P1:
Describe how legislation of the partnership act and accounting concepts affect
an organizations accounting policies.
In this assignment I am going to describe how legislation of the partnership act
and accounting concepts affect Paul`s guitar shop accounting policies.
A business can be runned in 4 forms:
Sole trader: this form allows the owner to have total control of the
company’s operations. The owner is legal owner of all the assets, is legally
liable for tis debts and is entitled to all the earnings of the proprietorship.
Partnership: a partnership is formed when two or more people join to run a
business together. Each partner has an equal share in profits and losses of
their business.
Limited liability Company: this form can provide owners also known as
members in this structure, the protection from liability and other
obligations similar to a corporation.
Corporations: this type of business form separates the liabilities and
obligations incurred by the company`s operations from being the
responsibility of the owners. Corporations are regulated by the laws of the
state they operate from.
Since Paul`s Guitar shop has 3 owners it will be runned as a partnership. There are
3 partners in the company, these are; Nora, Osman and Nasir. Since the business
will be runned as a partnership act it must follow The Partnership Act 1890. This is
an act which governs the rights and duties of people or corporate entities
conducting business in a partnership.
A partnership can arise trough conduct, oral agreement or a written contract also
known as a partnership agreement. Since 2002 the minimum membership within
a partnership is 2 people and the maximum is unlimited. Each partner is entitled
to participate in management, get an equal share of the profit and an indemnity
in respect of liabilities and the right not to be expelled by the other partners. The
affect the partnership act might have on Paul`s Guitar Shop accounting policies
could be; when the partnership dissolves and there are still debts which need to
be paid to suppliers or lenders, but these can’t be paid because the business has
Describe how legislation of the partnership act and accounting concepts affect
an organizations accounting policies.
In this assignment I am going to describe how legislation of the partnership act
and accounting concepts affect Paul`s guitar shop accounting policies.
A business can be runned in 4 forms:
Sole trader: this form allows the owner to have total control of the
company’s operations. The owner is legal owner of all the assets, is legally
liable for tis debts and is entitled to all the earnings of the proprietorship.
Partnership: a partnership is formed when two or more people join to run a
business together. Each partner has an equal share in profits and losses of
their business.
Limited liability Company: this form can provide owners also known as
members in this structure, the protection from liability and other
obligations similar to a corporation.
Corporations: this type of business form separates the liabilities and
obligations incurred by the company`s operations from being the
responsibility of the owners. Corporations are regulated by the laws of the
state they operate from.
Since Paul`s Guitar shop has 3 owners it will be runned as a partnership. There are
3 partners in the company, these are; Nora, Osman and Nasir. Since the business
will be runned as a partnership act it must follow The Partnership Act 1890. This is
an act which governs the rights and duties of people or corporate entities
conducting business in a partnership.
A partnership can arise trough conduct, oral agreement or a written contract also
known as a partnership agreement. Since 2002 the minimum membership within
a partnership is 2 people and the maximum is unlimited. Each partner is entitled
to participate in management, get an equal share of the profit and an indemnity
in respect of liabilities and the right not to be expelled by the other partners. The
affect the partnership act might have on Paul`s Guitar Shop accounting policies
could be; when the partnership dissolves and there are still debts which need to
be paid to suppliers or lenders, but these can’t be paid because the business has
