Accounting, 3rd Edition

Chapter 7

Partnerships and limited companies

‘Corporation, [i.e. Company] n. An ingenious device for obtaining individual profit without individual responsibility.’

Ambrose Bierce, The Devil's Dictionary, p. 29.

Learning Outcomes

After completing this chapter you should be able to:

• Explain the nature of partnerships and limited companies.
• Outline the distinctive accounting features of partnerships and limited companies.
• Demonstrate how to prepare the accounts of partnerships and limited companies.
• Understand the differences between listed and non-listed companies preparing accounts under IFRS for SMEs.

Go online to discover the extra features for this chapter at www.wiley.com/college/jones

Chapter Summary

• Sole proprietors, partnerships and limited companies are the main forms of business enterprise.
• A partnership is more than one person working together.
• Partnership accounts must share out the profit and equity between the partners.
• Sharing out profit, capital and current accounts are special partnership features.
• A limited company is based on the limited liability of the shareholders (i.e., they lose only their initial investment if things go wrong).
• A limited company's special features are taxation, dividends and equity employed split between share capital and reserves. ...