Appendix D

Appendix D - Appendix D Conceptual Accounting for...

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Accounting for Partnerships D C A P Conceptual Identify characteristics of partnerships and similar organizations. (p. D-2) Analytical Compute partner return on equity and use it to evaluate partnership performance. (p. D-14) Procedural Prepare entries for partnership formation. (p. D-5) Allocate and record income and loss among partners. (p. D-5) Account for the admission and withdrawal of partners. (p. D-8) Prepare entries for partnership liquidation. (p. D-12) C1 A1 P1 P2 P3 P4 Learning Objectives A Look at This Appendix This appendix explains the partnership form of or- ganization. Important partnership characteristics are described along with the accounting concepts and procedures for its most fundamental transactions. Appendix
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Skating Partners NEW YORK, NY—In a Chinatown loft just off New York’s Canal Street, Rookie Skateboards ( RookieSkateboar ) creates skateboard decks and apparel. But founders Catharine Lyons and Elska Sandor run a different sort of business. “Although we are women and happen to be the first women owned and operated skateboard com- pany,” says Catharine, “we run a company that simply celebrates the art and spirit of skate boarding.” Adds Elska, “Tomboy can be chic— although skating is perhaps more difficult in a knee-length skirt.” The partners quickly learned there is more to the skate business than skating. Knowledge of partnerships and their financial implications became important to Rookie’s success. “It’s been hard for us to catch up with the business side of it,” says Catharine. “We don’t have much enthusiasm for the unpleasant details of running a business.” Yet she stresses the importance of attending to partnership formation, agree- ments, and financials to stay afloat. Success is causing their partnership to evolve. “We want to offer a unique route for all skateboarders and especially girls, but at the same time we want to be considered a legitimate skateboard company, not a novelty,” says Catharine. “I don’t feel the need to make a point of being a woman.What I’m doing is—in the end—about skating.” As their skateboards and apparel evolve, the partners have not sold out. “I don’t have to have daisies on my board,” says Elska. “I can play with the same toys and still be a girl in the end. We are certainly not women trying to be men.” Still, the partners are gaining business savvy. “We’re trying to get ourselves as streamlined and efficient as possible,” says Catharine. “Rookie embodies an enthusiasm and positive outlook for the future while keeping a ‘scrappy’ edge.” The partners also know to ask for help.When starting a partner- ship “it’s good to be honest about what you are good at and what you are not, and align yourself with good professionals, like account- ants, to fill in the gaps,” says Catharine. “Don’t take yourself too seriously. Laugh a lot, and at yourself. Know how to enjoy yourself.
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Appendix D - Appendix D Conceptual Accounting for...

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