1. A partnership contract should always be prepared regardless of the amount or nature of the contribution. 2. All types of partnerships are subject to income tax. 3. A partner's contribution in the form of industry will require a debit to the account "Industry"
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
| 1. A |
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| 2. All types of partnerships are subject to income tax. | ||||||||
| 3. A partner's contribution in the form of industry will require a debit to the account "Industry" | ||||||||
| 4. In the partnership books, there are as many capital and drawing accounts as there are partners. | ||||||||
| 5. A partner's contribution in the form of noncash asset should be recorded at its fair market value even if there is agreed capital. | ||||||||
| 6. A partnership is much easier and less expensive to organize than a corporation. | ||||||||
| 7. A newly organized partnership should always open a new set of books for its use. | ||||||||
| 8. All partnerships have general partners. | ||||||||
| 9. Each partner generally has the authority to enter into contracts which are binding upon the partnership. | ||||||||
| 10. The property invested in a partnership by the partner becomes the property of the partnership. |
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