Partnership accounting basics
In the partnership accounting , all the final accounts are same as sole trade business final accounts . But main difference in these accounts are that In partner ship accounting , we make one extra account that is called profit and loss appropriation account which is used for calculating net share of profit or loss of different partner of a firm.
•This account is opened with credit balance of net profit ,
•In the debit side , we show interest on capital , salary and commission of partners and
•in credit side we shows interest on drawing , after adjusting these items , we transfer net profit to partners capital accounts in their profit sharing ratio
•In Absence of any partner ship deed Partner will divide profit or loss equally
•No interest on capital is given
•No interest on drawing is given
•No salary to any partner Interest on loan given by any partner is 6% annual.
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