Partnership Accounts - help needed
woobabe
Registered Posts: 35 Regular contributor ⭐
Please can someone clarify the correct accounting treatment.
Two partners used their own cash to make some purchases for the business. Is the correct treatment to
DR Expense Account
CR Capital Introduced Account.
Also, the what difference will this make to their tax liability?
Two partners used their own cash to make some purchases for the business. Is the correct treatment to
DR Expense Account
CR Capital Introduced Account.
Also, the what difference will this make to their tax liability?
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Comments
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It will not affect their tax liability, just the amount that have in their capital accounts.0
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Sorry T.C, - I'm confused - surely the business expense reduces the net profit, and therefore the tax liability for each partner will be lower?0
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Yes, but the fact that they spent it personally, not from the business account, is irrelevant. A business expense is a business expense
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