1 ACC 405 Final Project Two Guidelines and Rubric Overview In the role of the accountant, decisions are not always made based on what the numbers show. There are often ethical considerations in addition to financial considerations. While the rules and guidelines of the Generally Accepted Accounting Principles (GAAP) are set firmly in place, it is up to the accountant to interpret them. For Final Project Two, you will create a memo to help three partners in a business fairly decide how to split the profits from the first year of their business. While one of the partners has infused the most cash into the business, the others have brought value in unique ways—including attracting customers and overseeing the day-to-day activities. The final product will be submitted in Module Seven. In this assignment, you will demonstrate your mastery of the following course competencies:  ACC-405-01: Analyze economic activity of complex or unique business situations.  ACC-405-03: Explore the impact of emerging domestic, global, and technological factors that could affect financial reporting. Prompt Compose a memo addressing the allocation of profits to three partners of a new business: Alan, Bob, and Carol. It is your responsibility to address the potential ways in which the first-year profits can be divided among these partners, including whether the partners should be taking a salary, how the partners’ capital accounts may be affected by various decisions, and the most ethical way that the profits could be divided. Your memo should answer the following prompt: A new business client comes to your office. There are three owners of the business. The three individuals, Alan, Bob, and Carol, are thinking about forming a partnership. Alan is only investing $1 million in cash. He will not have anything to do with the daily activities of the business. Bob has had some experience in the business and will be responsible for the day-to-day operations of the business. Carol has a great deal of experience and many contacts within the business. She will be responsible for attracting new clients. Neither Bob nor Carol are investing cash into the partnership. During the first year of operation, the partnership generated a profit of $150,000. None of the partners received distributions during the year. 2 Specifically, the following critical elements must be addressed: I. Allocation of Profits A. Explain how allocating the profits evenly between the partners would work. Consider the fairness to each of the partners in your response. [ACC-405-03] B. What would be the value of each partner’s capital account at the end of the year, given that the profits were allocated evenly among the three? Support your answer with quantitative data and an explanation of how you came to this conclusion. [ACC-405-01] C. Explain an alternative method of allocating the profits if 80% of the profits was given to the cash investo.

1. 1
ACC 405 Final Project Two Guidelines and Rubric
Overview
In the role of the accountant, decisions are not always made
based on what the numbers show. There are often ethical
considerations in addition to financial
considerations. While the rules and guidelines of the Generally
Accepted Accounting Principles (GAAP) are set firmly in place,
it is up to the accountant to
interpret them.
For Final Project Two, you will create a memo to help three
partners in a business fairly decide how to split the profits from
the first year of their business. While
one of the partners has infused the most cash into the business,
the others have brought value in unique ways—including
attracting customers and overseeing
the day-to-day activities.
The final product will be submitted in Module Seven.
In this assignment, you will demonstrate your mastery of the
following course competencies:
-405-01: Analyze economic activity of complex or
unique business situations.

2. -405-03: Explore the impact of emerging domestic,
global, and technological factors that could affect financial
reporting.
Prompt
Compose a memo addressing the allocation of profits to three
partners of a new business: Alan, Bob, and Carol. It is your
responsibility to address the potential
ways in which the first-year profits can be divided among these
partners, including whether the partners should be taking a
salary, how the partners’ capital
accounts may be affected by various decisions, and the most
ethical way that the profits could be divided.
Your memo should answer the following prompt: A new
business client comes to your office. There are three owners of
the business. The three individuals, Alan,
Bob, and Carol, are thinking about forming a partnership. Alan
is only investing $1 million in cash. He will not have anything
to do with the daily activities of the
business. Bob has had some experience in the business and will
be responsible for the day-to-day operations of the business.
Carol has a great deal of experience
and many contacts within the business. She will be responsible
for attracting new clients. Neither Bob nor Carol are investing
cash into the partnership. During
the first year of operation, the partnership generated a profit of
$150,000. None of the partners received distributions during the
year.

3. 2
Specifically, the following critical elements must be addressed:
I. Allocation of Profits
A. Explain how allocating the profits evenly between the
partners would work. Consider the fairness to each of the
partners in your response.
[ACC-405-03]
B. What would be the value of each partner’s capital account at
the end of the year, given that the profits were allocated evenly
among the three?
Support your answer with quantitative data and an explanation
of how you came to this conclusion. [ACC-405-01]
C. Explain an alternative method of allocating the profits if 80%
of the profits was given to the cash investor and the remaining
amount was split
evenly between the other two partners. [ACC-405-03]
D. What would be the value of each partner’s capital account at
the end of the year, given this alternative allocation method?
Support your
answer with quantitative data and an explanation of how you
came to this conclusion. [ACC-405-01]
II. Payment of Salary
A. Should the two partners who are working in the business
receive a salary? Why or why not? Be sure to support your
decision with research and

4. quantitative data. [ACC-405-03]
B. If the two non-investors did receive a salary, how would
their capital account be affected? How would this impact a
potential future liquidation
or buyout? Be sure to thoroughly explain and support your
answer. [ACC-405-03]
C. Should the cash investor receive a higher share of the profits
or other sharing options? Why or why not? Support your
opinions with research
and quantitative data. [ACC-405-03]
D. If the cash investor did receive a salary, how would his
capital account be affected? How would this impact a potential
future liquidation or
buyout? Be sure to thoroughly explain and support your answer.
[ACC-405-01]
E. How do the payment of salary and the allocation of profit
affect entries and the financial bottom line? Be sure to support
your explanation with
concrete examples. [ACC-405-01]
F. How could the payment of salary and allocation of profit be a
more effective method of splitting the company’s profits for the
three partners?
Explain a scenario in which the three partners would all be
compensated fairly, and support your answer with logical
reasoning. [ACC-405-03]
G. What would be the value of each partner’s capital account at
the end of the year, given your proposed fair allocation method?
Support your
answer with quantitative data and an explanation of how you

5. came to this conclusion. [ACC-405-01]
Deliverable
Final Submission: Partnership Accounting Memo
In Module Seven, you will submit your final project. It should
be a complete, polished artifact containing all of the critical
elements of the final product. This
submission will be graded with the Final Project Two Rubric.
3
Final Project Two Rubric
Guidelines for Submission: The memo should be about 2–3
pages in length and should use double spacing, 12-point Times
New Roman font, one-inch margins,
and citations in APA style.
Critical Elements Exemplary (100%) Proficient (85%) Needs
Improvement (55%) Not Evident (0%) Value
Allocation of Profits:
Allocating the Profits
[ACC-405-03]
Meets “Proficient” criteria and
expertly balances brevity with
detail

6. Explains a fair allocation of
profits to each partner, and
response is clear and free of
errors
Explains a fair allocation of
profits to each partner, but
response is unclear or contains
inaccuracies
Does not explain a fair
allocation of profits to each
partner
7.92
Allocation of Profits:
Value of Capital Account
[ACC-405-01]
Meets “Proficient” criteria,
demonstrates a complex grasp
of capital accounts, and
supports answer with strong
qualitative data
Provides value of each
partner’s capital account and
supports answer with
qualitative data
Provides value of each
partner’s capital account but
does not support answer with

7. qualitative data
Does not provide value of each
partner’s capital account
9.50
Allocation of Profits:
Alternative Method
[ACC-405-03]
Meets “Proficient” criteria and
illustrates a sophisticated
explanation of alternative
methods for allocating profits
Explains an alternative method
for allocating profits
Explains an alternative method
for allocating profits, but
response contains errors or is
illogical
Does not explain an alternative
method for allocating profits
7.92
Allocation of Profits:
Value of Capital Account
with Alternative
Allocation Method

8. [ACC-405-03]
Meets “Proficient” criteria and
provides keen insight into
capital accounts given the
alternative method
Calculates the value of each
partner’s capital account given
the alternative method
Calculates the value of each
partner’s capital account but
doesn’t consider the
alternative method, or
response contains errors or is
illogical
Does not calculate the value of
each partner’s capital account
using the alternative method
7.92
Payment of Salary: Salary
Distribution
[ACC-405-03]
Meets “Proficient” criteria and
demonstrates a sophisticated
awareness of salary
distributions
Determines whether or not
the two partners should
receive a salary and explains

9. why or why not
Determines whether or not
the two partners should
receive a salary but does not
explain why or why not
Does not determine whether
or not the two partners should
receive a salary
7.92
Payment of Salary: Non-
Investor Capital Accounts
[ACC-405-03]
Meets “Proficient” criteria and
makes cogent connections
between salary and capital
accounts
Considers if the non-investors
received a salary, how their
capital account would be
affected; thoroughly explains
and supports response
Considers if the non-investors
received a salary, how their
capital account would be
affected, but does not explain
or support response
Does not consider if the non-

10. investors received a salary,
how their capital account
would be affected
7.92
4
Critical Elements Exemplary (100%) Proficient (85%) Needs
Improvement (55%) Not Evident (0%) Value
Payment of Salary: Cash
Investor
[ACC-405-03]
Meets “Proficient” criteria and
cites specific, relevant
examples and data to establish
a robust context for analysis
Determines why or why not
the cash investor should
receive a higher share of the
profits and supports opinions
with research and quantitative
data
Determines why or why not
the cash investor should
receive a higher share of the
profits but does not support
response with research or

11. quantitative data
Does not determine why or
why not the cash investor
should receive a higher share
of the profits
7.92
Payment of Salary: Cash
Investor Capital Account
[ACC-405-01]
Meets “Proficient” criteria and
uses industry-specific language
to establish expertise
Thoroughly explains how the
cash investor’s capital account
would be affected if the
investor took a salary
Explains how the cash
investor’s capital account
would be affected if the
investor took a salary, but
response is not cohesive or
contains errors
Does not explain how the cash
investor’s capital account
would be affected if the
investor took a salary
9.50

12. Payment of Salary:
Financial Bottom Line
[ACC-405-01]
Meets “Proficient” criteria and
draws a connection between
payment of salary and the
bottom line of the company
that demonstrates expertise
Explains how the payment of
salary could impact the
financial bottom line of the
company and supports
argument with examples
Explains how the payment of
salary could impact the
financial bottom line of the
company but does not support
argument with examples
Does not explain how the
payment of salary could
impact the financial bottom
line of the company
9.50
Payment of Salary:
Splitting the Company’s
Profits
[ACC-405-03]

13. Meets “Proficient” criteria and
demonstrates a sophisticated
awareness of splitting
company profits
Explains a scenario in which
the payment of salary and
allocation of profit could be a
more effective method of
splitting the company’s profits
Explains a scenario for the
payment of salary and
allocation of profit, but it is not
more effective, or response
contains errors or is illogical
Does not explain a scenario in
which the payment of salary
and allocation of profit could
be a more effective method of
splitting the company’s profits
7.92
Payment of Salary: Value
of Each Partner’s Capital
Account
[ACC-405-01]
Meets “Proficient” criteria and
demonstrates a complex grasp
of capital accounts

14. Accurately calculates the value
of each partner’s capital
account at the end of the year
and supports answer with
quantitative data and
thorough explanation
Calculates the value of each
partner’s capital account at
the end of the year, but does
not support answer with
quantitative data or thorough
explanation, or response
contains errors or is inaccurate
Does not accurately calculate
the value of each partner’s
capital account at the end of
the year
9.50
Articulation of Response Submission is free of errors
related to citations, grammar,
spelling, syntax, and
organization and is presented
in a professional and easy to
read format
Submission has no major
errors related to citations,
grammar, spelling, syntax, or
organization
Submission has major errors
related to citations, grammar,

15. spelling, syntax, or
organization that negatively
impact readability and
articulation of main ideas
Submission has critical errors
related to citations, grammar,
spelling, syntax, or
organization that prevent
understanding of ideas
6.56
Total 100%