What Are the Steps for Dissolving a Partnership?

According to China's "Partnership Enterprise Law", a partnership enterprise is a for-profit organization in which partners enter into a partnership agreement, jointly fund, manage partnerships, share revenue, share risks, and assume unlimited joint and several liability for the debts of the partnership enterprise. In order to regulate the accounting work of partnerships, in addition to strictly complying with laws and regulations such as the Accounting Law and Basic Accounting Standards for Work, before the accounting norms for partnerships have been promulgated, related businesses can be handled with reference to the current industry accounting system. Its daily business accounting work. However, due to the nature of the partnership and the characteristics of its organizational form, partnership accounting also has its own characteristics that are different from those of other organizations.

Partnership Accounting

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Modern enterprises are usually organized in the form of sole proprietorships, partnerships and corporations. A partnership enterprise has many similarities to a sole proprietorship. For example, investors have unlimited liability for corporate debt, do not have legal personality, and investors and managers are equal. However, since the sole proprietorship has only one owner, and the partnership has multiple partners to jointly fund the establishment, because the partnership enterprise has more independence of the accounting entity than the sole proprietorship, the accounting of the owner's equity is more complicated than the sole proprietorship, and the profit and loss Allocation is also not included in the accounting of sole proprietorships, except that the two are basically the same. Compared with company-based enterprises, partnership companies have different legal qualifications, investor responsibilities, investor-manager relations, equity settings, and transfers, so there are many differences in accounting theory and practice methods. Here It mainly analyzes the characteristics of partnership accounting through the comparison of partnership accounting and company accounting.

(1) From the perspective of accounting assumptions, the accounting entities and continuing operations assumptions in partnership accounting are different from those of corporate companies

1. A partnership is not a legal person. Corporate responsibility is closely linked to the individual responsibility of the partner, the behavior of the partner is closely related to the partnership, and the property boundary between the partner and the partnership is not very clear, which determines that it is not a completely independent accounting entity. However, the "Partnership Law" has clear regulations on the business registration of the partnership, the order of debt settlement, the partner's capital contribution, the transfer of property shares, the occupancy and withdrawal, dissolution and liquidation, etc., which makes the partnership It has relative independence in civil rights, civil liabilities, and corporate property. Therefore, the partnership also has the independence of the relative accounting subjects. This feature is reflected in accounting. On the one hand, accounting strictly divides the partners' personal property and the assets invested by the partners in the partnership; on the other hand, accounting still needs to reflect the close relationship between partners and partnerships. For example: Partners can withdraw funds from the partnership, but they must be accounted for and controlled through the withdrawal account; the salary of the partner is not included in the expenses of the partnership; when the assets of the partnership are insufficient to repay the liabilities, the partners must invest in the enterprise with personal property To repay partnership debts; loans between partners and partnerships are used as assets and liabilities of the partnership in the daily economy, and as a component of partnership rights when the company is dissolved and liquidated.

2. Partnerships have limited life. A partnership is established on the basis of a partnership agreement. If the duration of the partnership is specified in the partnership agreement, it is determined that the partnership will not operate forever. In addition, the addition of new partners or the withdrawal of the former partners may lead to the dissolution of the partnership, so the accounting assumptions of continuing operations are also limited. The method of amendment is: First, in the normal business process before the dissolution of the partnership business, it is regarded as a continuous operation. When the business period of the partnership business can be determined, the accounting period should consider the operating period, such as goodwill and other intangible assets. The selection of the amortization period should be appropriately selected in the benefit period, legal validity period, and business period. If neither the benefit period nor the legal validity period is specified, and the operating period exceeds 10 years, it is amortized over a period of not less than 10 years. Second, when the partnership is interrupted and inherited due to changes in partners, the accounting method of the partnership must be adjusted according to changes in accounting policies. The more common method is to adjust the partners' profit and loss distribution method.

(2) From the perspective of accounting account settings, the biggest difference between a partnership enterprise and a corporate enterprise is the different accounting methods for owner's equity.

1. Set up a Partner Capital account when partners invest. This account is equivalent to the "paid-in capital" account in the company's accounting, except that the "partner capital" account, in addition to recording the original investment amount, additional investment amount, and reduced investment amount of each partner, should also be recorded by " The profits and losses of the partnership enterprise that should be shared and carried forward by each of the partners in the Profit and Loss Summary account distribution. A partnership enterprise generally does not have a "capital reserve" account, and various added value caused by the investment of capital can be directly counted into the "partner capital" account. A partnership enterprise does not need to set up a "surplus reserve" account, and the profits realized by the partnership enterprise should be fully paid to the partners through withdrawal or additional investment. Because the partners have unlimited liability for the debts of the partnership, the "Partnership Law" does not impose additional restrictions on the individual's personal investment or withdrawal of capital except for the consent of all partners, so the partnership should stipulate capital reduction conditions through an agreement. In order to prevent partners from arbitrarily reducing investment or arbitrarily using the assets of the partnership, the normal operation of the partnership is guaranteed.

2. In order to reflect the formation and distribution of the partnership's income, a "profit and loss summary" account should be set up. This account is equivalent to the "profit for the year" and "profit distribution" accounts in corporate accounting. The difference is that in addition to the "profit and loss summary" account, in addition to recording the amount of income and expenditure transferred from the relevant account in the current period, and the number of profit and loss distribution, the balance at the end of the period should be carried forward to the "partner capital" account. In terms of the method and proportion of the profit and loss distribution of the partnership, unlike the corporate system, the proportion of the profit and loss distribution does not need to be consistent with the capital contribution ratio of each partner. In addition, in order for partnerships to strengthen their ability to withstand risks and achieve long-term development, they must first establish risk funds and development funds in the distribution of profits and losses. The "two golds" belong to the rights and interests of partners, and the rest of the income is between the partners. distribution. The basis for distribution should consider labor factors, capital factors, partners' ability to bear risks, or their combination.

3 When a partner draws on the assets of a partnership, a "partner withdraw" account is set up. Since partnerships pay their partners in the form of income distribution, partnership agreements usually allow partners to withdraw an appropriate amount from the estimated share of the benefits on a monthly or weekly basis, which can also be considered as a partner's salary. In addition, partners may also use the physical or other assets of the partnership, or retain the recovered partnership account. These businesses should be accounted for exclusively through "Partner Withdrawal" accounts. The debit balance of this account at the end of the period shall be transferred to the corresponding "Partner Capital" detail account as a reduction of capital. Although the use of the assets of the partnership by the partners will reduce the equity of the partnership, it is not the cost of the partnership because it is not done to obtain operating income. This account allows us to understand the withdrawal records of each partner over a certain period, and then compares the withdrawal amount agreed in the agreement in order to establish accounting control for excess withdrawals.

4 When a partner needs funds, he may temporarily withdraw a sum from the partnership, or temporarily retain the money paid by an external client to the partnership, and the partner is willing to handle the loan. This type of business should be through a "Partners Receivable Loans" account, not a credit partner withdrawal account. Correspondingly, when a partnership requires funds, partners may lend to the partnership. At this time, it cannot be considered as an increase in the partner's capital, but is credited to the "Partner Loans Payable" account. Borrowing loans between partnerships and partners are used as assets and liabilities of the partnership in daily operations. However, due to the unlimited liability of partners for corporate debt, such loans should be merged into the "Partner Capital" account as part of the partner's rights and interests during the liquidation of the enterprise. It can be seen that, whether in the equity of partners, capital accumulation, business accumulation, withdrawal of partners or business profits and losses, all are ultimately classified as "partner capital" accounts opened by each partner.

(C) from the perspective of accounting methods. There are also many special aspects of partnership accounting that differ from corporate accounting in terms of capital contribution, profit and loss distribution, partner changes, dissolution and liquidation, etc.

1. Since the partnership is contract-based, the partners' share of capital in the partnership may not match the fair value of their capital contribution. According to the "Partnership Enterprise Law", in addition to using the fair value of cash or non-cash assets as an investment, partners can also use labor services to contribute capital. That is, some partners can provide some special labor services, which have a high value content and can produce special economic benefits, so they are allowed to be used as an investment method for partnership enterprises. In this case, accounting should be based on the nature of its labor services, as a company's start-up costs, dividends, goodwill, or use human resources accounting theory to confirm its human capital. In addition, the proportion of the partners' income distribution from the partnership may not be consistent with their share of capital. The distribution of the profits and losses of the partnership may be directly distributed in a fixed proportion as stipulated in the agreement; it may also be distributed in the form of salary and capital remuneration, and then the residual income shall be distributed in a fixed proportion. These accounting methods are specific to partnership accounting and do not exist in corporate accounting.

2. The change of owner does not affect company accounting, but in the accounting of partnerships, it needs to be dealt with in a more complicated and specialized way. Taking the occupancy process as an example, a new partner can be engaged in two ways. One is to subscribe all or part of the partnership rights to an existing one or more partners, and the second is to invest in the partnership. In the first case, the partnership transfer price negotiated between the new and old partners and the method of payment of the price are purely transactions between individuals and have nothing to do with the partnership. Therefore, in the accounting treatment, it is only necessary to make a transfer record of the transferred capital. In the second case, the total assets and capital of the partnership will increase. Due to the different operating conditions of the original partnership enterprise, the new partners may invest in the same assets to join the partnership. It is possible that the good profitability of the original partner due to the painstaking operation of the original partner will require the new partner to pay a higher price than the partnership rights obtained. Or, it is also possible that the new partner has a higher reputation or the ability to bring higher profits to the enterprise, and the original partner will be willing to give the new partner partnership rights higher than its investment value. For the difference between the capital obtained by the new partner and its investment, there are two accounting methods for accounting, namely the dividend method and the goodwill method. The former is greater than the latter, the bonus or goodwill is given to the new partner, and the capital of the original partner is reduced according to the prescribed profit and loss distribution ratio. On the contrary, the original partner is given and the original partner's capital is increased in accordance with the prescribed ratio. The accounting treatment for withdrawal is similar to that for admission.

3 The dissolution and liquidation of a partnership is a special accounting practice of a partnership and is not available in corporate accounting. The accounting procedures for its liquidation shall be carried out according to the following steps: first, the property of the partnership shall be cleaned up, and the balance sheet, property list and debt and debt list shall be analyzed and prepared. Second, recovering claims and converting non-cash assets into cash. Third, deal with the outstanding affairs of the partnership related to liquidation and pay the liquidation expenses. Fourth, the liquidation gains and losses generated in the above two and three steps are allocated and recorded in the capital account of each partner according to the profit and loss distribution method stipulated in the partnership contract. Fifth, pay off corporate debt. If the debt is insolvent, the partners must pay off their personal property. If a partner is unable to pay its share, other partners will be jointly and severally liable. In the accounting treatment, the capital account of each partner should be adjusted accordingly. Sixth, return the partner's capital contribution. That is, the remaining cash is allocated based on the balance of the partner's capital account.

(4) From the perspective of accounting statements, the partnership enterprise has all the same characteristics as other organizations in terms of preparation purpose, type of report, preparation time, and display method.

In order to reflect the financial status and operating results of the partnership, in addition to the preparation of the "balance sheet", "profit and profit distribution" and "cash flow statement", the partnership should reflect in detail the contributions, withdrawals, and partnerships of the partners. For profit and sharing of losses, a Partner's Capital Statement should also be prepared to explain the changes in the partners 'equity and the total amount of partners' equity. It is a basic statement prepared for the complete description of the changes in partners capital accounts each year. Statements also serve as a bridge between the balance sheet and the income statement.

The accounting statements submitted by the partnership enterprises are all annual reports, and monthly statements are generally not required. The presentation method of the accounting statements of the partnership enterprise and other enterprises is basically the same, but it is different in the presentation of this aspect because of the special nature of the partner's capital accounting. If the capital is divided into development funds, venture funds, and partner capital items on the "balance sheet", the loan receivables from partners and the loans payable to partners should be separately listed in long-term assets and long-term liabilities to emphasize Its particularity or importance. For another example, in the cash flow statement, since the change in capital of the partner will have an impact on the cash flow of the partnership, the cash flow project of the financing activity should include the investment increased by the partner in the form of cash. It shall include the capital reduced by the partners in cash and the withdrawals of partners recorded in the withdrawal account.

Due to the partnership's own and external reasons, the partnership has many problems in accounting, accounting management, and internal accounting control.

(I) Problems in Accounting

1. The boundaries between corporate property rights and personal property are unclear. In China, the owners and operators of partnerships are generally partners themselves. Therefore, the ownership and operating rights of partnerships cannot be strictly separated like large enterprises. Especially in township partnership enterprises, the partners are the operators, and corporate property and personal family property often occupy each other. They believe that the property of the enterprise is their own and can be used arbitrarily as long as they need it. For example, some partners move the company's temporarily idle desks and chairs home, and even some partners use the company's warehouse as their own private garage, and so on. This has brought considerable difficulties to the accounting work.

2. Accounting agencies and staffing are irregular. The quality of accounting personnel in partnership enterprises is generally low, and they are not motivated. They are often helpless in the face of new situations. The accounting posts are not set up in accordance with the requirements of the Accounting Law, resulting in unclear job responsibilities and shirk responsibilities when problems occur. According to the survey, the current knowledge update of the accounting team of the partnership enterprise lags behind, and the accounting methods and financial management concepts cannot keep up with the needs of the development of the situation, especially the cost awareness is very weak. The accounting responsibilities of some units are unclear, and even the cashier manages both bank accounts and claims and debts.

3 The accounting method is simple. At present, partnerships only value accounting bookkeeping, accounting and reporting, and ignore accounting supervision and accounting analysis. From the source of the accounting data, the control of the original voucher is not strict enough. Substandard invoices, receipts, and even white slips can be reimbursed to the person's account. From the management and accounting of the assets, it is concentrated as the management system is not perfect, resulting in inconsistent accounting. The mismatch of accounts and accounts affects the authenticity of asset information; in the calculation of liabilities, the randomness of the company's accounts payable category of people's accounts is relatively arbitrary, resulting in the end of the month's reflection of assets and liabilities does not meet the principles of authenticity and timeliness. Requirement; In the calculation of income cost, some partners need to obtain more economic benefits, the loss can be made profitable, the profitable can be made into a loss, the phenomenon of over-calculation or under-calculation is common.

4 Profit and loss distribution is chaotic. At present, the distribution of partnerships is chaotic. They do not distribute profits and losses in a reasonable order at all. A considerable part of the partnerships eventually disbanded because of the problem of income distribution.

(II) Problems in Accounting Management

1. Accounting agencies are not sound. On the one hand, due to their small size, some partnerships often do not set up an accounting agency and entrust all accounting work to an accounting firm. On the other hand, although some partnerships have an accounting agency, the accounting agency is useless and cannot perform accounting management. effect.

2. The quality of accounting staff is generally low. The survey found that, except for a few more mature large-scale partnerships, the accounting staff had better professional knowledge, and the vast majority of the partnership's accounting staff did not have a professional accounting background and did not have professional titles in accounting. Many finance and accounting personnel in partnerships rely on relationships rather than their own professional level, and even some of them have been illegally employed without obtaining an accounting qualification certificate. They know very little about the new rules of finance and accounting, the actual operation technology is backward and the update speed is slow. Most financial and accounting personnel have very weak legal concepts. They do not know much about the "Basic Accounting Standards", "Accounting Law" and other relevant laws and regulations, and the self-discipline of financial brokers is very poor. Report.

(3) Problems in internal control

1. Not enough understanding of the internal control system. The internal control system is a dynamic mechanism of mutual influence and mutual restraint formed by various business departments or personnel of an enterprise in the course of business operation. It is a general term for various methods, measures and procedures with control functions. It is by no means equivalent to regulations. A system is not the same as internal management, nor is it an organizational plan. Internal control must be based on the premise of effectiveness. The key is the operator and employees who are the main body of the internal control system. Due to the discrepancy in the understanding of internal control between some operators and employees of partnerships, enterprises have not realized the important role of the internal control system, which has led to confusion in the management of enterprises.

2. There is no internal control system. In China, the partners of most partnerships are not too familiar with accounting. They only know that profit is the most important, and the internal accounting control system will hinder their behavior and decision-making. They believe that in order to succeed, it is enough to rely on their judgment and adventurous spirit of the market. There is no need to set up a troublesome internal accounting control system, so they simply do not make it. The flour factory in Haihe Town, Sheyang County mentioned above does not have an internal accounting control system. In order to make the enterprise pay less income tax, the partners deliberately instructed the accountants to reduce their revenues and more costs and expenses. This phenomenon is common in partnerships.

3 An internal control system is in place, but it is useless. Some partnerships have developed complete internal accounting control systems but have not implemented them. This situation is even more terrifying. The absence of an internal accounting control system will inevitably attract the attention of investors and regulators, and relevant parties will urge the enterprise to improve the internal accounting control system and supervise its implementation. There are systems that are not implemented but they are very deceptive and can easily lead to disaster.

(I) Strengthen education and supervision of accounting personnel

The financial department should strictly audit the accounting staff of the partnership. First of all, the qualification management system is implemented for the accounting personnel of the partnership. The accounting personnel employed by the enterprise must have a certain degree and hold an accounting qualification certificate recognized by the national financial department, otherwise a certain punishment will be imposed on the enterprise. Second, whether the accounting personnel have performed their duties seriously and the accountants who have not performed their duties seriously Personnel shall cancel their qualifications, revoke their qualifications for employment, and pursue corresponding legal responsibilities. Finally, regular training and professional ethics education shall be provided to accountants to continuously improve their professional and ethical standards and give full play to their role.

(2) Establish and improve the accounting management control system

Under normal circumstances, the education level of the managers of partnership enterprises is generally not high, and the financial management consciousness is weak. Many accounting management systems are ineffective or non-existent. Establishing a sound accounting management system is an important guarantee to implement accounting regulations and ensure the orderly progress of the unit's accounting work. It is also an important means to strengthen the accounting work. Specifically, the following systems should be established:

(1) Establish a sound internal audit system. Simply put, it is the internal audit personnel's review of accounting operations and accounting information. Accounting audit is an important part of accounting work. We can timely correct and stop the negligence and errors that occur in the daily work of an enterprise through audits. The internal audit system is an important measure to ensure the quality of accounting work.

(2) Establish a sound internal containment system. For the separation and restriction of incompatible positions, any work involving the receipt, payment, settlement and registration of corporate funds and property must be handled by two or more people in order to play a restrictive role; Various expenditures also adopt a containment system. It is stipulated in the approval process that each financial expenditure should be approved in accordance with the prescribed approval process in order to control the unreasonable expenditure of the partnership.

(3) Establish a sound financial accounting analysis system. A partnership enterprise can establish the financial analysis system in its daily work, clarify the content and methods of financial accounting analysis, and enable the enterprise to continuously check the implementation of national financial regulations and systems, as well as its financial plans and financial indicators According to these conditions, we will make timely predictions of future work and continuously improve the financial accounting work of the enterprise, so that the financial work of the enterprise is carried out in an orderly manner.