Question

Write short notes on methods of Piecemeal Distribution.

Answer 1

Methods of Piecemeal Distribution:

Piecemeal distribution of cash is an accounting term that refers to a situation that is caused due to the dissolution of the firm. The two methods of the piecemeal distribution of cash are as follows:

• Proportionate capital method (or) Surplus capital method
• Maximum loss method

Proportionate capital method:

Here the cash is initially paid to the partner who holds the maximum capital in the firm as compared to the other stakeholders.

Maximum loss method:

Here the loss is transferred to the other partners based on the share of their capitals (capital ratio) before the dissolution of the firm.

Answer 2

Explanation:

methods of piecemeal distribution