(4) How would you deal with the following balances disclosed in the balance sheet at the
time of the dissolution of a partnership firm ? Explain
(¡) General reserve
(¡¡)Investment fluctuation fund
(¡¡¡) Workmen accident compensation fund
(¡vProvidend fund
(v) Debit balance of Profit and loss A/C
(v¡)Depreciation fund
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Answer:
(i) General Reserve :
Balance of general reserve account is credited to partners’ capital or current account in their profit and loss sharing ratio.
(ii) Investment Fluctuation Fund :
Investment Fluctuation Fund is a provision against assets which will be shown under the heading of provision on credit side of Realisation Account.
(iii) Workmen Accident Compensation Fund :
Workmen Accident Compensation Fund is a accumulated profit, which will be credited for all partners’ capital/current account in their profit-loss sharing ratio.
(iv) Providend Fund :
Providend Fund is a liability (debt) which will be shown under the heading of Sundry Liability on credit side of Realisation account.
(v) Debit Balance of Profit and Loss A/c :
Debit balance of profit and loss account will be debited to partners’ capital account in their profit and loss sharing ratio.
(vi)Depreciation Fund :
Depreciation Fund is a provision against asset which will be shown under the heading of provision on credit side of Realisation Account.