How is interest on drawings on unequal amounts drawn at unequal intervals calculated?
Answer:- When the dates of drawings are given and the interest is to be charged at an agreed rate per annum, interest will be calculated on the basis of time.
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Give any two points of difference between Profit and Loss Appropriation Account and Profit and Loss Account.
Answer:- Profit and Loss Appropriation Account Profit & Loss Account 1 It shows the appropriation of net profit It shows the net profit earned or net loss incurred. 2 It starts with the net profit transferred from the Profit &…
Why is Profit and Loss Appropriation Account prepared by the Partnership Firm?
Answer:- The profit and Loss Appropriation Account is prepared to show the appropriation of net profit between/among the partners.
List any two items shown on the debit side of Profit & Loss Appropriation Account.
Answer:- i) Interest on Partner’s Capital ii) Salary to a Partner iii) Commission to a Partner iv) Share of Profit
List any two items shown on the credit side of Profit and Loss Appropriation Account.
Answer:- i) Net Profit for the year ii) Interest on Drawings
Mittal & Sons earned a profit of ₹ 2,75,000 during the year ended 31st March, 2016. 10% of this profit was to be transferred to Investment Fluctuation Reserve. Pass the necessary Journal entry for the same.
Ans:- Date Particulars L.F Dr. (₹) Cr. (₹) March, 31 Profit & Loss Appropriation A/c …Dr. To Investment Fluctuation Reserve A/c (Being 10% of Profit transferred to Investment Fluctuation Reserve) 27,500 27,500
State any three items shown on the debit side of the Capital Account of a partner when the capitals are fluctuating.
Answer:- Items that may be shown on the debit side of the Capital Account of a partner are: i) Drawings ii) Interest on drawings iii) Share of Loss
List any two items which may appear on the credit side of a Partner’s Fixed Capital Account.
Answer:- i) Cash/Bank A.c (Introduction of Capital) ii) Opening Balance of Partner’s Fixed Capital Account
State two differences between interest on capital allowed to partners and interest on drawings charged from partners.
Answer:- i) Interest on capital is allowed (paid) by the firm to the partners whereas interest on drawings is charged by the firm. ii) Interest on drawings is credited to Profit and Loss Appropriation Account and interest on capital is…
List two instances when a partner’s fixed capital may change.
Two instances in which the fixed capitals of partners may change are: i) When additional capital is introduced by the partners. ii) When a part of the capital is withdrawn by the partners.