What are Ratios A ratio is a mathematical expression that represents the relationship between two quantities or values. It is typically expressed as a fraction, with the numerator representing the first quantity and the denominator representing the second quantity What are Accounting Ratios Accounting ratios are statistical measures that are used to evaluate the financial […]
What are accounting ratios Read More »
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
Difference between new ratio and sacrificing ratio Read More »
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 :
Computation of New ratio and Sacrificing ratio Read More »
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 »
These terms often sound similar but they are considerably different. Face Value This is the value per share, which is fixed at the time of registration of the company. It is also known as nominal value or par value. This is the value per share, which is recorded in the memorandum of Association. It is
Face Value vs Issue Price vs Market Price of a share 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 »
