Partnership Form of Organization

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University of Toronto Scarborough
Financial Accounting
Liang Chen

Partnership Form of Organization Partnerships A partnership is two or more people who do business with the intention of making a profit. Professional partnerships can vary in size from two partners to thousands Characteristics of Partnerships Association of Individuals: a partnership is an accounting entity for financial reporting purposes. Thus, the personal assets, liabilities, and transactions of the partners are excluded from the accounting records of the partnership, just as they are in a proprietorship Division of Income: the partners specify how the partnership net income (loss) will be divided when they form the partnership. The net income of a partnership is not taxed as a separate entity, ratK070,.K5,7930788K,70L8 personally taxable Mutual Agency: each partner acts for the partnership when doing partnership business, thus binding one another Co-ownership of Property: partnership assets are owned jointly by the partners; each partner has a claim on total assets equal to the balance in their respective capital account. Net income is also co-owned; all net income or loss is shared equally unless it is specified Limited Life: any cha
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