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Accounting, 3rd Edition by Michael J. Jones

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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.

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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.

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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. ...

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