Accounting for Partnership Firm



Admission of a Partner, Retirement of a Partner , Death of a Partner, Dissolution of a Partnership Firm

What you will learn

Accounting for Partnership Firm

Accounting for Admission of Partner in the Partnership Firm

Accounting for Retirement of the Partner

Accounting for Death of the Partner

Accounting for Dissolution of Partnership Firm

Description

Businesses can be formed through Partnership Firm. In Partnership firm 2 or more persons come together to start a business. They predetermine their profit sharing ratio. All these information is recorded through partnership deed.

Sometimes Partnership firm gets restructured due to admission of a partner, retirement of a partner, death of a partner and dissolution of the partnership firm.

When new partner is admitted into partnership firm existing partners need to sacrifice their profit ratio.

When existing partner retires then continuing partner will gain as retiring partners profit sharing will be transferred to continuing partners.

When there is death of a partner then continuing partner will gain as died partner profit sharing will be transferred to continuing partners.

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When there is dissolution of a partnership firm all liabilities need to be settled subject to availability of the cash.


In typical partnership question you will be given balance sheet and information about restructuring of the partnership i.e. either admission or retirement or death of dissolution of the partnership firm

All items appearing in the balance sheet need to be recorded only once. All information provided outside balance sheet in the form of adjustment need to recorded Twice as same need to be done to tally the balance sheet.

One of the important table that need to be prepared is partners capital account as important information like partners opening balances, profits in old ratio, goodwill adjustments  etc. are recorded through this table.

Introduction

Introduction to Partnership Accounting
Partnership Accounting – Admission of Partner
Partnership Accounting – Retirement of Partner
Partnership Accounting – Death of Partner
Partnership Accounting – Dissolution of Partnership Firm

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