Answer based on following information: Azad and Babli are partners in a firm sharing profits and losses in the ratio of 2:1. Chintan is admitted into the firm with ¼th share in profits. Chintan will bring ₹30,000 as his capital and the capitals of Azad and Babli are to be adjusted in the profit-sharing ratio. The Balance sheet of Azad and Babli as on December 31, 2016 (before Chintan’s admission) was as follows: Balance Sheet It was agreed that: (i) Chintan will bring in ₹12,000 as his share of goodwill premium.Liabilities Amount (₹) Assets Amount (₹) Creditors 8,000 Cash in hand 2,000 Bills payable 4,000 Cash at bank 10,000 General reserve 6,000 Sundry debtors 8,000 Capital accounts: Stock 10,000 - Azad 50,000 Furniture 5,000 - Babli 32,000 Machinery 25,000 Buildings 40,000 Total 1,00,000 Total 1,00,000
(ii) Buildings were valued at ₹45,000 and Machinery at ₹23,000.
(iii) A provision for doubtful debts is to be created @ 6% on debtors.
(iv) The capital accounts of Azad and Babli are to be adjusted by opening current accounts.
Current accounts of partners are reflected in books of accounts as per ______ method.
Fixed
Under the Fixed Capital Method, the partners maintain separate Capital Accounts and Current Accounts.
All regular transactions like drawings, interest, and share of profit/loss are recorded in the Current Account while the Capital Account remains unchanged.
Important Questions from Accounting for Partnership : Fundamentals
If the partner’s capital accounts are fixed, where will you record drawings made by a partner out of his capital during the year?
Under rule 10 of the Companies (Miscellaneous) Rules 2014, what is the maximum number of partners a partnership firm can have?
Calculate interest on drawings if an amount of ₹7,500 is withdrawn at the end of every two months for the year. The rate of interest on drawings is 8% p.a.
Identify the essential features of partnership.
(A) Agreement between persons
(B) Partners should carry some Business
(C) No restriction on the number of partners
(D) Sharing of profits/losses in agreed ratio between partners
(E) No of partners is restricted by Partnership Act 1932
Choose the correct answer:
Which of the following is not a factor affecting the value of goodwill?
