Partnership Accounts Session 4. Partnership Accounts Aims This unit is about the learner being able to prepare final accounts for both sole traders and.

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Presentation transcript:

Partnership Accounts Session 4

Partnership Accounts Aims This unit is about the learner being able to prepare final accounts for both sole traders and unlimited partnerships, including the appropriation of profits. Learners will be able to draft final accounts and make necessary adjustments according to current financial standards

Partnership Accounts Learning outcomes By the end of the sessions all leaners will be able to correctly complete a Statement of Financial Position for a Partnership

Statement of Financial Position The statement of financial position of a partnership must show the year end balances on each partner’s capital and current account. The transactions can be shown in summary form.

Statement of financial position These are shown in the “financed by” section of the statement All other sections of the statement of financial position are prepared the same as a sole trader.

SFP Example Layout Financed by

SFP Example Layout Financed by

Example

Worked example – Len & Fred

Task (a) - Appropriation Account Financial Year Ending 30 th September£ Profit for appropriation38,000 Salaries Fred6,000 Interest on Capital (5%) Len (£33,000 x 5%)1650 Fred (20,000 x 5%)1000 Profit available for distribution29,350 Profit Share (2:1) Len (£29350 / 3 x 2)19567 Fred (£29350 / 3 x 2) ,350

Worked example – Len & Fred Current Accounts Bal b/d500Bal b/d1000 Drawings Salary6000 Interest on Capital Profit Share Balance c/d Balance b/d Len Fred LenFred

Worked example – Len & Fred Statement of Financial Position

Non-current assets: CostAcc DepreciationCarrying value Motor Vehcles Fixtures & Fittings Current assets: SLCA Bank 5000 Cash 500 Closing Inventory Current liabilities: PLCA Loan Total net assets Financed by LenFred Total Capital Account Current Account Total

Non-current assets: CostAcc DepreciationCarrying value Motor Vehcles Fixtures & Fittings Current assets: SLCA Bank 5000 Cash 500 Closing Inventory Current liabilities: PLCA Loan Total net assets Financed by LenFred Total Capital Account Current Account Total

Practice Questions