If IOC and IOD is given then how to find Opening capital?
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Fundamentals Of Partnership Accounts And Goodwill - Chapter1 And Chapter2
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The notes contains information about Introduction and summarised material for Introduction to Partnership Accounting: Fundamentals and Goodwill. The notes is divided into two parts - Chapter1 and Chapter2.
1Chapter - 1 ACCOUNTING FOR PARTNERSHIP FIRMS - FUNDAMENTALS l. Concepts of Partnership Partnership is when two or more persons agreed to work together for business purpose Persons are termed as Partners Collectively partners form a Firm Nature of Partnership From Accounting point - Firm has a separate legal identity; and From Legal point - Firm and partners are not separate i.e. they have same legal entity means partners are personally liable. 1. 3. 4. 5. IV. Features/Characteristics of Partnership Two or more persons a deed between the two Lawful business Profit Sharing Business can be carried on by All or Any one acting for All: (Partners are agents as well as principal of the firm) Partnership Deed: An oral or a written agreement between the two Name, description and addresses of Partners 1. Name and address of the Firm 2. Address of the Place of business 3. Date of Commencement of Partnership 4. Capital Contribution by Partners 5. Rate Of Interest Of Capital: F p 6. 7. Rate Of Interest on Loan: F p Remuneration: F 8. 9. Rate Of Interest Of Drawings: p F Profit/Loss sharing Ratio 10. 11. Valuation of Goodwill and Assets 12. Accounting Period 13. Accounting Period Rights and Duties of Partners 14. Duration of Partnership Firm 15. Bank Account Opening Operations 16. 17. Settlement of Accounts
218. Settlement of Disputes 1. 2. 3. 4. 5. Provisions applicable when there is "NO PARNETSHIP DEED" No interest of capital to be paid to Partners; No interest of drawings to be paid by Partners; Interest of Loan @ 6% p.a.; Profit and Loss to be shared Equally; and No Remuneration (salary, commission etc.) to be paid to Partners (The above provisions are as per Indian Partnership Act, 1932) VI. Charge against Profit A deduction from revenue to ascertain Net Profit or Net Loss It is reflected in Profit & Loss Account It is done before Appropriation of Profit Items debited in Profit & Loss Account are considered to be charges against profit (Example: Interest on Loan, Rent payable, Provision for doubtful debts etc) (from Partnership's point of views first two are most important) Treatment: Even when the firm is facing loss Firm needs to pay interest on loan, rent etc VII. Appropriation of Profit Appropriation means Allocation, Distribution etc It is reflected in Profit & Loss Appropriation Account Profit generated from Profit & Loss Account is appropriated to various heads like Interest on Capital, Salary, Commission etc. The above heads are nothing but payments that are made to Partners.