Question

Q. 2 How would you treat Employees Provident fund shown on the liabilities side of the balance Sheet, at the time of dissolution of partnership firm and why?​

Answer 1

Answer:

Employee's contribution towards EPF - 12% of the employee's salary is deducted by the employer on a monthly basis for contribution towards EPF. The entire contribution goes towards the EPF account. Employer's contribution towards EPF - The employer also contributes 12% of the employee's salary towards EPF.

Explanation:

In case of admission of a partner Employee Provident Fund remains on the liabilities side of the new balance sheet. So Employee Provident Fund will be treated like any other liability and it will not be distributed among old partners in the old ratio.