Identify various matters that need adjustments at the time of admission of a new partner.
The following are the various items that need to be adjusted at the time of admission of a new partner.
1. Profit Sharing Ratio: Calculation of new profit sharing ratio.
2. Goodwill: Valuation and adjustment of goodwill among the sacrificing old partners.
3. Revaluation of Assets and Liabilities: Assets and liabilities are revalued to ascertain the current value of the assets and liabilities of the partnership firm. Moreover, the profit or loss due to the revaluation need to be distributed among the old partners.
4. Accumulated profits, losses and reserves are distributed among the old partners in their old ratio.
5. Adjustment of capital of the partners.
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If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated?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 the meaning of Receipt and Payment Account.
What are the features of Receipt and Payment Account?
What is subscription? How is it calculated?
On what occasions sacrificing ratio is used?
Explain the process dissolution of partnership firm?
Write the various matters that need adjustments at the time of retirement of partner/partners.
State the accounting treatment at the time of dissolution of a firm for:
i. Unrecorded assets ii. Unrecorded liabilities
State the difference between dissolution of partnership and dissolution of partnership firm.
Why it is necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?
What is Capital Fund? How is it calculated?
Very nice answer of this question