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class 12 accounts notes

AS- 3 Cash Flow Statement • A statement that shows flow of cash and cash equivalents of a particular period of time. It is a summary of receipts and payment of cash for a particular period of time. It also explains reasons for the changes in cash position of the firm. • Cash flow statement is generally prepared for one financial year (April to March). • Cash means cash in hand and cash at bank /demand deposits with banks. • Cash equivalent is a highly liquid investment whose maturity period is three months or less. It is subject to a minimal risk of a change in value. • Cash equivalent includes Marketable securities / short term investment, short term deposits in banks, cheques and drafts on hand, certificate of deposits. Note - Until and unless, question specifies, short term investment is considered as marketable securities. Otherwise it will be taken as current asset while solving question. • Cash Flow means inflow and outflow of cash and cash equivalents. • Inflow – Any transaction that increases cash and cash equivalent of a company Example –rent received cash revenue from operations, sale of investment etc. • Outflow – any transaction that decrease inflow and outflow of a company. Example – repayment of loans and advances, payment to creditors, operating expenses paid etc. AS -3 requires preparation of cash flow statement under three heads: • Cash Flow from Operating Activity It includes cash flows from the principal revenue generation activities of an organisation. • Cash flow from investing Activity It includes cash flows from sale and purchase of noncurrent assets, investments (which are not included in cash equivalent) and earning generated on those investments. • Cash flow from financing Activity It includes cash flow resulting out of change in shareholders’ fund and noncurrent liability of an organisation (raising and repaying finance of an organisation). Note - We will see the examples of all three activities in CFS format.*
Class 12 Accounts

AS- 3 Cash Flow Statement

AS- 3 Cash Flow Statement notes, CFS format, Cash Flow from Operating, Financing & Investing Activity, Change in Working Capital, Cash & Cash equivalent & CFS Specimen

By admin, 3 yearsJune 23, 2022 ago
4. ADMISSION OF A PARTNER According to Section 31 of Indian Partnership Act, 1932, New Partner shall be admitted in the Firm only when all existing partners agree to admission of new partner or it is agreed otherwise by partners in Partnership Deed. Change in Profit Sharing Ratio Change in Profit Sharing Ratio takes place at the time of Reconstitution of Firm. In this chapter Admission of new Partner will lead to change in Profit Sharing Ratio of a Partner in existing firm. Since, New or Incoming Partner acquires his/her share from old Partners; therefore, we need to determine New Profit Sharing Ratio and also Sacrificing Ratio. New Profit Sharing Ratio New Profit Sharing Ratio is the ratio in which all Partners, including new Partner, share future profits and losses of the Firm. New Partner acquires share from Old Partners through different ways. There are different cases related to acquisition of Shares by New Partner from Old Partners Case 1. When New or Incoming Partner acquires his share from Old or Existing Partners in their Old Profit Sharing Ratio: Situation I. When Profit Share of New Partner is given, but sacrifice made by Old Partners are not given: NPSR is calculated as follows: Subtract New Partner’s Ratio from 1 and Divide remaining share among Old Partners in their OPSR. Example: A & B Profit Sharing Ratio is 2:3. New Partner C enters into Partnership for 1/5th Share. In this case NPSR will be calculated as follows: 1 – 1/5 = 4/5 New Ratio of A = 4/5 × 2/5 =8/25 New Ratio of B = 4/5 × 3/5 =12/25 Ratio of C = 1/5 = 1/5 ×5/5 = 5/25 So, NPSR of A: B: C = 8:12:5 Ratio of Old Partners remain same as is evident from example A:B = 8:12 = 2:3 Situation II. When Share of New Partner is given and also New Profit Sharing Ratio of Old Partner is given. Subtract New Partner’s Ratio from 1 and Divide remaining share among Old Partners in their NPSR. Example: New Partner C enters into Partnership for 1/5th Share. Future Profit Sharing Ratio or NPSR of A & B is 2:3. In this case NPSR will be calculated as follows: 1 – 1/5 = 4/5 New Ratio of A = 4/5 × 2/5 =8/25 New Ratio of B = 4/5 × 3/5 =12/25 Ratio of C = 1/5 = 1/5 ×5/5 = 5/25 So, NPSR of A: B: C = 8:12:5 Situation III. When New or Incoming Partner acquires his share from old or existing Partners equally. Deduct sacrifice made by old Partner to get NPSR of each Old Partner. Example: New Partner C enters into Partnership for 1/5th Share, which he took equally from A & B. Old Profit Sharing Ratio of A & B is 2:3. In this case NPSR will be calculated as follows: Share Surrendered by A= 1/2 × 1/5 = 1/10 Share Surrendered by B= 1/2 × 1/5 = 1/10 New Ratio of A = 2/5 – 1/10 = 3/10 New Ratio of B = 3/5 – 1/10= 5/10 Ratio of C = 1/5 = 1/5 ×2/2 = 2/210 So, NPSR of A: B: C = 3:5:2 Case 2. When New or Incoming Partner acquires his shares from Old or Existing Partners in a particular ratio Deduct sacrifice made by old Partner to get NPSR of each Old Partner. Example: New Partner C enters into Partnership for 1/5th Share, which he took from A & B in the ratio of 2:3. Old Profit Sharing Ratio of A & B is 2:1. In this case NPSR will be calculated as follows: Share Surrendered by A= 2/5 × 1/5 = 2/25 Share Surrendered by B= 3/5 × 1/5 = 3/25 New Ratio of A = 2/3 – 2/25 = 44/75 New Ratio of B = 1/3 – 3/25= 16/75 Ratio of C = 1/5 = 1/5 ×15/15 = 15/75 So, NPSR of A: B: C = 44:16:15
Class 12 Accounts

Admission Of Partner

Accounting Treatment of existing goodwill & Hidden Goodwill, calculation of new profit sharing ratio in different cases, New Partner

By admin, 3 yearsJune 22, 2022 ago

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