Net increase in working capital other than cash and cash equivalents will increase, decrease or not change cash flow from operating activities. Give reason in support of your answer.
The formula of working capital = Current assets - Current liability
Net increase in working capital denotes that inflow (decrease in current assets and increase in current liability) is more than outflow (increase in current assets and decrease in current liability).
So the impact would be the net increase in cash flow from operating activity.
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If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated?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?
Explain why it is considered better to make a partnership agreement in writing.
Why it is necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?
Why there is need for the revaluation of assets and liabilities on the admission of a partner?
State the meaning of Income and Expenditure Account.
What is Capital Fund? 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.
On what occasions sacrificing ratio is used?
Rani and Suman are in partnership with fixed capitals of Rs, 80,000 and Rs.60,000, respectively. During the year 2015-16, Rani withdrew Rs. 10,000 from her capital and Suman Rs. 15,000. Profits before charging interest on capital was Rs. 50,000. Rani and Suman shared profits in the ratio of 3:2. Calculate the amounts of interest on their capitals @ 12% p.a. for the year ended March 31, 2016.
Give two circumstances under which the fixed capitals of partners may change.
Discuss the main provisions of the Indian Partnership Act 1932 that are relevant to partnership accounts if there is no partnership deed.