Accounting Principles Accounting for Partnerships参考.pptx

12Accounting for PartnershipsLearning ObjectivesDiscuss and account for the formation of a partnership.1Explain how to account for net income or net loss of a partnership.2Explain how to account for the liquidation of a partnership.3Discuss and account for the formation of a partnership.LEARNINGOBJECTIVE1Partnership, an association of two or more persons to carry on as co-owners of a business for profit.Type of Business:Small retail, service, or manufacturing companies.Accountants, lawyers, and doctors.LO 1Characteristics of PartnershipsASSOCIATION OF INDIVIDUALSLegal entity.Accounting entity.Net income not taxed as a separate entity.MUTUAL AGENCYAct of any partner is binding on all other partners, so long as the act appears to be appropriate for the partnership.LO 1Characteristics of PartnershipsLIMITED LIFEDissolution occurs whenever a partner withdraws or a new partner is admitted. Dissolution does not mean the business ends.UNLIMITED LIABILITYEach partner is personally and individually liable for all partnership liabilities.LO 1Characteristics of PartnershipsCO-OWNERSHIP OF PROPERTYEach partner has a claim on total assets.This claim does not attach to specific assets.All net income or net loss is shared equally by the partners, unless otherwise stated in the partnership agreement.LO 1Characteristics of PartnershipsQuestionAll of the following are characteristics of partnerships except: co-ownership of property. mutual agency. limited life. limited liability.LO 1Organizations with Partnerships CharacteristicsSpecial forms of business organizations are often used to provide protection from unlimited liability.Special partnership forms are: Limited Partnerships, Limited Liability Partnerships, and Limited Liability Companies.Helpful Hint In an LLP, allpartners have limitedliability. There are nogeneral partners.LO 1Organizations with Partnerships CharacteristicsRegular PartnershipMajor AdvantagesSimple and inexpensive to create and operate.Major DisadvantagesOw