ETB's and Current Accounts

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi Guys,

Really new to this and hoping that someone out there can give me an answer.

When doing an ETB, do you include the partners current accounts in the P&L or BS? And where does the interest go? So confused... :?

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ETB's and Current Accounts

    Drawings are an appropriation of profits generated by the entity. As a result, drawings would be seen within the Balance Sheet section of the Accounts. The extract would appear as follows:

    Balance Sheet (extract)

    Net Assets: X

    Financed by:

    Partners Current Account brought forward
    Plus capital introduced
    Plus profit for the year (or less losses)
    Less drawings
    Partners Current Account carried forward: X

    Obviously, each partners current account would be appropriated depending on the profit ratios. I have grouped all the partners current accounts together just for simplicity.

    Even though the drawings are, in effect, a reduction in the profits they would not appear in the profit and loss account as they are being "distributed" to the partners.

    Interest charges would appear under "Finance Costs" in the profit and loss account.

    Hope that helps.

    Regards
    Steve

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:ETB's and Current Accounts

    Thanks Steve. That's made a lot of sense!

Categories

Privacy Policy