Partnership firm is formed with an objective to earn profit. However, due to unforeseeable conditions, the loss may arise in the firm’s business. In this topic, we will discuss about the accounting treatment for profit or loss arising in the course of partnership business. In distribution, there are two methods which can be followed to properly document the transactions.
Methods of Profit or Loss Distribution
In accounting, we also called this distribution as appropriation of profit and loss in the partnership firm.