Accounting · Study Guide
Key Points
Each partner has a separate capital account and current account to track their equity and profit share
Profit is divided according to the partnership agreement, often using ratios or fixed amounts
Changes in partnership (admission, retirement, dissolution) require revaluation of assets and recording of goodwill
Exam Focus
Prepare partnership accounts with correct capital and current accounts. Handle profit distributions and partnership changes accurately.
Must-Know Terms
Cross-Theme Connections
Types of business organisation
Partnership is one of four main business structures
Preparation of financial statements of sole traders
Sole trader accounts provide the foundation before moving to partnership accounts
Limited company accounts
Limited company accounts differ fundamentally in how capital and profit are recorded