Meaning of Commission to Partners There are several ways in which the profits are appropriated among the partners. Like Interest on capital, salary and commission. As a part of appropriation of profits partners may be paid commission out of profits. It is shown in the profit and Loss Appropriation A/c on the debit side. As […]
Commission to Partners Read More »
Meaning of Loan by firm to partner Meaning – If a partner borrows some amount from the firm for his personal expenses then such amount is treated as loan by firm to partner. Is it an Asset for firm – Yes this is an asset for the firm. It will be shown on assets side
Interest on Loan by firm to Partner Read More »
Meaning of Loan by partner to firm Meaning – Each partner contributes Capital to the firm. If a partner gives money to the firm over and above his capital contribution then such amount is treated as a loan by partner to firm. Is it a Liability for firm – Yes this is a liability for
Interest on Loan by partner to Firm Read More »
Meaning of Charge Against profits All the items which go to firms profit and loss A/c are charge against profits. These are called charge as these are to be paid whether the firm earns profits or incur losses. These items are deducted from the Revenue from operations (Sales) of firm to find the Net profit
Charge Against Profits vs Appropriation of Profits Read More »
Meaning of Capital Meaning – In simplest terms , Capital means the amount that a person invests in business. This investment can be in any form be it cash or kind (Machinery, building, vehicle, stock, etc.).Considering that the business is a separate entity in accounting sese , the capital invested by the owner also becomes
Partner Capital A/c Read More »
What is drawings in Partnership Accounts Drawings means any amount withdrawn , either in cash or kind, by partners for personal use from the firm. Usually we think that drawings is done only in cash. But this is not correct. Drawings can be done in the form of any asset like cash, machine, vehicle, computer,
Interest on Drawings Read More »
What is Interest on Capital Meaning – Interest on Capital is an appropriation of profits in case of partnership. It is a way to compensate more the partners who have contributed more capital compared to other partners. Since it is an appropriation so it is neither a profit nor loss for the firm. The key
Interest on Capital in Partnership Read More »
Meaning of Partnership A partnership is an association between two or more persons who agree to do business and share profits and losses of the business Features of Partnership Who is a Person Two or More persons – At least 2 persons are required to form a partnership. A single person alone cannot form partnership.
What is Partnership Read More »
What is Partnership Partnership is an association between two or more persons who agree to do business and share profits and losses What is Partnership Deed It is pertinent to note that the partnership can be formed either by an oral or a written agreement among the partners. Partnership Deed is a written document which
Provisions applicable in the absence of partnership Deed Read More »
Original Cost of Asset This is the cost of the asset. It is also known as historical cost. It includes : Example – Below cost details are with regard to purchase of a machinery : Note : Any refundable taxes are not included in the cost Estimated Residual Value or Scrap value Amount estimated to
Factors in Depreciation calculation Read More »
