Partnership Questions

2022/03/01

Revision on Partnership

Final A/c in Partnership

● Income Statement
● Appropriation
● Statement of Financial Position
● Current Account

Income Statement has two sections

● Trading section calculating gross profit

● Profit and Loss section calculating Net Profit

Trading A/c

Sales

Return Inwards

Opening Inventory

Purchases

Carriage Inwards/Transport In or any expense that increase purchases- duty, packaging, etc
Return Outwards

Closing Inventory

Gross Profit = Net Sales - COGS

Profit & Loss

Revenues - Com Rec’d, Dis Rec’d, Rent Rec’d, Reduction in PFBD, Bad Recovered

Expenses- Insurance, Bank Charges, Electricity, rent, wages, dis all’d, sundry expenses, Bad
Debt, Depreciation Interest on Loan

Net Profit = Gross Profit + Revenues - Expenses

Appropriation A/c

Net profit b/d

Interest on Drawing( Identify partners) - add to net profit

Less Appropriations:

● Reduction in goodwill state as one figure.

● Interest 0n capital (identify partners)
● Salary
● Balance of profit
● Share the profit in the given ratio

Likely Ratio- 2:3

- In proportion to capital

- equally

Current Account stating the current increases and decreases in Capital

Current Account

Debit Side - decreases in capital- Drawings and interest on drawings, Share of losses

Credit Side - Increases in capital- interest on capital, salary, share of profit, loan interest from
partner.

Statement of Financial Position/ Balance Sheet

Non - Current Asset/ Fixed Assets

Office Equipment, Fixtures, Motor Van

Current Assets - Inventory, A/c Receivables(debtors) Accrued Revenues, Prepaid Expenses,

Bank, Cash

Current Liabilities - Account Payable ( Creditors) , Prepaid Revenues, Accrued Expenses,

Bank overdraft

Working Capital/ Net Current asset or Net CL if the liability is larger = CA- CL

Non Current Liabilities /Long Term Liabilities- Mortgage, Loan, Debentures

Financed By/ Equity

Capital where partners are identified

Current A/c partners are identified