Accounting for Partnerships FLASHCARDS

Distributive share The amount of net income or net loss allocated to each partner Distributive share

Mutual agency The characteristic of a partnership by which each partner is empowered to act as an agent for the partnership, binding the firm by his or her acts Mutual agency

Unlimited liability The implication that a creditor can look to all partners’ personal assets as well as the assets of the partnership for payment of the firm’s debts Unlimited liability

Liquidation Termination of a business by distributing all assets and discontinuing the business Liquidation

Limited partner A member of a partnership whose liability is limited to his or her investment in the partnership Limited partner

For additional reinforcement of accounting terms, visit the crossword puzzle on this Web site.