PARTNERSHIP BASIS Meaning and
Definition
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Partnership basis refers to a method of accounting used by persons or entities engaged in a partnership. It is a system that records and reports financial transactions based on the partnership agreement and the contributions made by each partner. The partnership agreement outlines the terms and conditions, including the rights, responsibilities, and profit-sharing arrangements of the partners.
Under the partnership basis, each partner's capital account is maintained, which reflects their initial investment, subsequent investments or withdrawals, and their share of any profits or losses of the partnership. The capital account is usually adjusted periodically to reflect each partner's current stake in the partnership.
Additionally, the partner's drawing account is used to record any withdrawals made by partners for personal expenses, which are typically recorded as a reduction in their capital account. This allows for tracking and maintaining the integrity of each partner's investment.
Partnership basis accounting also involves the distribution of partnership profits and losses according to the agreed-upon sharing ratio, which is outlined in the partnership agreement. The partners' profit share is typically proportional to their capital contributions but can be adjusted depending on the specific terms.
Overall, the partnership basis provides an organized and structured system of accounting that accurately reflects the financial activities and interests of each partner in a partnership.
Common Misspellings for PARTNERSHIP BASIS
- oartnership basis
- lartnership basis
- 0artnership basis
- pzrtnership basis
- psrtnership basis
- pwrtnership basis
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- paetnership basis
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- parrnership basis
- parfnership basis
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- partbership basis
Etymology of PARTNERSHIP BASIS
The word "partnership" originates from the Middle English word "partener" (partnership) and the Old French word "partener" (to share with). Both of these words have roots in the Latin word "partitio" (division, portion).
The word "basis" comes from the Latin word "basia" (step, pedestal), which has further roots in the Ancient Greek word "basis" (a base, pedestal).
When combined, "partnership basis" refers to the fundamental or foundational principles of a partnership agreement or arrangement. However, it is important to note that "partnership basis" as a complete phrase does not have a well-defined etymology on its own, as it is a combination of two words with separate origins.
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