Partnership Agreement
Accounting glossary · Understand, connect, apply
A partnership agreement sets out the partners’ rights, responsibilities and arrangements for operating their business.
Example
An agreement specifies initial contributions, profit-sharing ratios, decision-making rights and how a partner may leave.
Remember the difference
A profit-sharing ratio need not equal the capital contribution ratio. Applicable law may supply rules where the agreement is silent.
Updated 3 November 2026. Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
← Return to the accounting glossary