Question

summarize the key differences in accounting for partnerships versus accounting for corporations.

Answer 1

Differences between the accounting for partnership and accounting for corporations;

Taxation;

Partnership: In partnership the firm itself is not taxable. But the partners of the partnership firm income, intrest is taxable.

Corporations: The corporation is itself taxable and not its shareholders. Since the corporation and the shareholders are two different entities. So, the income and profit earned by the corporation are taxable under the name of the company itself.

Accounting:

Partnership: In partnership each partner have their own personal account ehere all the related transactions takes palce. Like the distribution of profit, income, intrest and also withdrawals of the partners.

Corporations: Person who owns shares in the corporations are known as the stockholders. For stockholder equity the c ompany maintains the capital stiock account of all shareholders at one palce without creating personal account of each shareholders.

Life;

Partnership; Life of the partnership firm ends with the death, retirement of the partners. If there is death of the partner or retires the partnership comes to an end.

Corporations: The death, retirement of the stockholders have no effect in the life of the firm. Number of stockholders may come and go but the company tends to go on. The features of company "Going On Concern" determines that the company is not effected by the sharholders as the company and shareholders are two different entity.

Liabality;

Partnership; In partnersip the partners are liable to pay their debts even through personal assets. Major partnersip have partnership deed which decides the ratio of each partners profit and loss ratio. And according to that ratio the partner is liable to pay his/her debt even through their personal assets.

Corporations; In corporation the comapny is liable to pay of its debts rather than its shareholders. Being company different from shareholders the shareholders distribute loss according to their shares held and none of the shareholders  personal assets are required to pay off the debt.