• Shares of profits and losses
• Capital introduced and withdrawn by each partner
• Drawings made by each partner
• Whether any partners are to receive a guaranteed salary (for example, if only one partner works full-time for the partnership)
• Interest charged on drawings (to discourage individual partners from drawing excessive amounts)
• Interest allowed on capital balances (to reward those partners who have invested more than others).
Occasionally, partners cannot agree over vital matters such as how to split profits and losses. In such cases the Partnership Act 1890 states that they should be shared equally.
Capital accounts and current accounts
Partnership capital accounts and partnership current accounts are the key accounts recording the details of each partner. Sometimes all relevant transactions are recorded in capital accounts, which work in a similar way to a sole proprietor's capital account. In many partnerships, capital accounts record only {fixed' agreed capital balances, with all other transactions recorded in 'current' accounts (not to be confused with bank current accounts).
Partnership income statements
When preparing a partnership's financial summaries, the income statement will be produced in exactly the same way as that for a sole proprietorship. The only additional information, an appropriation account, comes in a separate section after the net profit or loss has been determined, as the profit or loss has to be 'appropriated' between the partners according to their partnership agreement. If partners have also agreed to pay themselves salaries or charge interest on drawings or capital, these items are also shown in this section.
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