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Running Head: ACCOUNTING FOR PARTNERSHIPS Accounting for partnerships Your Name Here School Name Here 16th May 2019 1 ACCOUNTING FOR PARTNERSHIPS 2 Accounting is said to be the language of business. It is used in the business world to describe the process from collecting, analyzing and reporting transactions. An accountant is not only concerned with record keeping he/she should be interested in the study of the connection between the financial result and the causes of such events and finding solutions for the firm. Partnership business is a legal form of business association, which is formed through a contract between two or more people. This association creates a business that is lawful and which aims at making profits. According to Peterson and Plowman (1958), the partnership is characterized by being that it arises out of a contractual relationship between two or more persons. Accounting procedures in partnership business is vital, in the absence of these procedures the company can easily collapse because of keeping poor accounting records. Therefore accounting system is essential for the growth of any organization. Characteristics of the partnership Association of individual A partnership is an accounting entity, thus, the personal assets, liabilities, and transactions of the partners are excluded from the accounting records of the partnership, just like in proprietorship Mutual agency Mutual agency means that an individual partner acts on behalf of the partnership ...
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