Partnerships and the Capital account

numberjunky

Hi everyone,

Yet another question from me.....

Could it ever be the case that Drawings and Share of Profit are shown in the Capital Account when the question states that 'current accounts are not used by the partnership'

Not come across this before.

PhilW

I've never come across this before. I thought all partnerships had a Capital account and Current accounts for each partner? It's not mentioned in my AAT reference books?

louise

helo,

i would think i is all included in the capital.

but maybe its a trick question, can you open a current account for them.

if not i would be included in the capital a/c, as maybe all the money is together

hope this helps

:001_rolleyes:

numberjunky

Capital accounts

I don't think it's a trick question as the question definately states that the partnership does not USE 'current accounts' so I will assume that it is possible to do all transactions via Capital accounts - If that is wrong at least I will learn from it, and if it's right. I will also learn - so I can't lose!

Thx for your support though

Princey

From Acca website

While it is normally the case that all appropriations of profit are taken to a current account, it is important to be clear about whether the question requires this approach. If so, this may be referred to by stating that the partnership maintains fixed capital accounts. This means that each partner will have a capital account and a current account. The capital account will record the initial introduction of capital, and will normally only be adjusted if the partner introduces additional capital. The current account will record the appropriations of profit and drawings. If the partnership maintains floating capital accounts, there will be no current account, and appropriations of profit and drawings will be recorded in the capital account.

numberjunky

Thanks Princey

That answers it perfectly - Maybe we've all learned something from it

Thanks for your efforts

Another example of the tutor making us (and others) use our initiative!:thumbup1: