what is workmen compensation reserve
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17
This is a free reserve created out of divisible profits. At the time of admission, change in profit sharing ratio, retirement or dissolution, if there are any liabilities against this reserve then first those liabilities should be adjusted against this reserve and the balance should be distributed among all the existing partners in their existing (old) profit sharing ratio.
aditya1555:
plese tell me treatment in admission and retirement
It will be distributed among old partners in their old profit sharing ratio.
please explain me all 4 cases
if it is less ,if it is more, if there is no liability
Answered by
15
It is the amount of money kept aside from the profits to compensate the workmen , if any uncertainty happens in future . the amount is kept as reserve and not be distributed to owners or partners .
please tell me treatment in dissolution of partnership firm
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