Skip to main content

Business Accounting Financial Accounting: Information for Decisions

Income of a partnership firm is allocated on the basis of the terms agreed upon in the partnership agreement. The partnership agreement indicates the allocation of net income of the partnership. The agreement provides for interest, salaries and profits sharing ratio for the partners. To identify: the financial statement on which allocation of partnership income is presented. Income of a partnership firm is allocated on the basis of the terms agreed upon in the partnership agreement. The allocation of partnership income is done after calculation of net income of the partnership. And the allocated net income is crediting to the capital accounts of the partners. Hence the allocated net income is presented on the statement of partner’s equity in the set of financial statements.

Income of a partnership firm is allocated on the basis of the terms agreed upon in the partnership agreement. The partnership agreement indicates the allocation of net income of the partnership. The agreement provides for interest, salaries and profits sharing ratio for the partners. To identify: the financial statement on which allocation of partnership income is presented. Income of a partnership firm is allocated on the basis of the terms agreed upon in the partnership agreement. The allocation of partnership income is done after calculation of net income of the partnership. And the allocated net income is crediting to the capital accounts of the partners. Hence the allocated net income is presented on the statement of partner’s equity in the set of financial statements.

Solution Summary: The author explains that income of a partnership firm is allocated on the basis of the terms agreed upon in the partnership agreement.

Financial Accounting: Information for Decisions

Financial Accounting: Information for Decisions

8th Edition

ISBN: 9781259533006

Author: John J Wild

Publisher: McGraw-Hill Education

See similar textbooks

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

Blurred answer

Chapter D, Problem 6DQ

Chapter D, Problem 8DQ

Students have asked these similar questions

How does a partnership prepare financial reporting?

Knowledge Booster

Background pattern image

Similar questions

What types of bases for dividing partnership net income or net loss are available?
A well written partnership agreement should include each of the following except ________. A. how to settle disputes B. the name of the partnership C. division of responsibilities D. Partners individual tax rate
Can a partnership assume liabilities as part of one of the partners contributions?

Recommended textbooks for you

Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Entrepreneurial Finance
Finance
ISBN:9781337635653
Author:Leach
Publisher:Cengage
SWFT Corp Partner Estates Trusts
Accounting
ISBN:9780357161548
Author:Raabe
Publisher:Cengage
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Income Tax Fundamentals 2020
Accounting
ISBN:9780357391129
Author:WHITTENBURG
Publisher:Cengage
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:9780357391266
Author:Nellen
Publisher:Cengage

Text book image

Century 21 Accounting Multicolumn Journal

Accounting

ISBN:9781337679503

Author:Gilbertson

Publisher:Cengage

Text book image

Entrepreneurial Finance

Finance

ISBN:9781337635653

Author:Leach

Publisher:Cengage

Text book image

SWFT Corp Partner Estates Trusts

Accounting

ISBN:9780357161548

Author:Raabe

Publisher:Cengage

Text book image

Principles of Accounting Volume 1

Accounting

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax College

Text book image

Income Tax Fundamentals 2020

Accounting

ISBN:9780357391129

Author:WHITTENBURG

Publisher:Cengage

Text book image

SWFT Essntl Tax Individ/Bus Entities 2020

Accounting

ISBN:9780357391266

Author:Nellen

Publisher:Cengage

SEE MORE TEXTBOOKS