What steps are taken to prepare Income and Expenditure Account from a Receipt and Payment Account?
The following steps are taken to prepare Income and Expenditure Account (I&E) from Receipts and Payment Account (R&P).
Step 1: All the revenue expenditures paid for the current accounting period are transferred from the Payments side of R&P to the Expenditure side of I&E.
Step 2: All the revenue receipts for the current accounting period are transferred from the Receipts side of R&P to the Income side of I&E.
Step 3: Expenses outstanding for the current period and expenses paid in advance (prepaid expenses) for the current period in the preceding accounting periods are to be added (adjusted) to their related expenses in the Step 1.
Step 4: Income outstanding (accrued income) for the current period and income received in advance for the current period in the preceding accounting periods are to be added (adjusted) to their related incomes in Step 2.
Step 5: Non-cash items like depreciation, appreciation for the current accounting period are to be adjusted in the I&E.
Step 6: After adjusting all the revenue items for the current accounting period, the Income and the Expenditure sides are totaled. If the sum total of the Income side exceeds (or is lesser than) the sum total of the Expenditure side, then the balancing figure is termed as surplus (or deficit).
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If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated?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?
What is sacrificing ratio? Why is it calculated?
Explain the process dissolution of partnership firm?
If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated?
Give two circumstances under which the fixed capitals of partners may change.
State the difference between dissolution of partnership and dissolution of partnership firm.
Reproduce the format of Realisation Account.
List the items which may be debited or credited in capital accounts of the partners when:
(i) Capitals are fixed.
(ii) Capital are fluctuating.
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?