Chapter 12 Terms Flashcards
Admission by Investment
Admission of a partner by investing assets in the partnership, causing both partnership net assets and total capital to increase
Admission by Purchase of Interest
Admission of a partner in a personal transaction between one or more existing partners and the new partner; does not change total partnership assets or total capital
Capital Deficiency
A debit balance in a partner’s capital account after allocation of gain or loss
General Partners
Partners who have unlimited liability for the debts to the firm
Income Ratio
The basis for dividing net income and net loss in a partnership
Limited Liability Company
A form of business organization, usually classified as a partnership for tax purposes and usually with limited life, in which partners, who are called members, have limited liability
Limited Liability Partnership
A partnership of professionals in which partners are given limited liability and the public is protected from malpractice by insurance carried by the partnership
Limited Partners
Partners whose liability for the debts of the firm is limited to their investment in the firm
Limited Partnership
A partnership in which one or more general partners have unlimited liability and one or more partners have limited liability for the obligations of the firm
No Capital Deficiency
All partners have credit balances after allocation of gain or loss
Partners’ Capital Statement
The owners’ equity statement for a partnership which shows the changes in each partner’s capital account and in total partnership capital during the year
Partnership
An association of two or more more persons to carry on as co-owners of a business for profit
Partnership Agreement
A written contract expressing the voluntary agreement of two or more individuals in a partnership
Partnership Dissolution
A change in partners due to withdrawal or admission, which does not necessarily terminate the business
Partnership Liquidation
An event that ends both the legal and economic life of a partnership
