Change in Profit Sharing Ratio
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- Change in PSR takes place at the time of admission of a partnership firm.
- Accounting treatment of accumulated profits and losses through one journal entry:
- Gaining partners cap/current A/c Dr.
- To sacrificing Partners cap/current (in case of profits).
- Sacrificing partners’ cap/current A/c Dr.
- To Gaining Partners cap/current (in case of losses)
- General Reserve/ Reserve fund, Workmen Compensation Reserve/ Fund, Investment Fluctuation Reserve/ Fund, Contingency Reserve, Profit and Loss Account (Debit and Credit Balance) and Advertisement Suspense Account/ Deferred Revenue Expenditure