 In this presentation, we will take a look at multiple choice questions related to partnerships. First question. Partners Draws are A. Credited Draws Account B. Debted Draws Account C. Credited Retained Earnings D. Debted Retained Earnings or E. Debted Net Income. So let's go through this again and see if we can go through the process of elimination. These Draws Accounts are A. Credited Draws Accounts. Now that's not the best terminology there, but I think we're looking for the normal balance for Draws. What is the Draws Normal Balance here? B. Debted Draws Accounts. So between these two, you know, we have the same thing, but it's a debit or a credit. So that could be an indication that we could say, hmm, maybe it's one of those two. And then C says, Credited Retained Earnings. And Retained Earnings is for a corporation, not a partnership. So you'll note that in the partnership section here, we haven't seen anything related to Retained Earnings. That's because it's a corporate, it's the corporation type of capital account, not the capital account for a partnership. And therefore, no Retained Earnings. That can't be it because there is none. And D says Debted Retained Earnings, so that doesn't look right. And E says Debted Net Income. And typically we don't debit net income. Debted Income is the result of debiting and crediting the revenue and expense accounts calculated as revenue minus expenses. So that's not it. So it looks like either A or B. So if we read through this again, Partners Draw Accounts, A, Credited Draws Accounts, B, Debted Draws Accounts. And again, we're really looking for kind of the normal balance of draws here. And draws are kind of funny account. They're the hardest one to really know about whether they're a debit or credit because they're kind of a contra equity account and they're not on the income statement. So we don't see them as much as we do expenses or revenue. So normal normal credit, normal capital accounts are typically credits. And the draws account because it's reducing the capital accounts is actually a debit. So B is the right answer. Draws have a debit normal balance. We debit them when to increase draws kind of like an expense, but they're not on the income statement. They're decreasing equity but not a temporary income statement account such as an expense. So one last time I'll read through question and answer. Partners draws are B, Debted Draws Accounts. Next question, which if there is no partnership agreement, it is assumed net income and loss will be allocated A, in accordance with partner capital accounts. B, based on time spent working. C, by salary allowance. E or D, equally. E, based on partner vote at the end of the month. Okay, so let's go through the scan process of elimination. If there is no partnership agreement, it is assumed net income and loss will be allocated either A, in accordance with partner capital accounts. Now that would seem kind of reasonable because the capital accounts would be reflective of the investments in the business. So you might think, that sounds kind of reasonable. If they didn't come up with an agreement, maybe the person who invested more should get some percentage higher based on the ratio of the investments. So I'll keep that one for now. B says, based on time spent working. And again, you might think, that kind of sounds reasonable, but I don't know how you would actually do that, you know, because again, you could try to use some ratio of the time that was worked. So I'll keep that for now. C says, by salary allowances. And if there was no partnership agreement, we wouldn't really know what the salary allowance would be because it's not wages like income, it's really just, that would be us agreeing to give ourselves some kind of allowance of the net income. So it can't really be that if there's no partnership agreement, we can't have a salary allowance. And D says, equally, and that seems like a pretty common default, that would be the easiest thing to do. So like if we didn't have any agreement, well, then we must be just splitting equally, right? We might, that would probably be the default. Then E says, based on partner vote at the end of the month. And again, that seems kind of reasonable. But that's not typically, we don't vote for at the end of the month. We want to agree before the month ends on how much the allocation of that income should be. So I'll leave it with A, B, and D. Let's go through this again. If there is no partnership agreement, it is assumed that net income and loss will be allocated either A, in accordance with partner capital accounts, B, based on time spent working or D, equally. And of those three, D is the correct answer and kind of makes the most sense intuitively, I would think, because, again, it's the simplest thing to do. So if you've got two people that just start doing business, they just start working and they don't make any formal partnership agreement, or even in the oral agreement as to profit sharing, then you would assume the profit sharing would be equal 50-50. So we'll keep it at D, final question and answer. If there is no partnership agreement, it is assumed that net income and loss will be allocated D, equally.