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Questions and Answers
Why are assets revalued and liabilities reassessed in case of a change in profit-sharing ratio or reconstitution of the firm?
Why are assets revalued and liabilities reassessed in case of a change in profit-sharing ratio or reconstitution of the firm?
- To determine the new profit-sharing ratio
- To distribute accumulated profit and loss
- To calculate the sacrificing and gaining share of each partner
- To determine the new capital of the partners (correct)
Which account is debited to write off goodwill in case of a change in profit-sharing ratio or reconstitution of the firm?
Which account is debited to write off goodwill in case of a change in profit-sharing ratio or reconstitution of the firm?
- Partner's capital account in the new profit-sharing ratio
- Goodwill account
- Partner's capital account in the old profit-sharing ratio (correct)
- Accumulated profit and loss account
What happens to accumulated profit and loss when there is a change in the profit-sharing ratio or reconstitution of the firm?
What happens to accumulated profit and loss when there is a change in the profit-sharing ratio or reconstitution of the firm?
- It is distributed among the partners in the new profit-sharing ratio
- It is distributed among the partners in the old profit-sharing ratio (correct)
- It is carried forward to the next accounting period
- It is written off
How is the difference between the new profit-sharing ratio and the old profit-sharing ratio calculated?
How is the difference between the new profit-sharing ratio and the old profit-sharing ratio calculated?
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What happens to goodwill in case of a change in profit-sharing ratio or reconstitution of the firm?
What happens to goodwill in case of a change in profit-sharing ratio or reconstitution of the firm?
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