KEMBAR78
Financial Analysis and Control: Principles of Accounting | PDF
Scribd
Upload
40 views4 pages

Financial Analysis and Control: Principles of Accounting

This document provides an overview of partnership accounting principles. It defines a partnership and outlines their key characteristics, including voluntary association, mutual agency, limited life, unlimited liability, and co-ownership of property. It also discusses advantages like flexibility and fewer formalities, as well as disadvantages like unlimited liability and termination issues. The document then covers unique features of partnership accounting, how income/losses are divided, key financial statements, changes in partnership composition, and liquidation procedures.

Uploaded by

safiqulislam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
40 views4 pages

Financial Analysis and Control: Principles of Accounting

This document provides an overview of partnership accounting principles. It defines a partnership and outlines their key characteristics, including voluntary association, mutual agency, limited life, unlimited liability, and co-ownership of property. It also discusses advantages like flexibility and fewer formalities, as well as disadvantages like unlimited liability and termination issues. The document then covers unique features of partnership accounting, how income/losses are divided, key financial statements, changes in partnership composition, and liquidation procedures.

Uploaded by

safiqulislam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 4

Financial

Principles
Analysis
of Accounting
and Control

Prepared By:
Dr. H. M. Mosarof Hossain
Professor
Department of Finance
University of Dhaka
mosarof@du.ac.bd

1
Chapter 12: Partnership Accounting

Definition of partnership:
Partnership agreement/deed:
Characteristics of a partnership: (voluntary association,
mutual agency, limited life, unlimited liability, co-ownership of
property)
Advantages of a partnership: (flexibility in accumulation of
capital and talent, easier formation, less formalities, not
subject to separate taxation)
Disadvantages of a partnership: (unlimited liability, mutual
agency-one partner may bind the partnership to others,
limited life i.e. termination to many uncontrollable
circumstances, difficult to transfer ownership)

2
Unique features in partnership accounting:
Partner’s capital account
Partner’s drawing accounts

Division of partnership income or loss:


(a) Net income/loss divided equally
(b) Net income/loss divided by an agreed ratio other than equal
(c) Net income/loss divided by ratio of partners’ beginning capital
account balances
(d) Net income/loss divided by ratio of partners’ average capital
account balances
(e) Net income/loss divided by ratio of partners’ ending capital
account balances before distributing income/loss.
(f) Net income/loss divided by allowing salaries, interest on capital,
or both, with remaining an agreed ratio.
3
Financial statements of a partnership:
Partnership income statement
Statement of partner’s capital
Partnership balance sheet
Changes in partnership composition:
(a) Admission of a new partner- personal or business (equal, more
or less amount of capital investment)
(b) Retirement or withdrawal of a partner- personal or business
(equal, more or less amount of capital return back)
Liquidation of a partnership:
(a) Asset sold at a gain
(b) Asset sold at a loss
(c) Asset sold at a loss when one partner’s share of the loss is
greater than the balance of that partner’s capital account
4

You might also like