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Question 1
In ACCA articles,
It is written,
“A partnership is an unincorporated business entity. That means the reporting entity (business entity) principle applies to a partnership, so for accounting purposes, the partnership is a separate entity from the partners.”My question is that, I have studied that partnership is not separate from it owners or separate legal entity is not applicable so why is saying this. Please help me understand this.
Question 2
When a partner injected capital in middle of period so will it increase his balance in capital account or current account?Q1 – it is separate for accounting purposes – as is a sole trader. However, for legal purposes relating to asset ownership and liabilities, the entity does not own/owe anything itself.
Q2 – usually the capital account as that is where capital regarded as being fairly long-term/’permanent’ is recorded.
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