Ss a Chapter 14 313 | =a | = my] te Laterest oo Talecest on = capital altqening = a % capital % Arowings > 2 Bo pours 4o peciecce| Pacinos pays to the bal =» Lor cacouraing more do cliseaurage enossie =) cartol Atowines > + ee ca = =a Pas doership CS ecl ot: 4/3 ® Ocapilal conte ike lack by 26h partners a Profit -shacing = 3) Interest on Capiial—-roie %) _—> 2% pense(Tor b>) a) So.lacy fo pactner => workload 5) Drawings = tna bent . ’ wa Q_Toeest ne deasicgs => 1acame (for ipo \ 1) Taterect on lean contipuled by o varloor —>29 to by financial statements srenatod by the actaeships hu sie: = - Tacome statement O) Profit aod losS aoopicdten 4 @ _speP JOSSSEEEEEEEDE Scanned with CamScannerfe ap Leu Hourat_of ott and _loss oppi@calin 4 a Profil (or {he @$ onda. sys foe ce) bosiaes$ (4) Tolevesh on dissing ile pode A - KX pail] BeK¥ | Xx (=) Totee on cape” Parntech acral xx [Cx f ey Factors Salary (exp) Prolit shore pacleerA| x alto | xx | — Pe Lae, ch ccceacsananane eeceeg Scanned with CamScanner| Ne ol Q: ir ote ctoocchin _, there & ial ends 99 Zo July. ihe ex owas the Po\lousing infocenbon 2Copital on August 20! Acune 5S p00 Deepro Ge, 006 = Drawings for iF July Zoles Acune Qeeo Deepro 6 See = Protit far year emled so 3 July 2016-3 0 S00 The pactnership agreement includes the Lllowine dorms: ) Tntems! on capital is allowed at GY ee anoumLyear) 2) Tafeoss on _dleausings ischamed at 47 um, 3) Arune ts entitled 2, poactocichip salty eat Per annum 4) Ro: idual protits are eS be shaceol gutally {o) Prepace the profe{ end oss opprepriation account for the Yeas ence 3! July, 2o-& . (Bs ah ils biel ase's owen below, oe Fe a aie aad the ~ a e pe ree ae Scanned with CamScanner@ ce 61312024 * ~ Aratand 0” POOLiF Gack (ast opp Plakon for the yor enced “4 bl Faly, Zol ¢ 5 a GY Prot for Aho year 30500 | BoSed| z 4) Taleest of cliawings A_| 360 e c )_ [abo [ezo| @ | FitZel & fi Pact nership olar \2y00) e : e |_ (=) Tolerest on casita A_1 3300 7 D | 36am | 6900) @F \2G0) (2220| @ Profit share - eile Ss » 6 \lo o 1 2270) @ e e a a a s e s e e e ea e 8 ’ Scanned with CamScanner{ — previous Pose gues tor ol 3.12024 Arun ond loepro Capital ve = c De te Cr 0 Delos | Arun etoils | Arua [vee LYST | balancobld | - \S00 balance bAI[ 2200 | — WHT Drawings | 000 | Goo [Ss [Talend on | 33c0 [2625] 334] Theron (360 | 260 coped aleawings | rate Salary |[2oar a oie | Share ae fi] Gllo__ jello 31 MT Baloncedd| 14250 1450 | 236\0 |atlo 23616 | 2316 THE] Ralaacob| 14 755| ts —|—_ Balance b/d on CC Sidhe means business owes to paoclaccs DOSS EEEEELELEDUUIUIII ITV VITFsGaT: i Scanned with CamScanner1: a Ledger’ —prepacte, by & paclnership besiaess = So in| 0) fal Ye—>cre Ail bal. De er @ canent % | @ Dilawings % debit balance \ Parlner recieves monty ' salary Int - 09 capitas polit shoe Pastner pays Jp the busiacss Cwhat jhey owe) Dau ings ~ q Int= on Of a ace of => they have palrnited liabi | t ay (oe “tbe? 6 kets) We prepare cutlent Ye to shows ewhal partner (eriev: fom | ‘ ood hd $0 yeck to the businecss Then we compaae which i's ofeater, Scanned with CamScannerrs | £ocmot Layout of a _coccont Ye particuais Balance Dlowrg s - Tnkrest gt IMO OF Se = te Vex {awh OQS. x _| Partner Sse 4 x = Shae oF pki ce any) Shae of loss Balance of/d Ca J Dr sidle shows what the partner ewe to the fusiness. T 7 -Cc side shows what tho business owes to tho paclner. AR K Te the debil side > than cred - —= 4 cuecests Mot the pada owes moe eneney | 0 tho busines: than yhot_4he business owes ~ the “pac4 ror balance _b/el balance fd or on Dr sich Cc_side Te the ctedi! side Sthan dlebt side st sues tho _busupss ues mae _motey 12 the parinoc w aa bot feel gwet 4p We buses LL as that hat halanco blof balance k's share 24360- S47 = 21389 aesy +2 = 1oG44-— > Mand Shere rer HHeH PHSB SPCKPRHSSSVPRARARAAAAVZIZVOOE Scanned with CamScannerCh (4 — oe Tens roy @.1 GC Qi c Continue WZ (a) Diksha and Paco Moki and loge alpioptation Se Cec ence at yitly, (GVPOET fo tho year uel c+) Taletesd on dic 75 125 Zoe] | Scanned with CamScannerbEBELL Te exb admajas Cattenk Y% Po, the eor enclec/ at july,2d> EELLELELDDVUUUT UUs u dss yeeY Dele iPetails | Am Date | Details 'Amt $ — (ego | Balance Wd 206, we Tatoacfel | (Zue 9486 |_Diawiegs Se00 MT Solan Yoo 31 44! Tal on Drawing | \ 25 EM ihe Probtt l250 ATs Blanech [1955 Ware 7 eee or CSiE 1A“9¢ | Balanced | (55S ae Scanned with CamScannerCe Beth Kode USoo xloo. Boco xloo OR Yoea0 Goo =S¥7. ENA (d) G Y2oo CTT indicates the arount that the business awe to 1h nattret r Laer dtawinas Jiptetest on i exe a/ie mets than roptal or pallnets colota and (ohy chate oC nick t 7 (hy Berause VA ic not as further capital ond: tiie on dhe loan ia _lerpecti@ /utolie, > buciorn 5 lof oc loss, Scanned with CamScannerSER ERREROR RAGA Se ORs eee TYPE 1 Where the full details of the partners’ current accounts are not required, the capital section of a partnership statement of financial position could be presented as follows: Capital accounts * Current accounts * Where a balance is a debit balance, itis shown in brackets and d AARKARRARARAAARRRRRRERIGATRA ARE RE Scanned with CamScanner"we ee SS ET ETE ST ES SS SSSESSSSUEYU Sometimes the partners. may wish to show the full details of the current f | TYPE2 f |, accounts in the statement of financial position. Where full details of the current accounts are required, the capital section of a partnership | statement of financial position could be presented as follows: Capital accounts Current accounts ‘Opening balance “Interest on capital Partner's salary [E.° 700K 100% 100% 200K xox om OK ma 0K ee aeaud Scanned with CamScannerCh-19 a 13/2024 Qé = Maru = Goois@ ~ 2 = “09 cc® Zahur — o i =. 200 C090 y ‘ ie appreplali, ae. i £ Protit Cor the ye (4) S400) =) Tateed on capital Sf, Mil ace EWA bp oo| Geed) (=) Paclners salar. 2 C400) 4 | Soce Profit shore MA loeme Scanned with CamScannerL4 SoEP, ES __] Asse'ss Aon— cuceal Acge\s: P somises Hoo ,e00} Ploat_ oad Mochiaery HH no Fixtutes ood Fittings W pl 7 6 2a Cunent Asots: Taveoioy 29350 Trade recievable Otlec ¢ecr@ Tolal Assets Monu Zahor | Tofel sags hal ee Curren x openne balance Trieest on capdal ¢ Poclnes salouy Ct 4 9.090 Less | 30.2 oy L Fao PiiGoo) |Fuce Adon =cuccend linbllioss 00./ Curent liadilifi Trade poy ables Olher_pduaile £ Rook avers to0\ - 2008 I. SIPPPPPRPERRERRAKRARAARAADVDARARANRV HS Scanned with CamScannerTORR RERRERERER ERR ER ERR RRRRRRRRR ERR ERR | Homewoch 24131 202 Exam ste 33 .* Cacent VE Cr LDelans [Wao Quao | Delos | lac : Tat co 00¢ 1Sao Po 4 rei salary} - Good k sheave | 8600 266 | 2 lo- 360 - \ 0 \\ Aaswer: B ->1630e Ve tee \ feps + Re\- a 3 Vol C c = {0O0.0 61 = ES oat f= sft of = Beatid = a Ste x g Scanned with CamScannerCh 22 - Analysis and interpretation! 23 | eS —> Profitability cattos —> _Liguidtu v J tatios —> Tn ventom ratos = Wienarac 0 coins Coron ¢ dont if (each clecisions QO compete ¢ : 5 in thet o ( C e me + i and sis The accounting catios (C 0 4 ( tue. s UT i Prof iho bility catio: Prkiability patios meacmo the sCocma nas bu companied tn (of » other as (evwnue soleé é AVES k (o\ Gres pot mato (Gros: Ole cCahio = 6.08 ys? ¢ a jotm of Reventic. ¢ WIEFH PHF PHP RRRARKERARKAAAARARVARARNURG Scanned with CamScanner[conliiawe x, a {GP = Revenue — cost oC cales ) Thi¢ yalio shows he percentage of o¢ C4 made fiom /eaecd! Cian, fevene- TWat ve tt Jelis us how much acess prot neck foc ew 14% of rouecue » The higher GP mareio the peter if is. ° inc Weoys to ‘iploue GP mace ne“ "Nexarn — Foclease feveoue Cimprove adc tis Le Se\\ moe orodkucis, ineicose pr bead maintain the cas{ of sales. — Reduro COst of calee / bu locw@ cing weeks + : =! (educe rau material co rw sh Ws } ie or bu finding chearer curpliers) ~ Reasons Lor oa Salt in GP margia — Selliy S_ ah cheaper pr - No\ ». Lng, Ahe imcreesed cost tha _¢ ustonet = Tneleasing “tne Cat ris (@) to Scanned with CamScanner261312024 $< CS + 10com~e (ic Cit maging choaze the nm contvoltida ite expenses af > fo° ~sememMeOM@M@MRAaRBRBRAQRQRNDAaeasgeegatcaaaraararweaaan =... Scanned with CamScannerReturn on copital em) “a ShaiCho | fei $ egucly /owne’ *X_Copiial emp\ouse Tolpa ioed proCite + < yyy _ ) > + noo-cucet (hawicf FAT _shoeholderpwret coully — Re tained petits + cogilal K CE = sholenolele 5 Couly 4+ pg n-cucent asi ties This _calio mossules how eCicen\ly_c by _ancteosing of 4 t 7 a >> > FD uses its capital to make = orci a» Now much Profs is © A for Cv 7* invested! {he x = 14 C w solic is that fos Ane eran (1 mois 4 TH the size of the pusia es - os ROCE = NOS eK! Kor tH + belue 44x) oe we canttal emayed re 2412 = i } c 7 ~ — apital emploucd: is dhe toicl fends ewhict { aie ing used bu the T4 ongisis of —_ =F J f the anes equiuf cag © is) + .04 = Non -cutteak \iom Wie on ¢ (he ~ PP busines bac beer = = Wows 40 ‘smpteve ROCE = rm ~ Moke bolic use so cof shot (aduing Xi r@P = Tocreoe plot while mov he scfro ar

_cheapec cost ales ce to better discounts achiove = olectease 10 expense ~ laclease | LQ i Accom? ccaal feveaue im Pfovemeat >€ GP mare? G2 : (Q_ Caytent who = CA Cl = inventory Glor) + trade rece nk ol + Arcelie | (ed - Toectecce albtowinas lacteas = Reduco “ueatoru held C decroan - Tacleas?e Pool Q:3 Scanned with CamScannerlah hethhdhghuleieaaadialas aaltepet | Nov King, capital ol Werkitg copital ovgswres the liouicllu of jhe pusices aod _ is the oman thats iequired de poy {h L ges of the business cue aS purchate of ater ials, reat_poic pully bulls Chew Working ca ho CWC) ecucceol Acscle = cur Uabitild Cuctent assets + Cucreak [rete cosh eons Bot) —1elm) book ie} Aiade fecievaves Tnueniot other ¢ @ciova be (choct— heim) Cenort - ber Problem of ingutticieak ea0tki ng eacitel’s = coo’t moet immed. s hetel Jo obtain Curther sur bosis = can’t take advertises of = cont take odvan{ cae ef {hey alice Ways fo improve working capital o \nlzaduae cositesl vote fhe _basiners ~oblein tong Fecen Looas = sell fnua stad Non CUlien\ __6S¢ - delay pubohese of non -culieat assels CO f he oconets = tedue fio ia diwidlencls Scanned with CamScannerj | Tet, Liquid ly tate cop | Lowdlly cofio meosuces the billy of the business 4o t coavect the ace into cash fo pou the short - bern debts. They _afe ( two types: \ escent nsecaiaaes y @) Taal CoAio/was bing cepital celio (b)Acid valio/ Liout? tate © (a\_Curcent ratte = Curent Asets cacent labuikes Tt compares tho abitity of o busines 4 cuccent Lak WheS from tneic cuccont 258 cy, Mey Cait clues The eof ar slombacd cu creat f6¥4o fa \\s. babusedo 12651 tos 2 | anal ‘ tole, foqacelec os salisactory but it ienpord ont “be @oncisler the size anc 4 bus hess. C tho cuctemt odio i¢ lees than JS si it miaht sugges! that they miaht foce warkirg Copital probleme ia Eahate ono au fot have ‘each euctant assets fo p ay their cucient (ig bi Whos € the cucent (lin exeemls Ql if sugoets that cosh is tied! wo unotedecliin) (b) Acid test catio/ Lig il _catic The liquid talio ic the same as the cattoot folio but it excludes iquend or ia is not cecatderd oc a lipuid ocr’. ne iclar| Ztendarel Ligue cetio’ Frances be\Wween o, tilto lt \ The liguich fabio ‘a cove method A testing. the lute! ty. = culicot Assets — \avenbory cutieot Wabihty (a) Scanned with CamScannerce Tae eee ee See eee ontt QHY The current cabrio nas imere A Bok there we. wn reductwelu Bea} current cratic f the could be an excess oh of inirotc though this rope oF Lic thot thou’e | ag less ioveotory «1 ( of ue. docu coo ante stoteee co anol wast 200 » Tl also Ver up cach which con» 2 (eo The lio quick Corio hes ine(eased! ec thea yoar 214K ook thew pow have $ 29% ouailat for evetu one lotlar ouved ustthout using inventer =“ Overall 1€ ioventotu ts not inc tucler het afte iasut eat sRocd -term 2 JO € eucent habi lite Scanned with CamScannerTit: (urnover ratios i 4 (&) Rote of Tovertory dur novee x Avyoroge turoouer = opening + aM C Times metas tT Cacns The rafe of inveotory tucnouet cuec + oh Memes an inventocu is solel and fer peciod. This ole coil) vores accord ing Ao business ¢ Pusiacrs setting Nicucy gocde will We low cote of inventocy jucnouer, whereas, 450 selling low yolue eveiley reguitments J/items coil! hove a high cate -% hqvento ry jurmopr - Tho anickor he snwentoty desnouer the less time Cunds ae “tick ug. LO payentora . loves i c - lower coler (esuling io high inventorey lovels = inventory Quer pace hase ~_ too high Selling tice = fall ig ofemoc f acdivity sowing clown C recession) ncfliccacy Cp00c gual ity or desice) Scanned with CamScannerAPPR RR REPRE RRSRER ERE REEL EERE EEE} rt The ellowing (ormula ic _usa/ to dre number of “days inventory is hole Salol + ovalage “Toventeru” x 266 coast of sale { z i 0. 4 hop. has following i nfoconadion: Cost of sales =$96000 Opeaina ‘ia z. c losing, inventory = & Goo Calculate ahmed’ cofe of inueatocy fucnovec to chew the Following : e)calcutate the aumbec of Simes ia tho co th inventory ig ceplecec\. lculdte the oumbec of clays iaveatocu is held befre boinc, sdd- Ce dienes ‘b) olou hin = cosh of sale = Ovetoe inWoiory = 46000 = £000 x GS Z 16 001 §S00) <> 96000 = ooo = 3042 x 3\ dou bao \ ~ =\L Jsmes Siok = fouid 4 off to the next od evn dermal ic vnoke Scanned with CamScanner| | (b) Teede tecewobles takio/ Trade recrove le § jucoovuer Codigo / sales codio \ Ceredkit custome Cowes money te bah | she cceelil accoudls. ssible Tt measuces the auatege line if ustome sHtcade cecievabie) to p A_busingss coll want this « as this meons thek the crock: wicker. The to | Vikdu \t ie +o became iCtec back e@ithec the the w Cid —> haus Cu) — week WL A 1) Irode cecieyesle casio folav Trade fecioyables Ctackit Sale GU Trade crecieveble codigo € Trocle (ecievarios acod’t uD Trade cectevable catic Cmeoths) = Veade _reciovabier (% erect sales \ eS =a pepnaegaeaseaeaBBBOSSsEsGCGYHPH#RRARARAAKRAKKN ec Scanned with CamScannerSTUULYELLLVUV UU | i Te the ec \_ clecteases , if mou indicate thal \he credit control Ucy is being apbled mace octively Te the peciock incroses, it may indicate thot +he ? credit conttol policy in jnekCidpot+ J cove 4c Cecieua. dusnou = mp muc codih control pollicy n ( count (summacy pb thé busieess\ Tanck” slop supdu +. J — offer cash discounts for ca a—ehotae iniclest/extran amount on = elUsing Curiner supplies cotil ony ox o, olebt is Said. . - @)Trode pousble Tlio/ Trode « / pacctases (esis ecedit su Tt moasuces ihe avorrcé accounts of creckit suas lielss Tratle cane bos (utinoyor Oke: = code Poyables tuto vet 4] = Tle . 1 ( ( \ Veodo peyat furor! folio frrooihs) = Teade _¢ as Scanned with CamScanner| 4itt | Tl dhe period decteo ses, the businecs is pe sing dhe supplies more oui ilu Tf he _pecioel incroews, d ma \ndiente that the busier is in short of immediate Lunds and is Cindina 4 difficult te meet the debts hea they FeAl clues lakina loneer to the supolier eaos that 4h busitess cao + Ane funols for other purneses but 4 ellects C nesedive)e - {he sup cos can be advers ng_creol it ia the Culuie™, = the sucplic cfu the ¢ supplics , ~ the lost of any Cac ly peo Or Ase Hlement = ol Ba ce fo tHe lationship uo Z, te Supaliots rs . Somnus LF Qt Cvii) RoTI- catols 2-23 times = Tn Q.2 c\ Trade recieyv = Trodle Sy 26S credit sale \ = 2s x 29 Claus Scanned with CamScanneree eee ee | Ete eed MEEy (d) Tcoohe iz Ccekit UIChE ser = +6309 220000 = 3BYU3> 35 Trade «eciovahes {ucnovec has impcouce ie now taking S2 ok Loc trade ceceiuable cuctomets) ta pay 5 cathoc than F2 olcus = A uae {Lis chill highee “hao the traclo [es {ur at _25 hich means that the business clock sqgpliocs 10 25 doys eq an ayocace - roasntain Ligeuil cd cash Flex, the 4cacle c- Jucnewor shoulel? be lower inan the Sroole Gauci futnovec. Taeteasing ia Arde Poveblos jucnoucs could cAawce.tge the” wlotionshie with the croolit Supplicls bile Lasishing oo foslee payments Read ced Customers uid lone ter lost of cx theen lodges ctedit petted Qs aFxéGP = Revere -—cCost of sale AF Cost of sales = Opins | puichaser Cl inv = 290001 \E 0,006 —ISc0o =_\99, 90m 6P * loo joven @ Meoce pales 2% go00 = WS7TZ Scanned with CamScannerToterlran ¢ onc errsons : mens cuhen business compate. i ww Pelormance with inarc 0 o%nec of the some wade Cratwe) aod 9 Cleounting fatcos » This is“elone in otoler de make impeomrnt> in their exon geeremacce bu remedial fsolutivas) acts =. { fie] -—p . z Cost of sales + qo, cor » 4 2 cuae nein ee Hilbed 4 4 2 —s = VY ZBoeo | Soo = 9-Sdimes = _Lte c- —Reduce om = offer cosh OM cy om rm rom | Problems of interlican compacises Td is nel alucus possible to obta eu th inlotantion aboed the othec busicesses in occa moke a ‘tu 21 uf (£00 wn (€ oe years Linoocinl date is_gal haceal it is not possible +i Cafecdale ihe {6 Sals Cor compocisan asthe other Cincncial plate. (s col availble- —alifleriog accounting faic fac _Cxcen>t: 3 hi {facot Welbodleaot Cade yt clepatet tian = seme _busineres may ocsa property (ren -catcol css) while dhe othe Moot uc = Non moreler, flors, such as S*UC ancl expec icace ok 1M wyurklsire don? agence 20 the Einaceiul ckojameah but ireyip voly \nigortank for the sucess of the ba te Scanned with CamScanner{ i] = financial statements ave bas 0 _histc cont aod! clon’t shen the impact ¢ inflation while making comaatision. ~ the Cnancit( vear Cacling mou be ol which coud a mpock 0 inveatery ieucl dé pencling ma ne seasonaty € the busires (for example clucing the Hf & th stock of 10 wentocs Zan be bh gH eshich 15 (hace of ol, Tafecmation 2' a { = — — — —s Toateroal wWnec holders if the busir 2.20 bela f B® ko oe Se er ured t x ww nich Cao e Vo Aun Dae (otlurE _ciovecacza | Qn (wae ypaneot i je = Limi ta fons, Disacluonsages of accountiag cla teaval 2 ae OTime Soctors e The Cinonciol stalcments pravicle a lection of = a wha ha acl ia ~~ (ie — the post _ (ecloceumce nacl i$ na j ho Cutue, > \ cost oie Co » A sonsactione Sekes poco to tp actual @ ood so SeueCof cots lator \y mcy c peo Laie t0llecfror espic Ul hte gh iofiation vate with ~4nc O-Linanclal agwects l one atel chill ( the slat innovatwen wi ill nolo se a apt fo changes ate all hore? olor of monly Valdes Mier Wo cof & bunts wood cbpetl> an ete a aa > Sssssbbbbbb Scanned with CamScannerod WDillereaf accountimn po Vice : “Usea cl{(ewn mothids of clhprecction make it Micult {o make a _tcanoclal “comparison Scanned with CamScanner