ACCOUNTING FOR PARTNERSHIP

Partnership Fo rm of Organization:

 -        Characteristics

 -        Organizations with partnership characteristics

 -        Advantages/disadvantages

 -        Partnership agreement

 Basic Partnership Accounting:

 -        Forming a partnership

 -        Dividing net income/loss

 -        Financial statements

 iquidation of a Partnership:

 -        No capital deficiency

 -        Capital deficiency

Partnership, an association of two or more persons to carry on as co-owners of a business for profit.

Type pf Business:

 -        Small retail, service, or manufacturing companies.

 -        Accountants, lawyers, and doctors.

Characteristics of Partnership

 1.     Association of Individuals:

 -        Legal entity.

 -        Accounting entity.

 -        Net income not taxed as a separate entity.

 2.     Mutual Agency:

 -        Act of any partner is binding on all other partners, so long as the act appears to be appropriate for the partnership.

 3.     Limited Life:

 -        Dossolution occurs whenever a partner withdraws or a new partner is admitted.

 -        Dissolution does not mean the business ends.

4.     Unlimited Liability:

 -        Each partner is personally and individually liable for all partnership liabilities.

5.     Co-ownership of Property:

 -        Each partner has a claim on total assets.

 -        This claim does not attach to specific assets.

 -        All net income or net loss is shared equally by the partners, unless otherwise stated in the partnership agreement.