Accounts-1996-Set II

Q1) A and B are partners sharing profits in the ration of 4 : 3. C is admitted as a partner. The new profit-sharing ration is 3 : 2 : 1. Find out the sacrificing ratio. (Marks 2)
Ans1) A : B : C
3 : 2 : 1 New Ratio
Old ratio = A : B
4 : 3
A’s sacrifice = A’s old share – A’s new share
= 4/7 – 3/6 = 3/42
B’s sacrifice = 3/7 – 2/6 = 4/42
Thus, the sacrificing ratio = A : B
= 3 : 4

Q3) Define partnership. In the absence of Partnership Deed, what are the rules regarding :
(i) Profit-sharing ratio. (ii) Interest on drawings, (iii) Interest on Capital, (iv) Interest on loan given by a partner. (Marks 3)

Ans3) Partnership is defined as -
The relationship between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all.
In the absence of the information, the following rules will apply,
1. Profit sharing ratio : this will be equal for all the partners.
2. Interest on drawings : No interest is charged on drawings.
3. Interest on capital : No interest is paid on capital.
4. Interest on loan given by partners : Interest @ 6% p.a. will be given to the partners on their loans.

Q4) Mention the items that may appear on the credit side of the capital account of a partner when the capitals are fluctuating.
Ans4) The following items may appear on the credit of the capital account of a partner when the capital accounts are fluctuating :
(i) Opening balance of capital (Cr.),
(ii) Share of profit,
(iii) Interest on capital,
(iv) Salary (if allowed),
(v) Goodwill,
(vi) Share of general reserve.

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