Accounts - 5. page

Revaluation of Assets and Liabilities Revaluation is the valuation of assets and liabilities at the time of reconstitution of the partnership firm. At the time of admission of a partner, […]

Methods of valuation of goodwill: There are three methods of valuation of goodwill. They are: 1) Average Profit method 2) Super Profit method 3) Capitalisation method However, we are discussing […]

Admission of a partner : A Partnership firm suffering from shortage of funds or administrative incapabilities may decide to admit a partner. Admission of a partner is one of the […]

Adjustments : While admitting a new partner, the following adjustments are necessary: 1. Recording the Capital of a new partner 2. Calculation of New Profit Sharing ratio and Sacrificing ratio […]

Factors affecting the value of goodwill : Goodwill relates to the profit earning capacity of the firm. Thus, the goodwill of a firm is affected by the following factors. The […]

Interest on capital: Interest on capital is allowed to partners only, if the partnership deed specifically allows it. Interest is usually calculated on the opening capital and on the capital […]

Interest on Drawings : Drawings is the amount withdrawn in cash or in kind, for personal purposes. A Drawings Account is opened in the name of each partner and the […]

Salary or Commission to Partners: Some partners may devote more time or possess better skills and experience in comparison with their fellow partners. As a result, they should be allowed […]

Preparation of Profit and loss appropriation account : Illustration :  Mahesh and Ramesh are partners sharing profits in the ratio of 3:2 with capitals of Rs.50,000 and Rs.40,000 respectively. Interest […]

Goodwil l: When a firm is reconstituted, goodwill is valued and shared by the existing partners. Goodwill is the present value of a firm’s anticipated excess earnings in future and […]