Question

conclusion for partnership final accounts for project

Answer 1

 partnerships are a good form of business to start up for someentrepreneurs, and not so great for others. If an entrepreneur wants more control andwants to seek out a higher profit level, than a partnership may be a great way to go. Themost important facet of starting the partnership is making sure that the partners gettogether and create a partnership agreement that covers as many potential problems aspossible. Without an extensive partnership agreement, the partnership itself may gohaywire down the line when problems small or large arise. Going into the introductorystages of the company, “each person contributes money, property, labor or skill, andexpects to share in the profits and losses of the business” (Partnerships, 2008), theseelements are what makes up the partnership and also are the elements that later bring thepartners into the court of law.

Answer 2

Answer:

Final Accounts in partnership-

Partnership firms' final accounts are as follows:

a) Manufacturing account - if manufacturing is carried out

b) Trading and profit and loss statements - to determine profitability

c) Profit and loss appropriation account - used to show how profits and surplus are spent.

d) Balance sheet - used to determine financial status.

The procedure for preparing final accounts for a partnership firm is the same as for a sole proprietorship business, with the exception of the following:

a) In a sole proprietorship, the profit or loss in the profit and loss account is transferred directly to the capital account of the sole proprietor. A profit and loss appropriation account is created in a partnership, to which the net profit or loss from the profit and loss account is transferred. Adjustments for interest on capital, interest on drawings, salary, and other remuneration due to partners are shown in the profit and loss appropriation account. Finally, in the profit sharing ratio, the balance in the appropriation account is transferred to the capital account of the partners.

b) The sole proprietor's capital account balance is shown in the sole proprietorship's balance sheet. A partnership's balance sheet shows the balances in the partners' individual capital accounts (and current accounts).

Explanation:

Partnership-

• The agreement between partners must share the profits and losses of a trading concern.
• However, the Partnership Act defines partnership as an association of people who have agreed to share the profits of a business, with the sharing of losses implied. As a result, sharing profits and losses is critical.

Hence, we can conclude that preparing final accounts of a partnership is somewhat similar to sole proprietorship but not completely same.

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