Balbharati solutions for Book-keeping and Accountancy 12th Standard Hsc Maharashtra State Board.
Chapter 1 - Introduction to Partnership and Partnership Final Accounts [Latest edition]
Do you agree/disagree with the following statement:
When Partnership Deed is silent, Partners share profits of the firm according to capital ratio.
Current account always shows a debit balance.
It is compulsory to have a partnership agreement in writing.
Partnership Firm is a trading concern.
An interest on capital is an expenditure for the partnership firm.
Partnership is an association of two or more persons.
Partners are entitled to get Salary or Commission.
The balance of Capital Account remains constant under Fixed Capital Method.
The Indian Partnership Act, came into existence in the year 1945.
Profit and Loss Account reflects the true Financial position.
Amount borrowed by partner from his business will be debited to Current Account.
Sold but undispatched goods must be part of the valuation of closing stock.
Carriage Inward is a selling and distribution overhead.
Gross profit is an operation profit.
All financial expenditures are debited to profit and loss account.
Free distribution of goods is debited to the trading account.
Difficult Words & Meanings
- Partnership Deed: A formal written document outlining the terms, conditions, rights, and duties agreed upon by partners in a business.
- Capital Ratio: The proportion of total business capital that each partner has contributed, often used for profit/loss sharing if specified in the deed.
- Current Account (in partnership): A separate account for each partner (when using the Fixed Capital Method) to record transactions like drawings, interest on capital, salary, and share of profits/losses, keeping the main capital account unchanged.
- Debit Balance: An account status where total debits are greater than total credits. For example, an asset account or expense account typically has a debit balance.
- Fixed Capital Method: An accounting method in partnership where each partner's capital contribution remains constant or 'fixed.' All adjustments for drawings, profits, interest, etc., are made through a separate Current Account.
- Profit and Loss Account: A financial statement that summarizes a company's revenues, costs, and expenses during a specific period, showing the net profit or net loss.
- Financial Position: The overall health of a business's finances, represented by its assets, liabilities, and owner's equity at a particular point in time (shown in the Balance Sheet).
- Closing Stock (Inventory): The value of goods that a business has on hand and available for sale at the end of an accounting period.
- Carriage Inward: Transportation costs incurred by a business to bring purchased goods into its premises. It's a direct expense added to the cost of purchases.
- Gross Profit: The profit a company makes after deducting the direct costs of producing or acquiring the goods it sold (Revenue - Cost of Goods Sold).
- Trading Concern: A business primarily engaged in the buying and selling of goods, rather than manufacturing or providing services.
- Expenditure: An amount of money spent by a business in its operations or for acquiring assets.
- Overhead: Indirect business expenses that are not directly tied to producing a good or service, such as rent, utilities, or administrative salaries. (Context for "selling and distribution overhead").
- Undispatched Goods: Goods that have been recorded as sold but have not yet been physically delivered to the customer.