Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 24 - No. 43)
In a partnership, how are partners' salaries treated in the financial statements?
As a reduction of the partnership's net income, before profit allocation.
As a distribution of profits, after net income is calculated.
As a reduction of the partner's capital account directly.
As a separate item on the Statement of Changes in Equity.
Explanation
Partner salaries are an expense, reducing net income before profit sharing.
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