Fluctuating Capital Accounts: In this method only one account i.e., Capital Account of each and every partner is prepared and all the adjustment such as interest on capital, interest on drawings etc. are recorded in this account .Under this method ,Capital account may show a debit or credit balance and the balance of this account changes frequently from time to time. Dr. Partner's Capital A/cs Cr. Particulars X Y Particulars X Y ` ` ` ` To Balance b/d By Balance b/d (Opening Dr. Balance) (Opening Cr. Balance) To Cash/Bank A/c By Cash/ BankA/c (CapitalWithdrawn) (AdditionalCapital To Drawings Intoduced) (out of profits) By Interest on Capital To Interest on Drawings By Partner's Salary or To Profit and Loss A/c Commission (Share in losses) By Profit and Loss To Balance c/d AppropriationA/c (Closing credit Balance) (Share in Profits) By Balance c/d (Closing Dr. Balance) INTEREST ON CAPITAL Interestonpartners’capitalwillbeallowedonlywhenithasbeenspecificallymentioned in t he partnership deed. Interest on Capital can be treated as either: An Appropriation of profit; or A Charge against profits A. Interest on Capital: An Appropriation of Profits: In Case of Losses Interest on Capital is NOT ALLOWED In Case of Sufficient Profits Interest on Capital is ALLOWED IN FULL In case of Insufficient Profits Interest on Capital is allowed only to the extent of profits in the ratio of interest on capital of each partner
4. Provision for Tax CurrentLiability Provision 5. Outstanding Salaries CurrentLiability Other Current Liabilites 6. Preliminary Expenses Shareholders' Fund Subtracted from securit premium under Reserve and Surplus. 7. AuthorisedCapital Shareholder's Fund ShareCapital 8. Debenture Borrowings 9. Sinking Fund Shareholder's Fund Reserve and Surplus 10. Provision for provision Provident Fund Liabilities 11. Security Premium Shareholders' fund Reserve and Surplus 12. Creditors CurrentLiabilities Trade Payable head S. No. Items MajorHeading Subheading 1. Patents and Trade Marks Assets Intangible Assets 2. BillsReceivables & Current Assets Trade Receivable Debtors 3. Prepaid Expesnes Current Assets Other Current Assets 4. Advances Recoverable Current Assets Loans and in Cash Advances 5. Goodwill Assets Intangible Assets 6. Loose Tools Current Assets Inventories 7. Bank/CashBalance Current Assets Cash & Cash Equivalents 8. Investments Assets Investment 9. progress Current Assets Inventories 10. Govt. Securities Non Current Assets Investment Financial Statement Analysis Meaning In the words of Finney and miller 'Financial Analysis consists in separating facts according to some definite plan arranging them in groups according to certain circumstancesandthenpresentingthemina convenientandeasilyreadableandunderstandable form.' Objectives/Need To measure the profitability of the business To measure the financial strength of the business To make comparative study within the firm and with other forms To judge the effciency of Management To provide useful information to the Management To find out the capability of payment of interest, dividend etc. To find out the trend of the business Long-term Non-Current Long-term Short-term Short-term Non-Current Non-Current Non-Current Non-Current Non-Current
XYZ Company would be relatively good short-term financial standing. Computationof ratio FromthefollowingbalancesheetofM/s.RamLtd. calculatecurrent ratioason31.03.2010 iabilities Rs. Assets Rs. apital 21,000 Fixed Assets 17,000 eserves 1,500 Stock rofit and Loss Account 2,500 Debtors 3,200 ank Overdraft 2,000 Cash 6,600 undryCreditors 6,000 33,000 Solution : 33,000 Current Ratio = Current Assets/ Current Liabilities Stock+Debtors+Cash/Bank Overdraft+ Sundry Creditors Rs.6,200+Rs.3,200+Rs.6,600 Rs.16,000/Rs.8,000= 2:1 Alternatively current assets can be calculated as CurrentAssets = Working Capital + Current Liabilities Current Assets = Total Assets Fixed Assets Current Liabilities = Employed Indirect question On payment of current liablity Current Assets and Current Liability reduce to same extent, insuchcasesratiochangee.g. If currentassets areRs.40,000 andcurrent liabilities areRs.20,000 onpayment of Rs.10,000 tocreditors thecash(current asset) willdecrease to Rs.30,000 (Rs.40,000 Rs.10,000) & current liabilities will decrease to Rs.10,000 In first case current ratio is 2:1 Rs.40,000/Rs.20,000 And is second case it is 3:1 Rs.30,000/Rs.10,000
Note 4 Particulars As on 31.3.2012 As on 31.3.2011 (`) (`) Provision for Taxation 32,000 25,000 Note 5 Particulars As on 31.3.2012 As on 31.3.2011 (`) (`) Building 1,88,000 Machinery 4,30,000 3,60,000 Note 6 Particulars As on 31.3.2012 As on 31.3.2011 (`) (`) Goodwill 24,000 40,000 SOLUTION