A client of yours is considering investing in a partnership and has been analyzing the financial statements of the partnership Their analysis has resulted in the following observations that that they are hoping you could address 1 The balance sheet does not set forth the capital stock account at pa...

1 Investors in a partnership are not issued stock and have a capital balance rather than a capital stock at par value account Regarding the question o ...

A client of yours is considering investing in a partnership and has been analyzing the financial statements

Question:

A client of yours is considering investing in a and has been analyzing the of the Their analysis has resulted in the following observations that that they are hoping you could address:
1. The does not set forth the capital stock account at which would define some level of minimum legal liability.
2. The does not include any accrual for either state or federal income taxes even though the reported pretax income.
3. In analyzing the income statement, your client noted that no salaries to partners were listed as an expense even though they know that existing partners received a salary from the Interest on a partner’s capital balance is used as a means of allocating profits; however, no such interest appears on the income statement.
Provide a response to each of your client’s observations regarding the partnership’s Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...