Accounting For Partnership Firms
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After studying this chapter the student will be confident to:
- Understand and explain the meaning of partnership
- Understand the characteristics of Partnership
- Explain the meaning and contents of partnership deed.
- Apply their provisions of Partnership Act, 1932 in the absence of partnership deed.
- Prepare partners’ Fixed and fluctuating capital Accounts.
- Calculate interest on Capital and Drawings.
- Distribute profit among partners and prepare Profit and Loss Appropriation A/c.
- Make the accounting treatment of past adjustment.
- Partnership deed: It is a document which contains the terms and conditions of Partnership agreement either oral or written.
- Profit and Loss Appropriation Account : After the preparation of Profit and Loss account, entries pertaining to Interest on Capital, Drawings , Salaries among the partners are shown separately in a newly opened Profit and Loss Appropriation Account.
- Rules applicable in the absence of Partnership
- a) Profit sharing ratio will be equal
- b) No Interest on Capital and Drawings
- c) No Remuneration or Salary to the partners.
- d) Interest on Loan advanced by the partner @6%p.a.
- Fixed and Fluctuating Capital Accounts : When the Capitals are fixed, the
Current account of the partners will be maintained.
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