I. PARTNERSHIPS-BASIC PRINCIPLES
Definition: a partnership is two or more individuals jointly carrying on business with a view to making profit.
A, partnership agreement, which need not necessarily be in written form, will govern the relationships between the partners. Important matters to be covered include:
-Capital to be introduced by partners
-How profits are shared between partners
-Drawings by partners etc.
Division of Profit:
-Salaries may be a warded to certain partners, for example, those who are more involved.
-Interest on capital may be provided to reward those partners who have invested more into the business.
-The remaining profit may be shared out in any agreed ratio.
All of the above division are not expenses of the business.
Statement of Appropriation of Profit:
Within the financial statements, this information as separate statement after the income statement.