Ch. 12 Accounting for Partnerships

Capital deficiency

A debit balance in partner's capital account after allocation of a gain or loss.

General Partner

A partner who has unlimited liability for the debts of a firm.

Income ratio

The basis for dividing net income and net loss in a partnership.

Limited liability company

A form of business organization, usually classified as a partnership for tax purposes and usually with limited life, in which partners, who are called members, have limited liability.

Limited liability partnership

A partnership of professionals in which partners are given limited liabilityand the public is protected from malpractice by insurance carried by the partnership.

Limited partner

A partner whose liability for the debts of the firm is limited to that partner's investment in the firm.

Limited partnership

A partnership in which one or more general partners have unlimited liability and one or more partners have limited liability for the obligations of the firm.

No capital deficiency

All partners have credit balances after allocation of a gain or loss.

Partners' capital statement

The owners' equity statement for a partnership which shows the changes in each partner's capital account and in total partnership capital during the year.

Partnership

An association of two or more persons to carry on as co-owners of a business for profit.

Partnership agreement

A written contract expressing the voluntary agreement of two or more individuals in a partnership.

Partnership dissolution

A change in partners due to withdrawl or admission, which does not necessarily terminate the business.

Partnership liquidation

An event that ends both the legal and economic life of a partnership.

Schedule of cash payments

A schedule showing the distribution of cash to the partners in a partnership liquidation.