1. In piecemeal distribution according to surplus capital method, final deficit of each partner *
Answers
Answer:
According to the Surplus Capital Method in Piecemeal Distribution, each partner's final deficit will be in the profit/loss ratio.
Explanation:
Explanation: The Surplus Capital Method, also known as the Highest Relative Capital Method, the Quotient Method, or the Excess Capital Method, is a method of calculating the amount of capital that is available.
In this method, the capitals are first compared to the profit share ratio.
First, excess capital is paid (actual capital less capital proportionate to the profit-sharing ratio).
Methods of Piecemeal Distribution: Piecemeal cash distribution is an accounting term that refers to a situation caused by the firm's dissolution. The two methods of cash distribution in pieces are as follows:
Method of proportionate capital (or) Method of surplus capital
Method of maximum loss
The cash is initially paid to the partner who has the most capital in the firm in comparison to the other stakeholders under the proportionate capital method.
Maximum loss method: In this method, the loss is distributed to the other partners in proportion to their capital contributions (capital ratio) prior to the firm's dissolution.
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