Question

in piecemeal distribution of cash the credit balance of profit and loss account _____

(A) Deducted from cash
(B) Deducted from partner's capital account
(C) Added in partner's capital account
(D) Should not be distributed​

Answer 1

Answer:

(c) added in partner's capital account

Answer 2

The Correct option is (C) Added in partner's capital account.

Piecemeal distribution

Piecemeal cash distribution is an accounting phrase that refers to a condition that arises as a result of a company's dissolution.

Methods of Piecemeal Distribution:

The following are the two methods of the piecemeal distribution of cash.

Proportionate capital method (or) Surplus capital method

Maximum loss method

(1) Proportionate capital method:

The cash is first distributed to the partner with the most capital in the company in comparison to the other stakeholders.

(2) Maximum loss method:

The loss is distributed among the other partners depending on their capital share (capital ratio) prior to the firm's dissolution.

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