The World of Accounting: What is the difference between a Proprietorship and a Partnership?

Tuesday, November 13, 2007

What is the difference between a Proprietorship and a Partnership?

Proprietorship

A proprietorship is owned by one person, and therefore has only one capital account. This person is responsible for everything involved with the business. If the person's business fails, the sole owner is responsible for handling all liabilities owed. A Proprietorship uses an eight column journal for recording transactions.

Partnership

A Partnership uses the assets and abilities of two or more people. This is an advantage because one person is not responsible for handling everything in the business. The work and costs for operating may be split among the owners. However, the capital must also be split among owners. If the business fails, all owners are responsible for paying the burdens. A partnership uses an eleven column journal when recording transactions.

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kbeal_13 said...: Hello!!!! im the first to pop you comment cerry; November 14, 2007 at 11:07 AM

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Chapter 12 - Posting to General and Subsidiary Ledgers

1. Explain what a subsidiary ledger is and list the ones that we will be using as we post transactions from the journal to the ledgers.
Subsidiary Ledger - a ledger that is summarized in a single general ledger account.
We will be using Accounts Receivable Vendor's name and Accounts Payable Customer's name subsidiary ledgers.

2. Explain what a controlling account is list the ones that we will be using.
Controlling Account - an account in a general ledger that summarizes all accounts in a subsidiary ledger.
We will use the Accounts Receivable and Accounts Payable subsidiary ledgers.

3. Explain where controlling accounts are maintained.
They are maintained in the subsidiary ledger

4. What is the relationship between a controlling account and a subsidiary ledger?
The Subsidiary ledger has the names of all of the vendors/customers involved in the Accounts Payable and Accounts Receivable transactions. The Controlling accounts are the titles which include "Accounts Payable" and "Accounts Receivable".

5. Identify in writing the two schedules that we will prepare.
Schedule of Accounts Receivable and Schedule of Accounts Payable

6. List the rules for posting a journal's column totals.
General amount column totals are not posted
Special amount column totals are posted.

7. Explain why the 3-column account form used in an accounts receivable ledger has a debit balance column.
The Accounts Receivable accounts have a normal balance on the debit side because they are assets. Assets have a normal debit balance

8. What is the title of the balance amount column of the accounts payable ledger form and why is that title used?
The normal balance column is the credit side because it is a liability.

9. List the steps for starting a new page in the accounts payable ledger.
1. Write the vendor name.
2. Write the vendor number on the Vendor No. line.
3. Write the date in the date column.
4. Write the word Balance in the item column.
5. Place a check mark in the Post. Ref. column to show that the amount has been carried forward from a previous page rather than posted from a journal.
6. Write the account balance in the proper column.

10. List the steps for posting to the accounts receivable ledger.
1. Write the date in the Date column of the account.
2. Write the journal page number in the Post. Ref. column of the account.
3. Write the amount in the debit/credit column of the account.
4. Add the amount in the debit/credit column to the previous balance in the Debit/Credit Balance column. Write the new account balance in the Debit/Credit Balance column.
5. Write the customer number in the Post. Ref. column of the journal.

The World of Accounting

Tuesday, November 13, 2007

What is the difference between a Proprietorship and a Partnership?

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Chapter 12 - Posting to General and Subsidiary Ledgers