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Video tutorials - Accountancy: Accounting for Partnership Firms and Companies - Accounting for Partnership Firms (Central Board of Secondary Education (CBSE))

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shaalaa.com | Definition of Partnership and Deed

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Definition of Partnership and Deed [01:03:32]
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Description

Units/Topics

  • Partnership: features, Partnership Deed.
  • Provisions of the Indian Partnership Act 1932 in the absence of partnership deed. Fixed vs Fluctuating capital accounts.
  • Preparation of Profit and Loss Appropriation account- division of profit among partners, guarantee of profits.
  • Past adjustments (relating to interest on capital, interest on drawing, salary and profit sharing ratio).
  • Goodwill: nature, factors affecting and methods of valuation - average profit, super profit and capitalization.
    Scope: Interest on partner's loan is to be treated as a charge against profits.
  • Accounting for Partnership firms - Reconstitution and Dissolution.
  • Change in the Profit Sharing Ratio among the existing partners - sacrificing ratio, gaining ratio, accounting for revaluation of assets and reassessment of liabilities and treatment of reserves and accumulated profits. Preparation of revaluation account and balance sheet.
  • Admission of a partner - effect of admiss on of a partner on change in the profit sharing ratio, treatment of goodwill (as per AS 26), treatment for revaluation of assets and re­ assessment of liabilities, treatment of reserves and accumulated profits, adjustment of capital accounts and preparation of balance sheet.
  • Retirement and death of a partner: effect of retirement I death of a partner on change in profit sharing ratio, treatment of goodwill (as per AS 26), treatment for revaluation of assets and reassessment of liabilities, adjustment of accumulated profits and reserves, adjustment of capital accounts and preparation of balance sheet. Preparationofloan account of the retiring partner. Calculation of deceased partner's share of profit till the date of death. Preparation of deceased partner's capital account, executor's account and preparation of balance sheet.
  • Dissolution of a partnership firm: types of dissolution of a firm. Settlement of accounts -preparation of real zation account, and other related accounts: capital accounts of partners and cash/bank a/c (excluding piecemeal distribution, sale to a company andinsolvency of partner(s)).

Learning Outcomes-

  • state the meaning of partnership, partnership firm and partnership deed.
  • describe the characteristic features of partnership and the contents of partnership deed.
  • explain the significance of provision of Partnership Act in the absence of partnership deed.
  • Differentiate between fixed and fluctuating capital, outline the process and develop the understanding of preparation of Profit and Loss Appropriation Account.
  • develop the understanding of preparation profit and loss appropriat on account involving guarantee of profits.
  • develop the understanding of making past adjustments.
  • state the meaning, nature and factors affecting goodwill
  • develop the understanding of valuat on of goodwill using different methods of valuation of goodwill.
  • describe the meaning of sacrificing ratio, gaining ratio and the change in profit sharing ratio among existing partners.
  • develop the understanding of accounting treatment ofassets andre-assessment of liabilities and treatment of reserves and accumulated profits by preparing revaluation account and balance sheet.
  • explain the effect of change in profit sharing ratio on admission of a new partner.
  • develop the understanding of treatment of goodwill as per AS-26, treatment of revaluation of assets and re-assessment of liabilities, treatment of reserves and accumulated profits, adjustment of capital accounts and preparat on of balance sheet of the new firm.
  • explain the effect of retirement I death of a partner on change in profit sharing rat o.
  • state the meaning of sacrificing ratio.
  • develop the understanding of accounting treatment of goodwill, revaluation of assets and re-assessment of liabilities and adjustment of accumulated profits and reserves on retirement I death of a partner and capital adjustment.
  • develop the skill of calculation of deceased partner's share till the time of his death and prepare deceased partner's executor's account.
  • discuss the preparation of the capital accounts of the remaining partners and the balance sheet of the firm after retirement I death of a partner.
  • understand the situations under which a partnership firm can be dissolved.
  • develop the understanding of preparation of realisation account and other related accounts.
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