A and B were partners in a firm sharing profits and losses in the ratio of 4 : 3. They admitted C as a new partner. The new profit sharing ratio between A, B and C was 3 : 2 : 2. A surrendered 1⁄4 of his share in favour of C. Calculate B’s Sacrifice.
There are two ways of solution of the problem:
Way 1 :
A's sacrifice = A's Old ratio - A's New Ratio
= 4/7 - 3/7
= 1/7
B's sacrifice = C's Share - A's sacrifice
= 2/7 - 1/7
= 1/7
Way 2 :
B's sacrifice = B's Old share - B's New share
= 3/7 - 2/7
= 1/7
What is Capital Fund? How is it calculated?
What is sacrificing ratio? Why is it calculated?
If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated?
Why there is need for the revaluation of assets and liabilities on the admission of a partner?
What is subscription? How is it calculated?
List the items which may be debited or credited in capital accounts of the partners when:
(i) Capitals are fixed.
(ii) Capital are fluctuating.
Why is Profit and Loss Adjustment Account prepared? Explain.
If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?
Why it is considered desirable to make the partnership agreement in writing.
On what occasions sacrificing ratio is used?
State whether the following statements are true or false:
(i) Valid partnership can be formulated even without a written agreement between the partners;
(ii) Each partner carrying on the business is the principal as well as the agent for all the other partners;
(iii) Maximum number of partners can be 50;
(iv) Methods of settlement of dispute among the partners can’t be part of the partnership deed;
(v) If the deed is silent, interest at the rate of 6% p.a. would be charged on the drawings made by the partner;
(vi) Interest on partner’s loan is to be given @ 12% p.a. if the deed is silent about the rate.
Why it is considered desirable to make the partnership agreement in writing.
How deficiency of crditors is paid off at the time of dissolution of firm.
Explain the process dissolution of partnership firm?
List the items which may be debited or credited in capital accounts of the partners when:
(i) Capitals are fixed.
(ii) Capital are fluctuating.
On dissolution, how will you deal with partner’s loan if it appears on the
(a) assets side of the balance sheet, (b) liabilities side of balance sheet.
What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?
On what account realisation account differs from revaluation account.
State the meaning of ‘Not- for- Profit’ Organisations.
Why is Profit and Loss Adjustment Account prepared? Explain.