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Accounting Assignment - Partnerships, Limited Liabilty Companies and share capital

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Introduction

´╗┐Accounting 2 assignment by Carly Faulkner. BSMA1 ________________ The final accounts in relation to Sole traders and Partnerships. In the final accounts of a sole trader the capital is brought in by one individual. This person is entitled to all the profits. This also means that if the individual runs into difficulty and cannot meet his/her debt repayments the creditor can take the individual?s personal assets e.g. car, house, etc. In sole tradership the balance sheet will show only one capital account. Whereas in a partnership, the capital is brought in by more than one person and less than twenty, the profit is shared out in whatever proportion that is stipulated by their, ?Partnership Agreement? which is explained below. If there are three partners in the company then there will be three separate capital accounts, one for each partner. The structure of a partnership agreement. A partnership is an entity where ownership is divided between at least two people. Partnerships have unlimited liability. A partnership agreement is an agreement of the rights and liabilities of the partners of a company this will lay out ...read more.

Middle

The shareholders liability will be limited to the original price the person pays for the share, e.g. If an individual pays one euro for their share the maximum that shareholder can lose is one euro. The share capital has to stay within the company. Shareholders may not withdraw his share capital until the company is wound up. The Names and address of all directors and their shareholdings have to be registered. The Memorandum and Articles of Association must also be registered. Continuous Obligations All directors are accountable for anything that happens in the company. The directors are required to send in an Annual Return this will state any changes in particulars connected with the directors, the registered office and the Memorandum and Articles. It details any shares or mortgages taken out by the company. In other words it?s a file of detailed information about what is going on in the company throughout the year financially. It is the director?s duty to make sure all information is accurate. ...read more.

Conclusion

Equity shareholders are entitled to all the profits and losses of the company. Preference shares Preference shareholders do not have a share of the ownership of the business. They are not entitled to profits or assets in the event of the company being wound up. They are entitled to fixed dividends out of the profit of the company. If an individual has eight per cent preference share then at the end of the year that individual will make eight cent for every one euro worth of shares held. Share nominal value This is where a company issues shares there has to be a nominal value. This is designed when the promoters are drafting the Memorandum and Articles. Nominal value shares value at one euro but nominal values of fifty, twenty five, ten and five cents can be found. Whatever value chosen has little importance. If five thousand euro share capital has to be raised then the directors would have to issue five thousand equity shares for one euro or two thousand five hundred at fifty cent each. If an individual bought a thousand shares then that individual would own twenty per cent of the company. ...read more.

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