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Partnership Accounting

In: Business and Management

Submitted By shdtani
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Partnership Accounting Finding of The Study Definition
A partnership is an association of two or more persons to carry on as co-owners of a business for profit. Partnerships are sometimes used in small retail, service, or manufacturing companies. Also accountants, lawyers, and doctors find it desirable to form partnerships with other professionals in the field.

Characteristics of Partnership
Partnerships are fairly easy to form. People form partnerships simply by a verbal agreement, or more formally, by written agreement. We explain the principal characteristics of partnerships in the following sections.

Association of Individuals
A partnership is a legal entity. A partnership can own property (land, buildings, equipment), and can sue or be sued. A partnership also is an accounting entity. Thus, the personal assets, liabilities, and transactions of the partners are excluded from the accounting records of the partnership, just as they are in a proprietorship.
The net income of a partnership is not a taxed as a separate entity. But a partnership must file an information tax return showing partnership net income and each partner’s share of that income. E ach partners share is taxable as personal tax rates, regardless of the amount of net income each withdraws from the business during the year
.
Mutual Agency
Mutual agency means that each partner acts on behalf of the partnership when engaging in partnership business. The act of any partner is binding on all other partners’ his is true even when are beyond the scoop of their authority, so long as the appears to be appropriate for the partnership. For example , a partner of a grocery store who purchases a delivery truck creates a binding contract in the name of the partnership, even if the partnership agreement denies this authority. On the other hand , if a partner...

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