Podcast
Questions and Answers
What is the primary objective of forming a partnership?
What is the primary objective of forming a partnership?
What is the minimum number of persons required to form a partnership?
What is the minimum number of persons required to form a partnership?
What is a characteristic of a general partnership?
What is a characteristic of a general partnership?
What is the purpose of a partner's capital account?
What is the purpose of a partner's capital account?
Signup and view all the answers
What is the profit and loss sharing ratio used for?
What is the profit and loss sharing ratio used for?
Signup and view all the answers
What is a benefit that partners may be entitled to?
What is a benefit that partners may be entitled to?
Signup and view all the answers
Study Notes
Partnership Definition and Features
- Association of two or more persons to carry on a business with the objective of earning profits.
- Partners share profits and losses of the business in an agreed ratio.
Key Features of Partnership
- Minimum two persons are required to form a partnership.
- Agreement among partners to carry on a business is necessary.
- Partnership must be formed to carry on a business.
- Profits and losses of the business must be shared among partners.
- Partners have unlimited liability, meaning their personal assets are at risk in case of business losses.
Types of Partnerships
- General Partnership: All partners have unlimited liability and are actively involved in the business.
- Limited Partnership: One or more partners have limited liability, while the others have unlimited liability.
Accounting for Partnership
- Partners' Capital Accounts: Each partner has a capital account to record their initial investment and share of profits and losses.
- Profit and Loss Sharing Ratio: The ratio in which profits and losses are shared among partners.
- Interest on Capital: Partners may be entitled to interest on their capital investments.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
This quiz covers the definition and features of partnerships in accounting, including the requirements and characteristics of a partnership firm.
