Accounting › Section N · Partnership accounting › Topic N.2
Allocating partnership income and loss
A partnership has no shareholders and pays no dividends, so at year end its whole net income or loss is divided among the partners' capital accounts. How that division works, especially when salaries and interest are promised, decides who ends the year richer.
In this topic
- Dividing the year's result
- Closing entries in a partnership
- Common ways to share income
- Salary allowances and interest are not expenses
- The three-step allocation schedule
- Worked example: allowances and a remainder
- Worked example: allowances exceed income
- Sharing a net loss
- The statement of partners' capital
- Common mistakes to avoid
- Key takeaways
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