Which of the following is mostly used in treating partners' current earnings?
Answer Details
The correct answer is "Current account."
In partnership accounting, the current account is used to record the amount owed by the partnership to each partner for their share of the profits or losses. It is also used to record any withdrawals or contributions made by the partners.
At the end of the accounting period, the profit or loss is divided among the partners based on their agreed-upon profit-sharing ratio, and this amount is credited to their current accounts. Any withdrawals made by the partners are debited to their current accounts, reducing the amount owed to them by the partnership.
Therefore, the current account is primarily used to track each partner's share of the earnings and the amount they are owed by the partnership.