Topic 16 - Partnerships Flashcards
(7 cards)
1
Q
Check Partnership notes chapter 4.
A
2
Q
Why is a partnership agreement important?
A
It is written evidence of the official agreement regarding share of profits, interest on capital and drawings etc. Therefore, all rights, duties and responsibilities are clear to all the partners and conflict is avoided.
3
Q
What does a fluctuating (floating) capital account include?
A
- Partner’s capital contributions and withdrawals
- Drawings
- All current transactions between the firm and partners recorded in the appropriation account are double entered in the partner’s capital account
4
Q
What does a fixed capital account include?
A
- The original capital investment made by the partners
- Any additional capital contributions and withdrawals
5
Q
What does a current account include?
A
- Drawings
- All current transactions between the firm and partners recorded in the appropriation account are double entered in the partner’s current account
6
Q
What does the current account balance show?
A
If the original investment has increased (credit (positive) balance) or decreased (debit (negative) balance).
7
Q
A
