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 & Goodwill	Duration (min:sec)
Introduction to Partnership
Introduction	02:51
Why & What is Partnership?	07:20
Limited Liability Partnership (LLP)	02:42
Partnership Deed	05:07
In absence of agreement	03:00
Example	02:47
Profit Loss Appropriation A/c
P&L Appropriation Account .	07:23
Examples	08:14
Fixed & Fluctuating Capital	05:30
Interest on Capital	07:41
Interest on Drawings	08:45
Fixed amount withdrawn every month	07:45
Example	02:03
Guaranteed Min Profit	04:06
Example	03:54
Quiz	26:28
Profit Sharing Ratio
PSR	04:04
PSR-change in ratio	06:11
PSR-Admission	11:29
PSR-Retirement	10:37
Quiz	23:13
Goodwill
What is Goodwill?	07:23
Valuation of Goodwill	02:12
Av Profit Method	05:18
Wt. Av Profit Method	04:03
Super Profit Method	04:41
Capitalisation Method	02:28
Annuity Method	10:13
Summary	02:57
Accounting Entry	14:28
Quiz	07:31
Conclusion	06:51
Total	3:49:15

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