Partnership income statements

Question 1

Up to what point are they similar?

Answer 1

Up to the calculation of profit for the year

Question 2

What is needed after profit for the year? 1

Answer 2

Subtract interest on any partners loans from profit for year

Question 3

What is needed after profit for the year? 2

Answer 3

Complete the appropriation account:

Question 4

What actions are required in the appropriation account? 1

Answer 4

Add: Interest charged on partners drawings

Question 5

What actions are required in the appropriation account? 2

Answer 5

Subtract: Salaries paid to any partner

Question 6

What actions are required in the appropriation account? 3

Answer 6

Subtract: interest on partners’ capital accounts

Question 7

What actions are required in the appropriation account? 4

Answer 7

Remaining profit or loss is shared between the parties

Question 8

What to do if a partnership agreement was produced part-way through the year?

Answer 8

Produce two, one for before and one for after.

Question 9

Method if partnership agreement was produced part-way through?

Answer 9

Split profit between periods.

Follow partnership agreement on one period and partnership act for the other.