A legal precedent established in 1904, critical to determining financial obligations during the dissolution of a partnership, especially when dealing with the insolvency of a partner.
Partnership accounts refer to the detailed accounting records maintained by a partnership, encompassing various essential documents such as the appropriation account, capital account, and current account. These accounts aid in the equitable distribution of profits and manage the financial dealings among partners in accordance with the partnership agreement.
A Partnership Agreement, also known as Articles of Partnership, outlines the partnership terms, including profit sharing, salaries, interest on capital, and introduction or retirement of partners, governed by the Partnership Act 1890.
A Profit and Loss Appropriation Account is a financial statement showing how the net profits or losses have been dealt with in a given period.
The Profit-Sharing Ratio (PSR) is a financial metric used to define how profits or losses are distributed among partners or stakeholders in a business or investment.
A realizable account is an account prepared when a partnership is dissolved. It accounts for the assets of the partnership, expenses on realization, and proceeds from sales, with the resulting profit or loss shared between the partners according to their profit-sharing ratio.
In a partnership, the revaluation account captures changes in the value of assets and liabilities when a new partner is admitted, or an existing partner exits. It ensures that these adjustments are equitably shared according to the partnership agreement.
