1. Principles Of Accounts

2. A. Definition Partnership is an association of from 2 to 20 persons
carrying on business in common with a view of profit.
1. General partnership: unlimited liability
2. Limited partnership: at least one general partner
and the others limited partners

3. B. Accounting requirements covered in Partnership Agreement
1. The amount of capital
2. The profit or loss sharing ratio
3. The rate of interest on partners capital
4. The rate of interest on partners drawings
5. The amount of salaries to be paid to partners
6. The rate of interest on loans advanced by partners

4. C. Capital Accounts and Current Accounts
1. Fixed capital account system
a.Capital Accounts - record the fixed capital contributed
by each partner
b.Current Account - record the changes which affect the
capital owed by the business to the partner
c. Drawings account - at the end of the period, close the
accounts and transferred to the Current account.
2. Fluctuating capital account system
It records all relevant transactions which affect
the capital owed by the business to the partners

5. Appropriation account
D. Profit & Loss
Appropriation account
It shows how the profit is actually shared among the partners.

6. Example P.1

7. P.2

8. P.3

9. P.4

10. P.5

11. P.6

12. The End
by: KIMI (3)
PEGGY (12)