FINANACIAL ACCOUNTING - I I Presentation No.1 TOPIC: PARTNERSHIP Subtopic: Opening Account Group Members Syed Yasir Hussain Syed Saad Ali Ahmed Sabih Ovais Ahmed Farrukh Askari Sarfaraz Nawaz

ASSIGNMENT PART - I Partnership

Partnership A contract between two or more people in a joint business venture. In partnership all partners agree to combine their funds and/or talents and share in the profits and losses of their business venture. Each partners of a business entity is personally responsible for the partnership's total liabilities for the debts of the business. The assets are divided among the partners according to partnership agreement

Types of Partnership General Partnership Limited Partnership Limited Liability Partnership

General partnership It is the most common way for a few investors to put their money together to buy or start business. In the absence of a partnership agreement, each general partner has an equal right to participate in the management and control of the business.. MUTUAL AGENCY It is the right of all partners in a partnership to act as a owner to take decisions for the business. UNLIMITED PERSONAL LIABILTIY The condition facing a general partner in which liability is not limited to a person's investment in the business, but extends to the entrepreneur's total ability to make payments. The partner must assume that if business assets are not sufficient to settle creditor claims, the personal assets of the proprietor or partners may be used to settle the claims.

Limited partnership A partnership with at least one general partner and any number of limited partners. Partners who just invested capital into the business. Limited Partners are not liable for legal actions and debts the company may face. Limited partners are only liable to the extent of the amount of money they have invested.

Limited liability partnerships A form of organization in which the individual partners are protected from the liabilities of the other partners. A partnership in which the partners have unlimited liability for their own business activities but limited liability for other partners activities. A partnership that limits partners’ risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.

Accounting practices of partnership The preparation and periodic review partnership agreement by any good accounting firm is critical to practice success. A properly drafted and comprehensive agreement that is updated regularly can prevent or minimize many problems that otherwise might arise. A separate capital account & a separate drawing account must be maintained by every partner. All changes in any partners capital account must be clearly shown in Statement's of partners equity.

ASSIGNMENT PART-II Opening the Accounts of New Partnership

Opening the Accounts of New Partnership The valuation assigned to any asset others than cash contributed by any partner must have current market price of that asset. The current market price of contributed asset must my agreed by every partner. The capital account which should be maintained by every partner must show the accurate amount invested or withdrawn by the partners. A Drawing Accounts must be maintained by every partner which exactly show the amount of asset or cash withdrawals by the partners.