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(105)-SUMMARY ABOUT PARTNERSHIP ACCOUNTING

Friday, February 12, 2010

Summary about Partnership Accounting

Accounting for a partnership is for the most part the same as accounting for a sole trader except in the following respects.
  • The initial capital put into the business by each partner is shown by means of a capital account for each partner.
  • Each partner also has a current account and drawings account.
  • The net profit of the partnership is appropriated by the partners according to some previously agreed ratio.
  • Partners may be charged interest on their drawings, and may receive interest on capital. If a partner makes a loan to the business, he will receive interest on it the normal way.
  • Partnerships may be terminated either by closing down the business entirely or by disposing of the business as a going concern to a limited company.

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