CORPORATIONS AND PARTNERSHIPS

Corporations and Partnerships

Abstract

In this study we try to explore the concept of “Corporations and Partnerships” in the holistic context. The main focus of the research is on “Corporations and Partnerships” and its relation with “Difference in accounting”. The research also analyzes many aspects of “Corporations and Partnerships” and tries to gauge its effect on “Difference in accounting”. Finally the research describes various factors which are responsible for “Corporations and Partnerships” and tries to describe the overall effect of “Corporations and Partnerships” on “Difference in accounting”.

Corporations and Partnerships

Partnerships in Accounting

When two or more individuals engage in an enterprise as co-owners, organization is known as the partnership. This form of organization is popular among personal service enterprises, as well as in legal and public accounting professions. The important features of accounting procedures, for partnerships are discussed below. (Elliot, 2004)

Because ownership rights in the partnership are divided among two or more partners, separate capital and drawing accounts are maintained for each partner.

Investment of cash

If the partner invested cash in the partnership, Cash account of partnership is debited, and partner's capital account is credited for invested amount.

buying into of assets other than cash

If the partner invested an asset other than cash, an asset account is debited, and partner's capital account is credited for market value of asset. (Micklethwait, 2003)

If the certain amount of money is owed for asset, partnership may assume liability. In that case an asset account is debited, and partner's capital account is credited for difference between market value of asset invested and liabilities assumed.

Corporations in Accounting

A corporation is the legal entity created by state law. It has the distinct and separate existence from individuals who created it, and those who control its operations. companies are routinely classified as profit or nonprofit, and public or nonpublic. A earnings corporation's survival depends upon its proficiency to make earnings. A not-for-profit company relies on donations and grants. Public corporations issue supply that is broadly held and traded. Shares of the nonpublic corporation are usually held by the small number of individuals. Regardless of form or purpose of corporations, all must be created according to either state or federal statutes. (Low, 2008)

Characteristics of the Corporation

A corporation has ability to enter into contracts, incur liabilities, and buy, sell, or own assets in its corporate name. These provisions can be found in charter or articles of incorporation. Ownership of the corporation is divided into shares ...