Liquidity Ratios S No Ratio Name Formula 1 Current Ratio Current Assets / Current Liabilities Note : Stores and spares and Loose tools are to be excluded from inventoriesNote : Prov for bad Debts will be deducted from Sundry Debtors 2 Quick Ratio Quick Assets / Current Liabilities where Quick Assets Current Assets – Inventories […]
There can be different situations for accounting for Goodwill : Below we will discuss accounting entries for each of the above cases. Where the goodwill is paid privately Normally , first the new partner will pay Goodwill brought in by him to the firm and then firm will pay each old partners share to them.
Accounting for goodwill on admission of a new partner. Read More »
Sacrificing Ratio New profit Sharing Ratio It is the ratio in which old partners give their share to new partner/s It is the share in which all the partners (including new partner) share profits and losses in the future. It is related only to the old partners. it pertains to all the partners (including new
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Suppose A, B and C are partners in a firm sharing profits in the ratio of 3:2:1. D is admitted to the partnership and the profit sharing ratio in future will be 1 : 1 : 1 : 1. In this case 3:2:1 is called the old ratio and 1 : 1 : 1 :
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Admission of a partner in a partnership firm refers to the process of adding a new member to the partnership. When a new partner is admitted to the partnership, they become jointly and severally liable for the partnership’s debts and obligations. This means that each individual partner is responsible for the entire amount of the
Meaning of Admission of a Partner in Partnership Firm Read More »
If any calls are received in advance Forfeiture of Shares Calls in Arrears If calls in arrears account is used then the arrear amount is kept in a separate account and the Share allotment or share call account are credited with the full amount. Journal entries will change as below : In case the whole
Journal Entries for issue of Shares Read More »
Share Capital can be of different types and each type is discussed below : Authorised Capital This is also known as nominal capital or registered capital This is the maximum amount of capital which the company can raise and for which the company has received approval from government (ROC). It is stated in the memorandum
Classification of Share Capital Read More »
The key points of difference between equity shares and preference shares are summarised as follows :
Difference between Equity share and Preference Shares Read More »
These are shares which gives the voting rights. So the equity shareholders are the real owners of the company as they participate in decision making. The voting rights are proportionate to the shares held with respect to the total equity share capital of the company. Equity shareholders can get the dividend only after the dividend
What are Equity Shares Read More »
Preference shares can be broadly classified based on following four criteria : Based on right to receive dividend There can be two kinds of preference shares : 1) Cumulative Preference Shares 2) Non-Cumulative Preference shares Cumulative preference shares are those shares which has the right to receive arreas of dividend. Suppose a company cannot pay
Types of Preference Shares Read More »
