Accounting For Initial Investments
Because ownership rights in a partnership are divided among two or more partners, separate capital and drawing accounts are maintained for each partner.
Investment of cash
If a partner invested cash in a partnership, the Cash account of the partnership is debited, and the partner's capital account is credited for the invested amount.
Investment of assets other than cash
If a partner invested an asset other than cash, an asset account is debited, and the partner's capital account is credited for the market value of the asset. If a certain amount of money is owed for the asset, the partnership may assume liability. In that case an asset account is debited, and the partner's capital account is credited for the difference between the market value of the asset invested and liabilities assumed.
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