Question

How does partnership accounting differ from corporate accounting?

a. The matching principle is not considered appropriate for partnership accounting.
b. Revenues are recognized at a different time by a partnership than is appropriate for a corporation.
c. Individual capital accounts replace the contributed capital and retained earnings balances found
in corporate accounting.
d. Partnerships report all assets at fair value as of the latest balance sheet date.

Answer 1

Partnership accounting differs from corporate accounting in terms of revenue recognition, capital accounts, and the application of the matching principle.

Step-by-step explanation:

Partnership accounting differs from corporate accounting in several ways:

1. Revenues are recognized at a different time by a partnership than is appropriate for a corporation. In a partnership, revenues are divided among the partners based on the partnership agreement, while in a corporation, revenues are recognized and reported on the income statement.
2. Individual capital accounts replace the contributed capital and retained earnings balances found in corporate accounting. In a partnership, each partner has a separate capital account which reflects their investment and share of the partnership's profits or losses. In a corporation, contributed capital and retained earnings are used to track shareholders' equity.
3. The matching principle is not considered appropriate for partnership accounting. The matching principle, which requires expenses to be matched with revenues in the same accounting period, is more commonly used in corporate accounting. In a partnership, expenses are typically allocated based on the partnership agreement, rather than being matched with specific revenues.