A partnership is a business owned by two or more people who agree how to share the profit. The new skill is dividing that profit and recording each partner’s share in their own accounts.
This chapter belongs to the SPM Accounting guide. It builds on the financial statements of a sole trader, because the net profit you divide comes from that statement.
What does the partnerships chapter cover?
The chapter covers how to prepare the appropriation account, how to update the partners’ capital and current accounts, how to apply a stated partnership agreement, and how to handle changes during the year using your syllabus conventions. A separate worked set follows one pair of partners through all these steps.
One example to orient you
Farid and Lim share profits in the ratio 3:2. The net profit is RM50 000. Farid receives 3/5 of RM50 000 = RM30 000, and Lim receives 2/5 = RM20 000.
Real questions add interest on capital, a salary for one partner or interest on drawings. Those items are taken out first, and only the balance is shared in the ratio. That order is the heart of the chapter.
In what order should I study the lessons?
- Preparing profit appropriation shows how to divide the profit.
- Updating partners’ current and capital accounts posts the results.
- Applying a stated partnership agreement teaches you to read the clauses.
- Handling changes using verified syllabus conventions covers a change during the year.
- The partnership changes worked set and the chapter practice set apply everything.
Who should start where?
If you have never divided a profit between partners, start with lesson 1. If you can do the appropriation but the current accounts confuse you, start with lesson 2. Students who meet a long question in the worked set and stall should go back to whichever lesson that step belongs to.
If you want a teacher to go through partnership questions with you, see online one-to-one Accounting tuition or the one-hour trial class (from RM50).