Accounting for Partnerships
Businesses can be classified into various forms of ownership. In this text, I concern myself with partnerships. In so doing, I will discuss partnerships and the various advantages as well as disadvantages associated with this form of business ownership. Further, I will also highlight the Financial Accounting Standards (FAS) governing accounting for this form of business ownership from creation and operation to liquidation. Partnerships' tax consequences will also be discussed.
Partnerships: Advantages and Disadvantages
Just like any form of business ownership, partnerships also do have several advantages and disadvantages. A partnership according to Needles, Needles and Powers (2010) is "an association of two or more persons to carry on as co-owners of a business for profit." In that regard, a partnership is formed when two or more people come together with an aim of initiating a business activity. Individuals may be motivated to start a partnership form...
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