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
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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?
How deficiency of crditors is paid off at the time of dissolution of firm.
Why there is need for the revaluation of assets and liabilities on the admission of a partner?
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?
Distinguish between firm’s debts and partner’s private debts.
List the items which may be debited or credited in capital accounts of the partners when:
(i) Capitals are fixed.
(ii) Capital are fluctuating.
What is subscription? How is it calculated?
What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?
State the meaning of Income and Expenditure Account.
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On what occasions sacrificing ratio is used?