November 2012
Beginner to intermediate
414 pages
9h 26m
English
book
Problem Solving Survival Guide Volume I: Chapters 1-12 to accompany Accounting Principles, 11th Edition
by Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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CHAPTER 12
ACCOUNTING FOR PARTNERSHIPS
OVERVIEW
There are three forms of business organization: proprietorship, partnership, and corporation. Accounting for the revenues, expenses, assets, and liabilities is the same for all three forms of business organization; however, these three forms differ in accounting for owners' equity. Thus far in this book, we have been referring to a sole proprietorship when our discussions involved owner's equity. Accounting for owners' equity of a corporation will be discussed in Chapters 13 and 14. In this chapter, we will examine accounting for owners' equity in a partnership. The procedures are the same ones that are used in accounting for a proprietorship—with the exception that separate capital and drawing accounts must be maintained for each partner.
SUMMARY OF LEARNING OBJECTIVES
- Identify the characteristics of the partnership form of business organization. The principal characteristics of a partnership are: (a) association of individuals, (b) mutual agency, (c) limited life, (d) unlimited liability, and (e) co-ownership of property.
- Explain the accounting entries for the formation of a partnership. When formed, a partnership records each partner's initial investment at the fair market value of the invested assets at the date of their transfer to the partnership.
- Identify the bases for dividing net income or net loss. Partnerships divide net ...
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