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It defines what a partnership agreement covers, including capital contributions, interest on capital, salaries, drawings, interest on drawings, loans, and profit/loss sharing. It then describes the layout of the partnership statement of profit or loss, highlighting what is excluded and how to adjust it. A worked example for Tam and Pan prepares the statement using given balances, depreciation, and loan interest, plus guidance on which items affect profit or loss.",{"@graph":69,"@context":121},[70,84,104],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":20,"@type":76,"position":81},"https://docshare.wps.com/document/exam/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/cambridge-cie-igcse-accounting-financial-statements-for-partnerships-partnership-agreement-statement-of-profit-or-loss/664886/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":98,"encodingFormat":97,"isAccessibleForFree":99,"interactionStatistic":100},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/cambridge-cie-igcse-accounting-financial-statements-for-partnerships-partnership-agreement-statement-of-profit-or-loss/664886.png","ImageObject",300,407,{"name":92,"@type":93},"Dewi_Sukmawati","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-29",true,{"@type":101,"interactionType":102,"userInteractionCount":8},"InteractionCounter",{"@type":103},"ViewAction",{"@type":105,"mainEntity":106},"FAQPage",[107,113,117],{"name":108,"@type":109,"acceptedAnswer":110},"What is the purpose of a partnership agreement in IGCSE accounting?","Question",{"text":111,"@type":112},"A partnership agreement sets out the terms for how the partnership operates. Its purpose is to help partners avoid disagreements in the future.","Answer",{"name":114,"@type":109,"acceptedAnswer":115},"Which items are not included in the statement of profit or loss for a partnership?",{"text":116,"@type":112},"Interest on partners’ capital, interest on partners’ drawings, and partners’ salaries do not appear in the statement of profit or loss.",{"name":118,"@type":109,"acceptedAnswer":119},"In the Tam and Pan example, how is depreciation and loan interest handled for profit or loss?",{"text":120,"@type":112},"Depreciation is calculated using the straight-line method (e.g., $52,000 × 20% = $10,400). Loan interest on the $5,000 loan is calculated as $5,000 × 5% = $250 and included as a finance cost.","https://schema.org",{"og:url":83,"og:type":123,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":125,"canonical":83},"index,follow",{"doc_id":127,"site_id":62},664886,1793278509,{"code":4,"msg":5,"data":130},{"doc_id":127,"user_id":131,"nickname":92,"user_avatar":132,"doc_module":4,"category_id":19,"category_name":20,"doc_title":65,"doc_description":67,"doc_content":133,"file_id":134,"file_url":135,"file_type":136,"file_size":137,"view_count":8,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":138,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":128,"read_time":143},962094243415,"https://ap-avatar.wpscdn.com/davatar_3d24733baf745e90a7e4bdd5f77d97b2","Cambridge(CIE)IGCSE Accounting  \nFinancial Statements for Partnerships  \nContents  \n Partnership Agreement  \n Statement of Profit or Loss  Appropriation Account  \n Capital & Current Accounts  Statement of Financial Position  \nYour notes  \nPartnership Agreement  \nPartnership agreement Whatisa partnership agreement?  \n A partnership agreement is a document that sets out the terms of how the partnership should operate  \n Its purpose is to help partners avoid disagreements in the future  \nWhat is contained in the partnership agreement?  \n The agreement contains information about:  \n The amount of capital each partner is to invest  \n Whether the partners are entitled to interest on their capital  \n And if so, the percentage to be paid  \n Interest on capital is given to reward partners for investing their money into the business  \n Whether salaries are paid to each partner  \n And the amount to be paid  \n Whether partners are entitled to drawings and the limit each partner can take out of the business  \n Whether interest is charged on partners ' drawings  \n And if so, the percentage to be charged  \n Interest on drawings is charged to discourage partners from withdrawing money from the business  \n Whether the partners are entitled to interest when they loan their own money to the business  \n And if so, the percentage to be paid  \n Interest on loans is given to reward partners for loaning their money to the business  \n The distribution of profits and losses to be shared between partners  \nWhy might a partner provide aloantothe business instead of increasing their capital investment?  \n A partner might provide a loantothe business because the loan is repayable  \n The partner is then guaranteed income from the repayments each year  \nYour notes  \nThe partner might not want to invest more capital in order to avoid:  \n having to alter the partnership agreement  \n having money tied up in the business  \nYour notes  \nStatement of Profit or Loss  \nStatements of profit or loss for partnerships  \nWhat is the layout of the statement of profit or loss of a partnership?  \n The statement of profit or loss for a partnership is very similar to that for a sole trader  \n The statement of profit or loss for a partnership will have one new addition, for the interest on a partner’s loan  \n A partner may choose to lend money to the partnership  \n If this is the case, interest on the loan is a finance cost and an expense to the business  \n The following do not appear on the statement of profit or loss  \n Interest on partners ' capital  \n Interest on partners ' drawings  \n Partners ' salaries  \n You may have to make adjustments toa statement of profit or loss  \n This is the same idea as when preparing a statement of profit or loss for a sole trader  \nYour notes  \nLayout of a statement of profit or loss fora partnership  \nWorked Example  \nTam and Pan are in partnership providing car repair services in their local area. The following is a list of their balances for the year ended 30 June 2023 .  \n\n|  | $ |\n| --- | --- |\n| Income from repair services | 101 260 |\n| Salaries of employees | 30 400 |\n| Electricity | 2 420 |\n| Telephone | 3 110 |\n| Rent and rates | 10 000 |\n\nYour notes  \n| Trade payables | 12 190 |\n| --- | --- |\n| Trade receivables | 14 220 |\n| Discount allowed | 1 400 |\n| Office expenses | 10 610 |\n| Supplies for repairs | 41 570 |\n| Irrecoverable debts | 1 200 |\n| Machinery and Equipment at cost | 52000 |\n| Provision for depreciation on machinery and equipment | 20800 |\n| Tam:\u003Cbr> Capital\u003Cbr> Current account\u003Cbr> Drawings | 60000\u003Cbr>430\u003Cbr>20600 |\n| Pan\u003Cbr> Capital\u003Cbr> Current account\u003Cbr> Drawings | 30000\u003Cbr>300\u003Cbr>15 700 |\n| Bank | 21 750 |\n\nAdditional information 30 June 2023:  \n Depreciate the office equipment at 20% per year using the straight-line method  \n On 1 July 2022 , Pan loaned $5 000 to the partnership with loan interest at 5% per annum  \n Pan is to receive an annual partnership salary of $12 000  \n Remaining profits and losses are share","cbCaibZsw499DLdc","https://ap.wps.com/l/cbCaibZsw499DLdc","pdf",1049118,23,"English","# Partnership Agreement\n## What is contained in the partnership agreement?\n# Statement of Profit or Loss\n## Layout and key inclusions/exclusions\n## Worked Example: Tam and Pan","[{\"question\":\"What is the purpose of a partnership agreement in IGCSE accounting?\",\"answer\":\"A partnership agreement sets out the terms for how the partnership operates. Its purpose is to help partners avoid disagreements in the future.\"},{\"question\":\"Which items are not included in the statement of profit or loss for a partnership?\",\"answer\":\"Interest on partners’ capital, interest on partners’ drawings, and partners’ salaries do not appear in the statement of profit or loss.\"},{\"question\":\"In the Tam and Pan example, how is depreciation and loan interest handled for profit or loss?\",\"answer\":\"Depreciation is calculated using the straight-line method (e.g., $52,000 × 20% = $10,400). Loan interest on the $5,000 loan is calculated as $5,000 × 5% = $250 and included as a finance cost.\"}]","Cambridge (CIE) IGCSE Accounting - Financial Statements for Partnerships - Partnership Agreement - Statement of Profit or Loss | PDF",58]