|Accounting for Partnership business|
Each partner in the business has a Capital account. It carries the record of initial capital and any additional capital contributed by the partner. It is fixed and is not affected by any entry other than contribution of capital.
This account records the share of profits and losses and drawing of a partner. Credit balances in the Current Accounts at the end of the accounting year represents undrawn profits whereas debit balance indicates that the partner has overdrawn from his account and owes to the firm.
Profit and Loss Appropriation Account
This account is prepared to show the division of profit or loss among the partners
Balance Sheet of a Partnership firm carries the following information:
- Capital Account of all the partners
- Current Account of all the partners