Accounting (9-1) - 0985 CIE

Partnerships

Gbogbo ọrọ náà

A partnership is what happens when two or more people pool their money and their skills to run a business together. It brings more capital and more expertise than a sole trader can manage alone, but it also raises a new question that a single owner never faces: when the year ends and the profit is counted, who gets what? Answering that fairly is the whole point of partnership accounting.

In this lesson you will prepare the extra statement a partnership needs, the appropriation account, which shares the profit according to the partnership agreement: interest on capital, interest on drawings, salaries and the final split of what remains. You will then see how each partner's rewards and charges flow into their capital and current accounts, and how those accounts appear in the statement of financial position. Every figure is worked through and checked so you can follow the profit from the income statement right down to each partner's balance.

Ebumnobi

how a partnership can be a trading, service, manufacturing business or a combination of these.
the advantages and disadvantages of forming a partnership.
the importance and contents of a partnership agreement.
the purpose of an appropriation account.
how to prepare statements of profit or loss, appropriation accounts and statements of financial position.
how to record interest on partners’ loans, interest on capital, interest on drawings, partners’ salaries and the division of the balance of profit or loss.
how to make adjustments to financial statements as detailed in 5.1 (sole traders).
the uses of and differences between partners’ capital and current accounts.
how to prepare partners’ capital and current accounts in ledger account form and as part of a statement of financial position.

Akọmọ Ojú-ẹkọ

Two people who go into business together are trusting each other with money. The accounts are how that trust is kept honest. The appropriation account shows, in black and white, exactly how the year's profit is divided, and the current accounts track what each partner has put in and taken out. Get the layout right and you can settle any disagreement about shares before it becomes an argument. The skill builds directly on the sole trader statements, so most of what you already know still applies.

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Ayẹwo Ẹkọ

Ekele diri gi maka imecha ihe karịrị na Partnerships. Ugbu a na ị na-enyochakwa isi echiche na echiche ndị dị mkpa, ọ bụ oge iji nwalee ihe ị ma. Ngwa a na-enye ụdị ajụjụ ọmụmụ dị iche iche emebere iji kwado nghọta gị wee nyere gị aka ịmata otú ị ghọtara ihe ndị a kụziri.

Ị ga-ahụ ngwakọta nke ụdị ajụjụ dị iche iche, gụnyere ajụjụ chọrọ ịhọrọ otu n’ime ọtụtụ azịza, ajụjụ chọrọ mkpirisi azịza, na ajụjụ ede ede. A na-arụpụta ajụjụ ọ bụla nke ọma iji nwalee akụkụ dị iche iche nke ihe ọmụma gị na nkà nke ịtụgharị uche.

Jiri akụkụ a nke nyocha ka ohere iji kụziere ihe ị matara banyere isiokwu ahụ ma chọpụta ebe ọ bụla ị nwere ike ịchọ ọmụmụ ihe ọzọ. Ekwela ka nsogbu ọ bụla ị na-eche ihu mee ka ị daa mba; kama, lee ha anya dị ka ohere maka ịzụlite onwe gị na imeziwanye.

In which account does a partner's salary appear? A. The income statement as an expense B. The appropriation account C. The capital account only D. The trading section Answer: B
A partner has capital of $50,000. Interest on capital is allowed at 6% per year. How much interest on capital is credited to the partner? A. $300 B. $3,000 C. $6,000 D. $30,000 Answer: B
In the appropriation account, interest charged on partners' drawings is: A. deducted from the profit B. added to the profit C. ignored D. shown as an expense in the income statement Answer: B
Profit for the year is $60,000. Interest on capital totals $4,000 and salaries total $10,000. There is no interest on drawings. What is the residual profit? A. $46,000 B. $50,000 C. $54,000 D. $74,000 Answer: A
Where is interest on a loan made by a partner to the business recorded? A. As an appropriation of profit B. As an expense in the income statement C. In the capital account D. It is not recorded Answer: B