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Explains special partnership accounts including Appropriation Account, Drawings, Capital Accounts (fluctuating vs fixed), and Current Accounts, with caution about interest on loans. Describes partnership changes (new partner, leaving, profit ratio change) requiring old and new trading/profit and loss accounts, and covers revaluation of assets using a Revaluation account, plus goodwill treatment. Ends with partnership dissolution mechanics, including realization and settlement of assets, liabilities, and capital balances.",{"@graph":69,"@context":122},[70,84,105],{"@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":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/partnerships-theory-key-accounts-and-changes/664883/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/partnerships-theory-key-accounts-and-changes/664883.png","ImageObject",300,407,{"name":92,"@type":93},"naya.afterrain","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-30","2026-10-29",true,{"@type":102,"interactionType":103,"userInteractionCount":24},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"What are the key advantages and disadvantages of a partnership?","Question",{"text":112,"@type":113},"Advantages include raising more capital, bringing more skills and knowledge, and sharing the work. Disadvantages include shared profits, possible disagreements, and partners cannot act independently.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"Under the Partnership Act 1890, what happens if there is no partnership agreement?",{"text":117,"@type":113},"Partners contribute equal capital, do not receive interest on capital or salaries, and profits or losses are shared equally. Partners may also be entitled to 5% interest on a loan they make to the partnership.",{"name":119,"@type":110,"acceptedAnswer":120},"How do partnership changes affect the preparation of accounts?",{"text":121,"@type":113},"When a partner joins, leaves, or the profit-sharing ratio changes, an old Trading and Profit and Loss account is prepared on the same date for the old partnership, and a new one is prepared at the end of the year for the new partnership.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},664883,1793278505,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":24,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":52,"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":129,"read_time":143},962094248482,"https://ap-avatar.wpscdn.com/davatar_9964176cb1d06d4a9deccf72a44ae3dc","Partnerships  \nTheory  \n1. An agreement between two or more people to carry on a business in order to make a profit.  \n2. Advantages:  \na. Raise more capital  \nb. More skills & knowledge  \nc. Share the work  \n3. Disadvantages  \na. Profits must now be shared  \nb. Disagreements can occur  \nc. Partners cannot act independently  \n4. According to the Partnership Act 1890, in the absence of a partnership agreement:  \na. All partners contribute equal capital  \nb. Partners are not entitled to interest on capital or salaries  \nc. Partners will not be charged interest on drawings  \nd. Profits or losses will be shared equally  \ne. Partners are entitled to 5% interest on a loan they make to the partnership  \nSpecial accounts for partnerships  \n1. APPROPRIATION ACCOUNT  \n• Continues from the Profit and Loss Account and shows how the profit or loss will be treated between the partners.  \n• Items under the Appropriation Account:  \ni. Partners’ SALARIES  \nii. INTEREST ON CAPITAL  \niii. INTEREST ON DRAWINGS  \niv. SHARE OF THE REMAINING PROFIT  \nExample:  \nTrading and Profit and Loss and Appropriation Account  \nNet Profit 20 000  \nADD Interest on Drawings : Abrahams 2 000  \n: Peterson  3 000 5 000   \n25 000  \nLESS Interest on Capital : Abrahams 4 000  \n: Peterson  2 000  \n6 000  \nLESS Salaries : Abrahams  9 000 15 000  \n10 000  \nShare of Profit :Abrahams(1/2) 5 000  \n: Peterson (1/2)  5 000 10 000  \n2. DRAWINGS  \n• Each partner has their own Drawings account.  \n3. CAPITAL ACCOUNTS  \n• Each of the partners will have their own Capital accounts  \n• The capital accounts may either be:  \no Fluctuating Capital Accounts – all the items in the Appropriation account are entered into the Capital accounts of the partners; the Drawings account of each partner is closed off to the partners Capital accounts.  \no Fixed Capital Accounts – The capital account balances do not change unless a partner contributes more capital. The items in the Appropriation account now get entered into the partners’ Current Accounts.  \n4. CURRENT ACCOUNTS  \n• Each partner has their own Current Account if the Capital accounts are fixed.  \n• These accounts are used to complete the double entry from the Appropriation account ( salaries, interest on capital, interest on drawings, profit share) .  \n• The drawings account of each partner is closed off to the partners’ Current account.  \n• The current account may also be credited with any interest on a loan made by the partner to the business. BE CAREFUL! The interest on a loan made by a partner to the business appears as a normal expense in Profit and Loss.  \nExample:  \nCurrent account: Abrahams  \nDec 31 Interest on Drawings Drawings  \n2 000 8 000  \nJan 1 Balance b/d 6 000  \nDec 31 Interest on Capital 4 000 Salary: Abrahams 9 000  \nShare of Profit 5 000  \nInterest on Loan 3 000  \nPartnership Changes  \nWhat is a change?  \n• When a new partner joins the business  \n• When an existing partner leaves the business  \n• When partners agree to change the profit sharing ratio  \nIMPORTANT:  \nWhen a change occurs, a Trading and Profit and Loss account must be drawn up on the same date for the OLD partnership (before the change). A Trading and Profit and Loss account will be drawn up at the end of the year for the NEW partnership (after the change). Most examination questions will therefore consist of two Trading and Profit and Loss accounts next to each other.  \nREVALUATION OF ASSETS (unrealized Profit)  \nWhen one of the above changes occur, the Partners; Capital accounts should show the real net worth of their business.  \nThe real net worth depends on a realistic valuation of the businesses’ Assets. Therefore, it is usual to get all assets valued upon a change in the partnership.  \nA REVALUATION account is opened in the ledger for this purpose.  \nJournal Entries:  \nStep one: Transfer any Provisions for depreciation to the Revaluation account: DEBIT Provision for Depreciation  \nCREDIT Revaluation  \nStep two: If an assets value is increasing (import","cbCaidxkzw7uNG6R","https://ap.wps.com/l/cbCaidxkzw7uNG6R","pdf",623897,"English","# Partnerships Theory\n## Partnership Act 1890 Default Rules\n## Advantages and Disadvantages\n## Special Accounts for Partnerships\n### Appropriation Account\n### Drawings\n### Capital Accounts (Fluctuating vs Fixed)\n### Current Accounts\n## Partnership Changes\n## Revaluation of Assets (Unrealized Profit)\n## Goodwill\n## Partnership Dissolution","[{\"question\":\"What are the key advantages and disadvantages of a partnership?\",\"answer\":\"Advantages include raising more capital, bringing more skills and knowledge, and sharing the work. Disadvantages include shared profits, possible disagreements, and partners cannot act independently.\"},{\"question\":\"Under the Partnership Act 1890, what happens if there is no partnership agreement?\",\"answer\":\"Partners contribute equal capital, do not receive interest on capital or salaries, and profits or losses are shared equally. Partners may also be entitled to 5% interest on a loan they make to the partnership.\"},{\"question\":\"How do partnership changes affect the preparation of accounts?\",\"answer\":\"When a partner joins, leaves, or the profit-sharing ratio changes, an old Trading and Profit and Loss account is prepared on the same date for the old partnership, and a new one is prepared at the end of the year for the new partnership.\"}]","Partnerships - theory - key accounts and changes | PDF",25]