Chapter 12 Accounting for Partnerships

Mutual Agency

Each partner can bind the partnership to contracts

Unlimited liaibility

When a partnership cannot pay its debts, creditors usually can take partner’s personal assets. If a partner does not have enough assets to settle their share of partnership debt, creditors can take the assets of other partners.

Partnership formation

Each partner has its own capital and withdrawals accounts.

Partnership investment

Each partner’s investment is recorded at the market value of con tributed assets and liabilities.