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Published on December 31, 2017 16 min
Other Talks in the Series: Accounting Records and Accounts
Hello this is Huw Morgan from the Alliance Manchester Business School. This is the twelfth talk in a series of lectures on accounting records. And this session discusses the characteristics of a partnership, how it differs from the sole trader in terms of legality, Accounting records And financial statements.
Partnership and a sole trader are similar in many respects. Both aim to make profit from which drawings can be taken by owner or partner and both have unlimited liability. The owner or partner normally are obliged to settle any debts that the business can't from their personal possessions. A partnership differs in that it comprises more than one owner. The maximum numbers of partner depend on the business type. It's formed under legally binding terms, The Partnership Act 1890 in the UK. Although some rule partner is depending on the jurisdiction can benefit from limited liability under certain circumstances. Partnerships accounting record will differ mainly in the way capital is recorded and how annual profit is allocated between partners in accordance with the partnership agreements. Shaun would want to form a partnership to share the burden of expansion. He will need motivated and experienced partners who can also inject new capital. Shafeega that's been working for Shaun in the factory where she developed many successful new smoothie recipes and Shaun feels Shafeega is well placed to run the production area leaving him to focus on expanding the customer base. In addition to her experience the capital that Shafeega will introduce will be used to open a second shop in a new region.