NCERT Solutions Click here to download NCERT Solutions for questions of Class 12 Accountancy NCERT Book. Practice Worksheets Download free Printable Worksheets, test papers with questions and answers for Class 12 Accountancy for all important topics and chapters as per CBSE, NCERT,… More.. R’s share in the profit or loss of the firm till the date of his death. Profits for the years ending on March 31 of 2014, 2015, 2016, 2017 respectively were Rs. 15,000, Rs. 17,000, Rs. 19,000 and Rs. 13,000. Prepare B’s capital account to be presented to his executors.
Calculate the deceased partner’s share in the current year‘s profits of the firm. Remaining partners decided to bring sufficient cash in the business to pay off B and to maintain a bank balance of Rs. 24,800. They also decided to readjust their capitals as per their new profit sharing ratio. Solution 1.Goodwill earned by the firm is the result of the efforts of all the existing partners in the past. A part of the future profits will accruing because of the present goodwill and the retiring or deceased partner will not be share future profit.
New profit sharing ratio of B, C and D on A’s death. Discuss the method of treatment of goodwill at the time of retirement of a partner. Second, calculate the gain ratio of all the attributes whose calculated information gain is larger or equal to the computed average information gain, and then pick the attribute of higher gain ratio to split. If nothing is mentioned about the new ratio, old ratio of the continuing partners is equal to their new ratio.
Factors that can affect the sacrificing ratio include the level of risk taken, the return on investment, and the overall market conditions. The gaining ratio is interpreted as a measure of the efficiency of an investment, with a higher ratio indicating a more efficient investment. Gain Ratio is a feature selection technique used in decision tree induction and other machine learning algorithms.
Shyam borrows money from his bank on security of Plant and Machinery to pay off Ram. New profit sharing ratio of A, B, C and D on D’s admission. New profit sharing ratio of A, B and C on C’s admission. 3.) Interest on capital, if provided in the partnership deed. Name five items which are credited to the account of a deceased partner while calculating the amount due to his legal representatives.
New Profit Sharing Ratio and Gaining Ratio Q.12
V) Distribution of accumulated profit and losses and reserve among all the partners. Ii) Calculate new ratio of the remaining partners. Hope, this article is helpful in understanding the basis of the decision tree in the context of entropy, information gain, gini ratio and gini index. Objective To ascertain the amount of goodwill payable to the existing partners, when a new partner enters the firm.
It is provided under the partnership deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profits credited to his account during the last 4 completed years . Viii) Adjustment of capital accounts of the remaining partners in their new profit sharing ratio. At the time of retirement of a partner, his/her share is transferred to the remaining partners. So, the gaining ratio is the proportion in which the continuing partners gain out of the share of the retiring one.
Gaining ratio may not be suitable for datasets with highly skewed class distribution as it may assign higher importance to the majority class. Gaining ratio is sensitive to the number of samples and the distribution of classes in the dataset, which may lead to suboptimal feature selections.
Disadvantages of Gaining Ratio:-
Tests, examples and also practice Commerce tests. It comes in handy for calculating the extent of compensation that will be paid by gaining partners to the deceased partner’s legal representative or a retiring partner as goodwill or premium for goodwill. Usually, it is computed when a partner decides to retire or during the death of a partner. Though in a typical setup, the partners of a partnership firm decide to share their profits and losses equally, it may not be the same in every case. For instance, the acquisition of profits in a limited liability partnership firm would be different from that of an organization that shares profits and losses equally. Capital of the new film in total will be the same as before the retirement of Kusum and will be in the new profit sharing ratio of the continuing partners.
- It can also be described as the difference between the old profit-sharing ratio and the new profit-sharing ratio of partners.
- The ratio in which the remaining partners share increases is called the Gaining Ratio.
- The capital of the new firm was to be fixed at Rs. 90,000 and necessary adjustments were to be made by bringing in or paying off cash as the case may be.
- So, the gaining ratio is the proportion in which the continuing partners gain out of the share of the retiring one.
A gaining ratio is a financial tool that helps to measure the proportion in which a firm’s remaining partners acquire the retiring partner or deceased partner’s shares. It can also be described as the difference between the old profit-sharing ratio and the new profit-sharing ratio of partners. New Profit Sharing Ratio The ratio in which the continuing partners will share profits and losses is called new profit sharing ratio. It is the sum total of his old share and the ratio in which the outgoing partner’s share of profit is acquired.
Bad debts amounting to Rs. 3,000 will be written off and a provision of 5% on debtors for bad and doubtful debts will be maintained. Prepare the opening balance sheet of A and B at 1st April, 2018. Prepare Revaluation Account, Capital Accounts and the Balance Sheet of new firm assuming that one-third of the amount due to Nawab was paid in cash and balance was carried to Loan A/c. Provision for bad debts is to be made at the rate of 10% on debtors. Prepare Revaluation Account, Capital Accounts of the partners and the Balance Sheet of the reconstituted firm. The amount payable to Kanika was transferred to her loan account.
The new profit sharing ratio of Ashish and Aman will be ¾ and ¼ respectively. Dear, Gaining ratio is calculated at the time of retirement or death of a partner. It is the ratio in which the remaining partners acquire the outgoing partner’s share of profit. When the partner retires, the profit sharing ratio of the continuing partners gets changed. The ratio in which the continuing partners have acquired the share from the retiring partner’s share of the profit is termed as gaining ratio. A, B and C are partner’s sharing profits in the ratio of 50%, 30% and 20%.
Profits for the years ending 31st March 2016, 2017 and 2018 were Rs. 40,000; Rs. 50,000 and Rs. 72,000 respectively. The firm closes its books on 31st March every year. Anand, Bihari and Shivin are equal partners in a firm. Bihari retires and his claim including his capital and his share of goodwill is Rs. 40,000. He is paid in kind, a vehicle valued at Rs. 20,000 which is unrecorded in the books of the firm till the date of retirement and the balance in cash. P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively.
They decided to dissolve their partnership business. In English & in Hindi are available as part of our courses for Commerce. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free. Gaining ratio indicates the extent to which the continuing partners have acquired the share of the outgoing partner.
- Debtors of Rs. 24,000 will be written off as bad debts and a provision of 5% on debtors for bad and doubtful debts Will be maintained.
- The Balance Sheet of the firm after G’s retirement and G’s Loan Account till it is finally paid off.
- Though in a typical setup, the partners of a partnership firm decide to share their profits and losses equally, it may not be the same in every case.
- Pass necessary journal entry for recording the goodwill in the above mentioned case.
- Pass necessary Journal entries relating to goodwill and profit to he transferred to Ghanshyam’s Capital Account.
- They decided to dissolve their partnership business.
Question 5.Give any three points of distinction between sacrificing ratio and gaining ratio. I) Calculate new gaining ratio of all remaining partners. In this post, we will discuss the difference between sacrificing ratio and gaining ratio. Hence, due to the change in the profit-sharing ratio, some partners gain and some partners lose. Therefore, the gaining partner compensates the losing partner, by paying the amount in the form of capital. It increases the remaining partners’ share of profit.
A ’s capital on 3lst March, 2018 stood at 71,20,000, and his drawings from then to thedate of death amounted to Rs. 9,000. Amount due to B’s executors will be transferred to Charity account. Pass necessary Journal entries relating to goodwill and profit to he transferred to Ghanshyam’s Capital Account. Prepare A ’s Capital account to be rendered to his executors.
The Balance Sheet of the firm after G’s retirement and G’s Loan Account till it is finally paid off. 11,00,000 be transferred to A’s loan account and balance be paid through bank. Rs. 70,000 from Z’s Capital Account will be transferred to his loan account and the balance will be paid to him by cheque. Pass necessary journal entry for the treatment of goodwill.
However, a what is gaining ratio partner may be discharged from his liability by an agreement between himself, third party and the continuing partners. The gaining ratio is the ratio calculated when a person, i. The profit share is then distributed among the existing partners in a definite ratio, i. The gaining ratio is proportional to the amount of capital contributed by the continuing partners.
Class 12 Accountancy students should read the following DK Goel Solutions for Class 12 Chapter 5 Retirement or Death of a Partner in Standard 12. All solutions provided below can be downloaded in Pdf and are available for free. This DK Goel Book for Grade 12 Accountancy will be very useful for exams and help you to score good marks in Class 12 accountancy examinations. On our website , we have provided solutions for all chapters given in the DK Goel Accountancy Book for Class 12. It is the proportion in which existing partners of a firm surrender a share of their profit for a newly admitted partner. Goodwill of the firm was valued at Rs. 1,80,000 and Mohan’s share of the same was credited in his account be debiting Vinay’s and Nitya’s accounts.
Prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of X and Y after Z’s retirement. On 1st April, 2018 Y decided to retire from the firm on the following terms. Goodwill of the firm on Sameer’s retirement was vlaued at Rs. 5,40,000. Workmen Compensation Reserve appears in the books at Rs. 1,20,000 and there is a claim of Rs. 1,50,000 against it. It is often observed that decision trees are very catchy to understand because of their visual representation/interpretation.