Parcor Chapter 2

• Bonus.

  This allocation of profits to a partner on the basis of performance
• What is the equivalent percentage of 1 in the ratio of 1:3:2?

  16.67% (1\6 x 100= 16.67)
• what is the basis in dividing the profit and losses if the ratio is not given?

  Ratio of Original Capital investment
• Give atleast 3 types of financial position?

  1. Balance sheet
  2. Statement of cashflows
  3. Income Statement
• What is the type of partner that is not included in share of losses?

  Industrial partner
• Give atleast 3 scheme in distribution of profits of losses based on partners agreement.

  1. Equally or agreed ratio
  2. By allowing interest on partners capital to an agreed ratio
  3. By allowing salaries on partners and the balance on an agreed ratio
• Partner's Equity in Assets


  Contrasted with Share in Profits or Losses
• Basis of profits or losses sharing is a matter of agreement among the partners
• Equity of a partner in the NET assets of the partnership


  Should be distinguished from a partner's share in profits or losses
• Industrial partner is not liable for losses because he cannot withdraw the work or labor already done by him.
• Prior Period Errors


  Omissions from and other misstatements of the entity's financial statements for one or more prior periods that are discovered in the current period.
• Profit and Loss Ratio


  Ratio in which profits or losses from partnership operations are distributed
• International Accounting Standards (IAS)


  Overall Considerations
• Going Concern


  It should be prepared on a going concern basis unless the management intends to liquidate the entity or cease trading or has no realistic option but to do so.
• Accrual Basis of Accounting


  An entity shall prepare its financial statements, except for cash flow information, using the accrual basis of accounting.
• Materiality and Aggregation


  Present separately each material class of similar items
• Offsetting


  Entity shall not offset assets and liabilities, income and expenses unless required or permitted by IFRS.
• Frequency of Reporting and Comparative Information


  At least annually, an entity shall present with equal prominence each financial statement in a complete set of financial statements
• Consistency of Presentation


  Entity shall retain the presentation and classification of items in the financial statements in successive periods
• Complete Set of Financial Statements


  • Financial position as at the end of the period
  • Comprehensive income for the period
  • Changes in equity for the period
  • Cash flows for the period
  • Notes, comprising a summary significant accounting policies and other explanatory information
  • Financial position as at the beginning of the earliest comparative period
• Statement of Comprehensive Income


  The form and content of the income statement of a partnership resemble those of the sole proprietorship with the exception of the presentation of the division of profits or losses at the lower portion of the statement.