Important questions : Admission of a Partner
IMPORTANT QUESTIONSCHAPTER 5: Admission of a PartnerWrite the effects of admission of a partner?Define new profit sharing ratio?X and Y are partners sharing profit in the ratio of 3 : 2. They admit Z as a new partner for ⅕th shares in profit. Calculate the new profit sharing ratio and sacrificing ratio.A and B are partners sharing profits and losses equally. They admit C, as a new partner who acquires his share as ⅕th from A and ¼th from B. You are required to calculate the …
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CHANGE IN PROFIT SHARING RATION AMONG EXISTING PARTNERS : MOST IMPORTANT QUESTION
CHANGE IN PROFIT SHARING RATION AMONG EXISTING PARTNERS : MOST IMPORTANT QUESTION
Define Sacrificing Ratio?Define Gaining Ratio?Aman, Yatin and Uma were partners sharing profits and losses in the ratio of 5 : 3 : 2. Uma retired and her share was taken over by Aman and Yatin in 5 : 3 ratios. Calculate the gaining ratio of Aman and Yatin.P, Q and R are partners sharing profits and losses in the ratio of 5 : 4 : 1. Calculate new profit-sharing ratio, sacrificing ratio and gaini…
CLASS 12TH GOODWILL: MOST IMPORTANT QUESTIONS
CLASS 12TH GOODWILL: MOST IMPORTANT QUESTIONSWhat do you mean by goodwill?Explain the different methods of valuation of goodwill?Pooja purchased Ritik’s business on 1st April, 2019. It was agreed to value goodwill at three year’s purchase of average normal profits of the last four years. The profits of Ritik’s business for the last four years were:-
Year endedRs.31st March, 201690,00031st March, 20171,60,00031st March, 20181,80,00031st March, 20192,20,000
Following are noticed…
CLASS 12TH PARTNERSHIP : MOST IMPORTANT QUESTIONS
CLASS 12TH PARTNERSHIP : MOST IMPORTANT QUESTIONSWhat are the essential features of a partnership?Write the contents for partnership deed?X and Y started business with capital of Rs. 1,00,000 and Rs. 60,000 on 1st April 2018. Y is entitled to a salary of Rs. 800 per month. Interest is allowed on capitals and is charged on drawings at 6% per annum. Profits are to be distributed equally after the above noted adjustments. During the year X withdrew Rs. 16,000 and Y withdrew Rs.…
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Depreciation - Meaning, Definition, Causes, Objectives and Factors Affecting Depreciation
Depreciation - Meaning, Definition, Causes, Objectives and Factors Affecting Depreciation
Depreciation The non-trading fixed assets of a business like land, building, machinery, furniture etc. may be get depreciated in value due to various reasons. In other words, the value of such assets reduces each year due to use. Such gradual ad permanent reduction in the value of the assets due to wear and tear or from any other causes is called Depreciation. The word depreciation is de…
Depreciation, Fluctuation and Obsolescence
Depreciation, Fluctuation and Obsolescence
Depreciation It is a gradual deterioration or decrease in the value of asset after using that asset in our day to day work or after spending of time. In this world, everything is perishable, so making true profit and calculates true value of any asset at present time, it is very necessary to depreciate on fixed asset and deduct from it.
FluctuationIf you are doing business or linked with any business, you know that prices are always u…
Factors affecting the amount of Depreciation
Factors affecting the amount of Depreciation
It is almost impossible to calculate the actual and accurate amount of depreciation. However, to estimate the amount of depreciation following factors are considered:
1. Original Cost of the Assets: Original cost includes the purchase price of the asset plus freight and installation expenses. Depreciation is charged on cost of asset so, it is found as:
Cost of Asset = Purchase price Freight (Transportation expenses) Installation (er…
Methods of Depreciation
Methods of Depreciation
To find out the depreciation of assets or any kind of property, there are different forms or kinds of methods are available. The different kinds of depreciation methods are as follows:1. Fixed Installment or Straight line method.2. Diminishing Balance or written down value method.3. Sums of the digit method4. Annuity method5. Depreciation fund or Sinking fund method6. Insurance policy method7. Revaluation method8. Activity method
1. Fixed Installment or…
Provision of Depreciation Account
Provision of Depreciation Account
Provision of depreciation is the collected value of all depreciation .With making of this account we are not credited depreciation in asset account. But transfer every year depreciation to provision of depreciation account. Every year we adopt this procedure and when assets are sold we will transfer sold assets ‘total depreciation to credit side of asset account. For calculating correct profit or loss on fixed asset. This provision uses with …
Reserves - Meaning, Types and Credit Purchase
Reserves - Meaning, Types and Credit Purchase
Reserves: Reserves are accounting terms. In general, it is saving of money, but in accounting terminology , it has different meaning.
According to accounting technician, “ Reserves are that funds which withdraw from general or special profit of business and keep it in safe pocket of company. This sum is used when any loss happens in business."
Accounting Experts always in favor to keep some money or retain some fund for future …
Rules for Making Difference between Capital and Revenue Expenditure
Rules for Making Difference between Capital and Revenue Expenditure
Ist RuleAll expenses which are done for getting any fixed asset must be capital expenditure. For example, expenses of carriage and freight for getting fixed assets are also capital expenditure and will include in the total cost of fixed assets.
2nd RuleAll expenses which are done for increasing the size or improvement in fixed assets must be capital expenditure.
3rd RuleAll expenses which are done for getting s…
Retained Earnings - Meaning, Purpose, Advantages, Disadvantages and Calculation
Retained Earnings - Meaning, Purpose, Advantages, Disadvantages and Calculation
Retained Earnings or Ploughing Back of Profit: Retained earnings are an internal sources of finance for any company. Actually is not a method of raising finance, but it is called as accumulation of profits by a company for its expansion and diversification activities. Retained earnings are called under different names such as self finance, inter finance, and plugging back of profits. As prescribe…
Sinking Fund - Meaning, Types, Objectives, Advantages and Disadvantages
Sinking Fund - Meaning, Types, Objectives, Advantages and Disadvantages
Sinking Fund: A sinking fund is a fund which created for the purpose of repayment of liabilities (redemption of debentures) and replacing fixed assets. Every year a fixed amount either charged against profit or loss account or appropriated out of the profit and loss appropriation account. The same amount is withdraw from business in each year and invested on investments. The interest received on these inv…
Provisions
Provisions
Provisions: Provisions mean providing for possible losses or liabilities. The amount of which cannot be determined exactly. It is create to meet specific losses or liabilities which may be expected but not yet incurred. Provisions are usually created by debiting the profit and loss account. They are either deducted on assets side of balance sheet or shown on the liabilities under appropriate heading. The examples of some provision are:a. Provision for doubtful on d…
Bank Reconciliation Statement - Concept, Meaning, Definition and Characteristics
Bank Reconciliation Statement - Concept, Meaning, Definition and Characteristics
The word "reconcile" means 'to make compatible. It frequently happens in business that two'sets of figures which should agree, for some reason do not. For example, we might estimate that a certain profit should be made in a given period, but in fact we fail to achieve this expected profit. A good accountant would seek to reconcile the two sets of figures, examining the reasons f…
Objectives, Advantages and Importance of Bank Reconciliation Statement (BRS)
Objectives, Advantages and Importance of Bank Reconciliation Statement (BRS)
Bank Reconciliation statement is the basic document of the accounting. Preparation of it is not legally compulsory but by making it, following objects/advantages/importance are derived and is needed due to following causes:
1. To know the accuracy of entries in the Cash Book and the Pass Book: The basic object of preparing Bank Reconciliation Statement is to test the acuracy of causes of difference in…
Relationship Between Cash Book and Pass Book
Relationship between Cash Book and Pass Book
The traders record all the amounts or cheques deposited in the bank in the debit side of his Cash Book in bank column and whatever amount he withdraws from bank in cash or pays through cheque to other parties, he records them in the credit side of the Cash Book in bank column.
Bank also credits the customer's (Trader's) Account for the amount deposited by the customer and debits him for the amount withdrawn by him in his mai…
Rules for Recording Transactions in Bank Reconciliation Statement
Rules for Recording Transactions in Bank Reconciliation Statement
Rules:1. In the Books of Trader (Cash Book/Bank Column)
Increase in Bank Balance = Debit (Receipt Side)
Decrease in Bank Balance = Credit (Payment Side)
2.In the Books of Bank (Pass Book/Bank Statement)
Increase in Bank Balance = Credit
Decrease Bank Balance = Debit
Theoretically speaking there should not be any disagreement between Cash Book (Bank Balance) and Pass Book Balance (Bank Statement), as all banking trans…
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