Mar Sean Jan Gabiosa

Advance Accounting 1
Chapter Summary

Chapter 2
Partnership Operations

Allocation of Profit/Loss
Profit
a. partners agreement
b. no agreement:
- as to capitalist partner, the profits is divided according to ratio of capital
contribution(specified if original capital, beginning capital, ending capital, or average
capital).
- as to industrial partner, such share must be just and equitable.
Losses
a. partners agreement
b. according to profit sharing ratio
c. no agreement:
- as to capitalist partner, the losses is divided according to ratio of capital
contributions.
- as to industrial partner, shall not be liable for any losses.

Share of partners in Profit/Loss

1. Salaries fixed amount to be deducted before/after profit distribution.
2. Interest according to capital contribution. The purpose is to recognize capital differences.
3. Bonus after/before salaries or after/before interest
Then, balance is divided accordingly.