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CPT Chapter Introduction to Partnership

CA CPT syllabus “Introduction to Partnership” explains the features of a partnership, its advantages over a sole proprietorship and the importance a Deed of Partnership. This chapter deals with the distribution of profits and the valuation of Goodwill of a partnership business. It also explains how with a change in the profit sharing ratio among partners accounting entries need to be passed to adjust Goodwill.

CA CPT Exam  

With Sheela Warrier.Duration:3hrs49min

Partnership :Introduction, PL Appropriation, PSR & GoodwillDuration (min:sec)
Introduction to Partnership 
Introduction02:51
Why & What is Partnership?07:20
Limited Liability Partnership (LLP)02:42
Partnership Deed05:07
In absence of agreement03:00
Example02:47
Profit Loss Appropriation A/c 
P&L Appropriation Account .07:23
Examples08:14
Fixed & Fluctuating Capital05:30
Interest on Capital07:41
Interest on Drawings08:45
Fixed amount withdrawn every month07:45
Example02:03
Guaranteed Min Profit04:06
Example03:54
Quiz26:28
Profit Sharing Ratio 
PSR04:04
PSR-change in ratio06:11
PSR-Admission11:29
PSR-Retirement10:37
Quiz23:13
Goodwill 
What is Goodwill?07:23
Valuation of Goodwill02:12
Av Profit Method05:18
Wt. Av Profit Method04:03
Super Profit Method04:41
Capitalisation Method02:28
Annuity Method10:13
Summary02:57
Accounting Entry14:28
Quiz07:31
Conclusion06:51
Total3:49:15

Notes

Few things covered by us:

Partnership

What is partnership ? What is LLP ?
Partnership agreement
Profit & Loss Appropriation
Computation of interest on capital and drawings
Change in profit sharing ratio
Goodwill

Why Partnership?
Business Expansion
Pooling of resources

What is Partnership ?

It’s a relationship
Two or more persons
Share profits of a business
iv. Carried on by all or any of them acting for all.
Unlimited liability

Limited Liability Partnership

Both a partnership and a body corporate
Limited liability of partners
No liability for unauthorized acts of other partners
Taxed as a partnership

Partnership Deed

Registered Agreement
How much amount they will contribute?
Can they withdraw money?
Rate on Interest for Capital & Drawings
Salary?
Sharing of Profit?
Goodwill at change of constitution of firm
Dispute settlement
Audited Accounts

In the absence of an Agreement

No salary
No interest on capital
No interest on drawings
Interest @ 6% p.a. on loan
Profit sharing ratio - equal
Salary and interest on capital payable only if there is profit

Final Accounts for Partnership

Trading A/c
Profit & Loss A/c
Profit & Loss Appropriation A/c
Balance Sheet

Valuation of Goodwill

Four Methods:
Average Profits Method
Super Profits Method
Capitalisation Method
Annuity Method

Goodwill - Accounting Entries

At the time of Admission
At the time of Retirement
In case of change in Profit Sharing Ratio


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