Accounting for Partnerships


Overview/Description
Target Audience
Expected Duration
Lesson Objectives
Course Number


Overview/Description
Partnerships are voluntary organizations between two or more people that combine different resources in a business venture. These resources can be money, expertise, personal connections, or experience. Accounting procedures are established to ensure that each partner gets his/her share of the business income or loss. This course explores the accounting methods that pertain to partnerships and the division of its assets.

Target Audience
This course is intended for individuals who require knowledge of the basics of accounting, who are starting a business or interested in becoming a partner, who are learning to manage the accounting activities of a business, and who need to review accounting principles and procedures. Shareholders or people who are interested in becoming a shareholder can also benefit from this course.

Expected Duration (hours)
3.5

Lesson Objectives

Setting up a Partnership Account

  • identify the advantages of forming a partnership.
  • identify the conditions a business must meet for the formation of a new partnership, based on the type of partnership being formed.
  • calculate the balance of the capital account, given a scenario.
  • apply the steps to make an entry in a withdrawals account.
  • determine which accounting entries to use to set up the books for different types of partnerships.

    • Division of Partnership Earnings

  • recognize the importance of properly distributing the earnings of a partnership.
  • calculate owner's equity for each partner, using a balance sheet.
  • apply the three common methods of calculating owner's equity for each partner.
  • calculate the balance in each partner's capital account based on the Changes in Partner's Equity Statement.

    • Accounting for Changes in a Partnership

  • recognize the importance of understanding the accounting for change procedures.
  • match each type of new partner addition to examples.
  • calculate the bonus that existing partners contribute to admit a new partner, in a given scenario.
  • apply the steps to withdraw a partner from a partnership, for a given scenario.
  • apply the steps for dissolving a partnership because of a death.
  • sequence the steps for the liquidation of a partnership.
  • apply the steps for liquidating a partnership, given a scenario.

    • Course Number:
    FIN0221