ABSTRACT
This chapter provides partnership accounts, changes in the structure of a partnership, dissolution of partnerships and conversion of a partnership to a limited company. The main difference between the accounts of a partnership and those of a sole trader is the need to keep track of the equity stake of each of the partners. The partner will draw money regularly from the partnership to pay for his/her living expenses, and maybe an interest will be charged on the partner’s drawings. The structure of a partnership may change if new partners are admitted or existing partners retire/leave. The accounting entries on a change in the partnership will depend on whether goodwill is to remain in the accounts of the new partnership. There are two possibilities of converting a partnership into a limited company: when a partnership is transferred to a company, and when a partnership is sold to an existing company.
