CBSE Class 12 Accountancy - Partnership Fundamentals (Enhanced Notes)

CBSE Class 12 Accountancy

Chapter 1: Accounting for Partnership Fundamentals

Enhanced Notes with Practical Problems

Based on NCERT, CBSE Guidelines & Self Study Analysis

1. Partnership Definition & Features
2. Partnership Deed
3. Partnership Act Provisions
4. Capital Account Methods
5. Profit & Loss Appropriation

6. Interest on Capital
7. Interest on Drawings
8. Guarantee of Profit
9. Past Adjustments
10. Comprehensive Problems

1. Partnership: Definition & Features

Introduction

A business can be organized in different forms - Sole Proprietorship, Partnership, or Company. Partnership comes into existence when two or more persons agree to share profits and losses of a business. यह mutual agency के concept पर based होता है जहाँ हर partner दूसरे partners के लिए agent भी है और principal भी।

Legal Definition (Section 4, Indian Partnership Act 1932)

"Partnership is the relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all."

Essential Features of Partnership:

1. Two or More Persons:

Minimum 2 partners required

Maximum: 20 (normal business), 10 (banking)

Note: Companies Act 2013 के अनुसार

2. Agreement:

Partnership is created by agreement (written or oral)

Written agreement is recommended

3. Lawful Business:

Must carry on lawful business activity

Not just co-ownership of property

4. Mutual Agency:

Every partner is both agent and principal

Actions bind all partners

5. Profit & Loss Sharing:

Agreement to share profits and losses

In agreed ratio or equally

6. Unlimited Liability:

Partners personally liable for firm's debts

Joint and several liability

Practical Problem 1: Identifying Partnership

Question: निम्नलिखित में से कौन सा partnership का example है?

a) Vinod और Yuvraj ने jointly एक plot खरीदा और बाद में profit पर बेचा।

b) David और John मिलकर grocery store चलाते हैं और profit share करते हैं।

c) तीन दोस्त मिलकर charity organization चलाते हैं।

d) रमेश और सुरेश smuggling का business करते हैं।

Solution:

Answer: (b) David और John का grocery store

Explanation:

a) ❌ Joint property ownership है, business activity नहीं

b) ✅ Lawful business + profit sharing + mutual agency = Partnership

c) ❌ Charitable activity है, profit motive नहीं

d) ❌ Unlawful activity है, partnership नहीं हो सकता

Practical Problem 2: Maximum Partners

Question: एक partnership firm में maximum कितने partners हो सकते हैं?

Banking business के लिए: ?
Other business के लिए: ?
यदि 25 persons मिलकर business करना चाहते हैं तो क्या करना चाहिए?

Solution:

Banking Business: Maximum 10 partners

Other Business: Maximum 20 partners

25 persons के लिए: Company form करना होगा क्योंकि partnership में 20 से ज्यादा partners नहीं हो सकते।

Note: Companies Act 2013 के section 464 के अनुसार

2. Partnership Deed

Partnership Deed एक legal document है जिसमें partnership के सभी terms और conditions होती हैं। यद्यपि oral agreement भी valid है, लेकिन written deed recommended है।

Contents of Partnership Deed:

क्रम	विवरण (Details)	उदाहरण (Example)
1	Name and address of firm	ABC & Co., Delhi
2	Names and addresses of partners	Amit Kumar, Rohit Sharma
3	Date of commencement	1st April 2023
4	Capital contribution of each partner	Amit: ₹2,00,000, Rohit: ₹3,00,000
5	Profit and Loss sharing ratio	3:2 या equal sharing
6	Interest rates (capital, drawings, loans)	Capital: 10% p.a., Drawings: 6% p.a.
7	Salary, commission to partners	Manager partner: ₹5,000 per month
8	Rights, duties and obligations	Decision making powers
9	Banking arrangements	All checks signed by 2 partners
10	Admission, retirement, death rules	New partner admission procedure

Advantages of Written Partnership Deed:

1. Dispute Prevention

Future conflicts और misunderstandings से बचाव

2. Legal Evidence

Court में evidence के रूप में use हो सकता है

3. Smooth Functioning

Business operations में clarity और efficiency

Practical Problem 3: Partnership Deed Analysis

Question: राम, श्याम और गीता ने एक partnership firm शुरू किया। उनके partnership deed में निम्नलिखित terms हैं:

Capital: राम ₹3,00,000, श्याम ₹2,00,000, गीता ₹1,00,000
Profit sharing ratio: 3:2:1
Interest on capital: 8% p.a.
राम को monthly salary: ₹10,000
Interest on drawings: 6% p.a.

Partnership deed में कौन से और important clauses होने चाहिए?

Missing Important Clauses:

1. Firm का name और address

2. Partnership की duration (if limited)

3. Banking arrangements - cheque signing authority

4. Decision making process - majority या unanimous

5. Admission/Retirement rules - new partner कैसे admit करें

6. Goodwill valuation method

7. Books of accounts - कौन maintain करेगा

8. Audit arrangements

9. Dispute resolution mechanism

10. Dissolution terms

Practical Problem 4: Deed vs Act

Question: A और B partners हैं। उनके deed में profit sharing ratio 3:2 है लेकिन interest on capital के बारे में कुछ नहीं लिखा। बताएं कि निम्नलिखित items कैसे treat होंगे:

Profit distribution
Interest on capital
Interest on drawings
Salary to partners

Solution:

Profit Distribution: 3:2 ratio में (deed में mentioned है)

Interest on Capital: No interest (deed silent है, Act का rule applicable)

Interest on Drawings: No interest charged (deed silent है)

Salary to Partners: No salary (deed silent है)

Note: जब deed silent हो तो Partnership Act 1932 के provisions apply होते हैं।

3. Partnership Act 1932 Provisions

Key Principle

जब Partnership Deed में कोई specific provision नहीं है या deed silent है, तो Indian Partnership Act 1932 के rules apply होंगे।

Provisions when Deed is Silent:

1. Profit Sharing Ratio:

सभी partners equally share करेंगे

Example: 3 partners = 1:1:1

2. Interest on Capital:

कोई interest नहीं मिलेगा

No matter how much capital

3. Interest on Drawings:

कोई interest charge नहीं होगा

Free withdrawals

4. Salary/Commission:

कोई remuneration नहीं मिलेगा

Equal treatment regardless of work

5. Interest on Partner's Loan:

6% per annum मिलेगा

Fixed rate by law

6. Management Rights:

सभी partners equal rights रखते हैं

Democratic decision making

7. Access to Books:

सभी partners books inspect कर सकते हैं

Transparency right

8. Liability:

Joint and several liability

Personal assets at risk

Rights और Duties of Partners:

Rights of Partners

Management में participate करने का right
Books of accounts inspect करने का right
Profits में share करने का right
Important matters में consulted होने का right
Retire होने का right

Duties of Partners

Other partners के साथ faithful रहना
Firm के losses share करना
Duties को diligently perform करना
Firm के साथ compete नहीं करना
True accounts maintain करना

Practical Problem 5: Act Provisions Application

Question: X, Y, Z ने partnership business शुरू किया। उनके पास कोई written deed नहीं है। Following transactions हुए:

Capital: X = ₹50,000, Y = ₹30,000, Z = ₹20,000
X ने firm को ₹10,000 loan दिया
Net Profit = ₹60,000
X ने ₹15,000 drawings की

Partnership Act 1932 के अनुसार profit distribution करें।

Solution:

Partnership Act provisions applicable:

1. Profit Sharing: Equal (1:1:1) - not based on capital

2. Interest on Capital: No interest

3. Interest on Loan: X को 6% p.a. = ₹600

4. Interest on Drawings: No charge

Profit Distribution:

Net Profit = ₹60,000

Less: Interest on X's Loan = ₹600

Remaining Profit = ₹59,400

Each partner gets = ₹59,400 ÷ 3 = ₹19,800

Final Distribution:

X = ₹19,800 + ₹600 (loan interest) = ₹20,400

Y = ₹19,800

Z = ₹19,800

Practical Problem 6: Deed vs Act Comparison

Question: निम्नलिखित दो situations में profit distribution compare करें:

Situation A: Partnership Deed exists

Profit ratio: 2:1 (A:B)
Interest on capital: 10% p.a.
A's capital: ₹1,00,000, B's capital: ₹50,000
Net Profit: ₹45,000

Situation B: No Partnership Deed

Same capital amounts
Same net profit

Solution:

Situation A (With Deed):

Interest on Capital:

A = ₹1,00,000 × 10% = ₹10,000

B = ₹50,000 × 10% = ₹5,000

Total Interest = ₹15,000

Remaining Profit = ₹45,000 - ₹15,000 = ₹30,000

Profit Distribution (2:1):

A = ₹20,000 + ₹10,000 = ₹30,000

B = ₹10,000 + ₹5,000 = ₹15,000

Situation B (Act applies):

No interest on capital

Equal profit sharing

A = ₹45,000 ÷ 2 = ₹22,500

B = ₹45,000 ÷ 2 = ₹22,500

Impact: B को Act provisions में ज्यादा profit मिल रहा (₹22,500 vs ₹15,000)

4. Capital Account Methods

Partnership में partners के capital accounts maintain करने के दो methods हैं। दोनों methods में accounting treatment अलग होता है।

Fixed Capital Method

दो separate accounts: Capital A/c + Current A/c
Capital balance constant रहता है
सभी transactions Current A/c में जाती हैं
Only additional capital/withdrawal Capital A/c को affect करती है
Capital Account हमेशा Credit balance show करता है

When Capital Changes:

1. Additional capital introduced

2. Permanent withdrawal of capital

Fluctuating Capital Method

केवल एक account: Capital A/c
Capital balance बदलता रहता है
सभी transactions Capital A/c में जाती हैं
Profit, drawings, interest सब Capital A/c में
Balance Credit या Debit हो सकता है

All Transactions in Capital A/c:

Drawings, Interest, Salary, Profit/Loss सब

Detailed Comparison:

Basis	Fixed Capital Method	Fluctuating Capital Method
Number of Accounts	2 (Capital + Current)	1 (Capital only)
Capital Balance	Remains constant	Changes frequently
Transactions Record	Current A/c में	Capital A/c में
Balance Nature	Capital: Always Credit Current: Credit या Debit	Credit या Debit दोनों possible
Complexity	More complex (2 accounts)	Simple (1 account)
Balance Sheet Presentation	Separate Capital + Current	Only Capital balance

Account Formats:

Fixed Capital Method

Capital Account (Dr. | Cr.)
Withdrawal of Capital | Balance b/d
Balance c/d | Additional Capital

Fluctuating Capital Method

Practical Problem 7: Fixed Capital Method

Question: A और B partners हैं। Following information दी गई है:

Capital on 1st April: A = ₹1,50,000, B = ₹1,00,000
Current A/c balance on 1st April: A = ₹5,000 (Cr.), B = ₹2,000 (Dr.)
Drawings during year: A = ₹18,000, B = ₹15,000
Interest on capital: 10% p.a.
Profit sharing ratio: 3:2
Net profit: ₹75,000

Prepare Capital and Current Accounts (Fixed Capital Method).

Solution:

Capital Accounts:

Dr. Side		Cr. Side
Balance c/d	A: 1,50,000 B: 1,00,000	Balance b/d	A: 1,50,000 B: 1,00,000

Current Accounts:

Particulars	A (₹)	B (₹)	Particulars	A (₹)	B (₹)
To Balance b/d	-	2,000	By Balance b/d	5,000	-
To Drawings	18,000	15,000	By Interest on Capital	15,000	10,000
To Balance c/d	47,000	23,000	By Profit Share	45,000	30,000
Total	65,000	40,000	Total	65,000	40,000

Interest on Capital: A = 1,50,000 × 10% = ₹15,000, B = 1,00,000 × 10% = ₹10,000

Available for distribution: ₹75,000 - ₹25,000 = ₹50,000

Profit Share: A = 50,000 × 3/5 = ₹30,000, B = 50,000 × 2/5 = ₹20,000

But total to A = ₹30,000 + ₹15,000 = ₹45,000, B = ₹20,000 + ₹10,000 = ₹30,000

Practical Problem 8: Fluctuating Capital Method

Question: Same data as above problem को Fluctuating Capital Method से solve करें।

Solution - Fluctuating Capital Method:

Particulars	A (₹)	B (₹)	Particulars	A (₹)	B (₹)
To Drawings	18,000	15,000	By Balance b/d	1,55,000	98,000
To Balance c/d	1,97,000	1,23,000	By Interest on Capital	15,000	10,000
			By Profit Share	45,000	30,000
Total	2,15,000	1,38,000	Total	2,15,000	1,38,000

Note: Opening balance = Fixed Capital + Current A/c balance

A = 1,50,000 + 5,000 = ₹1,55,000

B = 1,00,000 - 2,000 = ₹98,000

Practical Problem 9: Method Selection

Question: कौन सा method बेहतर है और कब use करना चाहिए?

Method Selection Guidelines:

Fixed Capital Method best when:

• Partners का capital investment stable है
• Clear segregation चाहिए investment और earnings का
• Banks/Investors को show करना है
• Professional partnerships में

Fluctuating Capital Method best when:

• Simple record keeping चाहिए
• Small partnerships में
• Frequent capital changes होते हैं
• Family businesses में

5. Profit & Loss Appropriation Account

P&L Appropriation Account Profit & Loss Account का extension है जो दिखाता है कि partners के बीच profit कैसे distribute किया गया। यह charges नहीं, बल्कि appropriations को record करता है।

Appropriation Sequence (Standard Order):

Net Profit (P&L A/c से transfer)
Add: Interest on Drawings (income for firm)
Less: Interest on Partner's Loan (priority item)
Less: Interest on Capital
Less: Partner's Salary
Less: Partner's Commission
Less: Reserve Creation
Balance: Distributable Profit → Partners में sharing ratio के अनुसार

Charge vs Appropriation:

Charge (P&L Account में)

• Compulsory in nature
• Profit या loss दोनों में deduct
• Business expenses हैं
• Examples: Office rent, employees salary, depreciation

Appropriation (P&L Appropriation में)

• Optional, profit के distribution
• केवल profit available होने पर
• Partners के benefits हैं
• Examples: Interest on capital, partners salary, commission

Important Journal Entries:

1. Profit Transfer:

Profit & Loss A/c Dr.

    To Profit & Loss Appropriation A/c

2. Interest on Capital:

Profit & Loss Appropriation A/c Dr.

    To Partners' Capital/Current A/c

3. Interest on Drawings:

Partners' Capital/Current A/c Dr.

    To Profit & Loss Appropriation A/c

4. Partners' Salary:

Profit & Loss Appropriation A/c Dr.

    To Partners' Capital/Current A/c

Practical Problem 10: Basic P&L Appropriation

Question: राम, श्याम, गीता partners हैं (2:2:1 ratio). Following information है:

Net Profit: ₹1,25,000
Interest on Capital: राम ₹8,000, श्याम ₹6,000, गीता ₹4,000
राम को salary: ₹12,000
Interest on drawings: राम ₹1,000, श्याम ₹800
Reserve create करना है: ₹10,000

Prepare Profit & Loss Appropriation Account.

Solution:

Profit & Loss Appropriation Account
Dr. Side	Cr. Side
Interest on Capital:	Net Profit b/d: ₹1,25,000
राम: ₹8,000	Interest on Drawings:
श्याम: ₹6,000	राम: ₹1,000
गीता: ₹4,000 = ₹18,000	श्याम: ₹800 = ₹1,800
Salary to राम: ₹12,000
Reserve: ₹10,000
Profit distributed:
राम: ₹34,560
श्याम: ₹34,560
गीता: ₹17,280 = ₹86,400
Total: ₹1,26,800	Total: ₹1,26,800

Calculation:

Available for distribution = 1,25,000 + 1,800 - 18,000 - 12,000 - 10,000 = ₹86,800

Distribution in 2:2:1 ratio = राम: 34,720, श्याम: 34,720, गीता: 17,360

Practical Problem 11: Commission Calculation

Question: A, B, C partners हैं। Net profit ₹80,000. B को commission मिलता है "5% of net profit after charging such commission". Calculate commission और P&L Appropriation Account prepare करें।

Solution:

Step 1: Commission Calculation

Let commission = x

x = 5% of (80,000 - x)

x = 0.05 × (80,000 - x)

x = 4,000 - 0.05x

1.05x = 4,000

Commission = ₹3,810 (approx)

Step 2: P&L Appropriation Account

Dr. Side	Cr. Side
Commission to B: ₹3,810	Net Profit: ₹80,000
Profit to partners: A, B, C equally: ₹25,397 each
Total: ₹80,000	Total: ₹80,000

Practical Problem 12: Insufficient Profits

Question: X, Y partners हैं (1:1). Net profit ₹15,000. Interest on capital ₹20,000 (X: ₹12,000, Y: ₹8,000). Interest on capital को appropriation माना जाए। Calculate distribution.

Solution:

Available profit: ₹15,000

Required for interest: ₹20,000

Deficiency: ₹5,000

Since profit insufficient, interest will be restricted:

Interest ratio = X:Y = 12,000:8,000 = 3:2

X gets = 15,000 × 3/5 = ₹9,000

Y gets = 15,000 × 2/5 = ₹6,000

Note: जब profit insufficient हो तो interest proportion में restrict हो जाता है।

6. Interest on Capital

Key Point: Interest on Capital केवल तब दिया जाता है जब Partnership Deed में provision हो। यह appropriation है, charge नहीं। Insufficient profit की case में restrict हो सकता है।

Treatment of Interest on Capital:

As Appropriation (Common)

• केवल profit available होने पर दिया जाता है
• Insufficient profit में proportionate restrict
• Loss की case में कोई interest नहीं
• P&L Appropriation A/c में show

As Charge (Rare)

• हमेशा full amount दिया जाता है
• Profit या loss कोई matter नहीं
• P&L A/c में charge
• Specially mentioned होना चाहिए

Calculation Methods:

1. Fixed Capital (पूरे साल)

Interest = Capital × Rate × Time/12

Example: ₹1,00,000 × 10% × 12/12 = ₹10,000

2. Variable Capital (बीच में changes)

Interest = Capital × Rate × Months/12

Different periods के लिए अलग-अलग calculate करके add करें

Opening Capital Calculation (जब directly नहीं दिया हो):

Closing Capital: xxx

Add: Drawings during year: xxx

Add: Share of loss (if any): xxx

Less: Additional capital introduced: (xxx)

Less: Share of profit: (xxx)

Opening Capital: xxx

Practical Problem 13: Variable Capital Interest

Question: X partner है जिसका capital movement निम्न है:

1st April: ₹2,00,000
1st July: Additional ₹50,000 introduced
1st October: ₹30,000 withdrawn permanently
Interest rate: 12% p.a.

Calculate interest on capital for the year ending 31st March.

Solution:

Period	Capital (₹)	Months	Interest Calculation	Amount (₹)
1st April - 30th June	2,00,000	3	2,00,000 × 12% × 3/12	6,000
1st July - 30th Sept	2,50,000	3	2,50,000 × 12% × 3/12	7,500
1st Oct - 31st March	2,20,000	6	2,20,000 × 12% × 6/12	13,200
Total Interest on Capital				26,700

Practical Problem 14: Opening Capital Calculation

Question: A partner का closing capital ₹1,80,000 है। Year के दौरान:

Drawings: ₹36,000
Additional capital introduced: ₹20,000
Profit share: ₹40,000
Interest rate: 8% p.a.

Calculate opening capital और interest on capital.

Solution:

Opening Capital Calculation:

Closing Capital: ₹1,80,000

Add: Drawings: ₹36,000

Less: Additional capital: (₹20,000)

Less: Profit share: (₹40,000)

Opening Capital: ₹1,56,000

Interest on Capital:

On opening capital: ₹1,56,000 × 8% = ₹12,480

On additional capital: ₹20,000 × 8% × 6/12 = ₹800 (assuming introduced on 1st Oct)

Total Interest: ₹12,480 + ₹800 = ₹13,280

Practical Problem 15: Interest as Charge vs Appropriation

Question: M, N partners हैं। Capital: M ₹80,000, N ₹60,000. Interest 10% p.a. Net profit ₹8,000. Compare treatment यदि interest को (a) Appropriation (b) Charge माना जाए।

Solution:

(a) As Appropriation:

Required interest: M ₹8,000, N ₹6,000 = ₹14,000
Available profit: ₹8,000
Shortfall: ₹6,000

Interest given proportionately:
M = 8,000 × 8/14 = ₹4,571
N = 8,000 × 6/14 = ₹3,429
Remaining profit: Nil

(b) As Charge:

M gets full interest: ₹8,000
N gets full interest: ₹6,000
Total interest: ₹14,000

Loss after interest: ₹8,000 - ₹14,000 = (₹6,000)
Loss shared equally:
M bears: ₹3,000
N bears: ₹3,000

7. Interest on Drawings

Interest on Drawings partners के drawings पर charge किया जाता है (जब Partnership Deed में provision हो)। यह firm की income होती है और partner के capital को reduce करती है।

Key Concepts:

What are Drawings?

Cash या goods withdrawn from business by partners for personal use

Why Charge Interest?

To compensate firm for loss of earning capacity on withdrawn amount

When Charged?

Only when specifically mentioned in partnership deed

Calculation Methods:

1. Fixed Drawings (समान amount regularly)

Average Period = (n+1)/2 months

where n = total months

Interest = Total Drawings × Rate × Average Period/12

2. Variable Drawings (अलग-अलग amount/time)

Product Method:

Interest = (Amount × Months) × Rate/1200

Each drawing के लिए अलग-अलग calculate करके add करें

Standard Average Periods:

Monthly Drawings:

• Beginning of month: 6.5 months

• Middle of month: 6 months

• End of month: 5.5 months

Quarterly Drawings:

• Beginning of quarter: 7.5 months

• Middle of quarter: 6 months

• End of quarter: 4.5 months

Types of Drawings:

Drawings against Profit

• Profit से withdraw किया गया
• Current A/c में show होता है
• Capital reduce नहीं होता
• Interest calculation में ignore

Drawings against Capital

• Capital से withdraw किया गया
• Capital A/c में show होता है
• Capital reduce होता है
• Interest calculation में consider

Practical Problem 16: Monthly Fixed Drawings

Question: P partner है जो हर महीने की 15th को ₹8,000 draw करता है। Interest rate 9% p.a. Calculate interest on drawings for the year.

Solution:

Method: Average Period Method

Total Drawings = ₹8,000 × 12 = ₹96,000

Drawing date = 15th of month (middle)

Average Period = 6 months

Interest on Drawings = ₹96,000 × 9% × 6/12 = ₹4,320

Note: 15th को middle माना गया है क्योंकि month के बीच में है।

Practical Problem 17: Variable Drawings (Product Method)

Question: Q partner ने following drawings की:

1st May: ₹15,000
1st August: ₹20,000
1st November: ₹12,000
1st February: ₹10,000

Interest rate 12% p.a. Financial year: April to March. Calculate using Product Method.

Solution (Product Method):

Date	Amount (₹)	Months to Year End	Product	Interest (Product × 12/1200)
1st May	15,000	11	1,65,000	₹1,650
1st August	20,000	8	1,60,000	₹1,600
1st November	12,000	5	60,000	₹600
1st February	10,000	2	20,000	₹200
Total Interest on Drawings				₹4,050

Formula Used: Interest = Product × Rate/1200

Where Product = Amount × Months, Rate = 12% p.a.

Practical Problem 18: Quarterly Drawings

Question: R partner quarterly ₹25,000 draw करता है:

1st April (beginning of Q1): ₹25,000
1st July (beginning of Q2): ₹25,000
1st October (beginning of Q3): ₹25,000
1st January (beginning of Q4): ₹25,000

Interest rate 10% p.a. Calculate interest on drawings.

Solution:

Method 1: Individual Calculation

Date	Amount	Months	Interest
1st April	₹25,000	12	₹2,500
1st July	₹25,000	9	₹1,875
1st October	₹25,000	6	₹1,250
1st January	₹25,000	3	₹625
Total			₹6,250

Method 2: Average Period Formula

Total drawings = ₹1,00,000

Average period (quarterly, beginning) = 7.5 months

Interest = 1,00,000 × 10% × 7.5/12 = ₹6,250

Both methods give same answer: ₹6,250

Practical Problem 19: No Date Specified

Question: S partner ने year में total ₹60,000 drawings की लेकिन dates नहीं दी गई हैं। Interest rate 8% p.a. Calculate interest on drawings.

Solution:

When date not specified:

Assumption: Amount withdrawn evenly throughout the year

Average period = 6 months (middle of year)

Calculation:

Interest = ₹60,000 × 8% × 6/12 = ₹2,400

Note: जब date specify नहीं हो तो हमेशा 6 months average period assume करते हैं।

8. Guarantee of Profit

Guarantee of Profit का मतलब है किसी partner को minimum profit की assurance देना। यदि उसका actual share guarantee से कम है तो deficiency अन्य partners या firm bear करते हैं।

Types of Guarantee:

1. Guarantee by Firm

सभी existing partners मिलकर guarantee देते हैं।

• Deficiency सभी partners share करते हैं
• Their agreed ratio में distribute होती है
• Guaranteed partner को fixed amount मिलता है
• Remaining profit others में बांटा जाता है

2. Guarantee by Specific Partner(s)

केवल specific partner(s) guarantee देते हैं।

• केवल guarantor partners deficiency bear करते हैं
• अन्य partners unaffected रहते हैं
• Multiple guarantors की case में ratio में share
• Most common type

Calculation Steps:

Calculate normal profit share (as per agreed ratio)
Compare normal share with guaranteed amount
Find deficiency = Guaranteed amount - Normal share (if positive)
Deficiency को guarantor(s) के account से debit करें
Guaranteed partner के account में credit करें

Important Points:

• Guarantee केवल minimum के लिए होता है
• यदि normal share ज्यादा है तो normal share ही मिलेगा
• Deficiency हमेशा guarantor bear करता है
• Guarantee amount profit के बाद सभी appropriations के बाद consider होता है

Practical Problem 20: Basic Guarantee

Question: A, B, C partners हैं (3:2:1 ratio). Net profit = ₹72,000. C को minimum ₹15,000 की guarantee है A द्वारा। Calculate profit distribution.

Solution:

Step 1: Normal Profit Distribution (3:2:1)

A = ₹72,000 × 3/6 = ₹36,000

B = ₹72,000 × 2/6 = ₹24,000

C = ₹72,000 × 1/6 = ₹12,000

Step 2: Guarantee Check

C का normal share = ₹12,000

C की guarantee = ₹15,000

Deficiency = ₹15,000 - ₹12,000 = ₹3,000

Step 3: Final Distribution

A = ₹36,000 - ₹3,000 = ₹33,000 (deficiency bear की)

B = ₹24,000 (unchanged)

C = ₹12,000 + ₹3,000 = ₹15,000 (guaranteed amount)

Verification: Total = 33,000 + 24,000 + 15,000 = ₹72,000 ✓

Practical Problem 21: Multiple Guarantors

Question: P, Q, R, S partners हैं (4:3:2:1 ratio). Net profit = ₹50,000. S को minimum ₹8,000 की guarantee है P और Q द्वारा 2:1 ratio में। Calculate profit distribution.

Solution:

Step 1: Normal Distribution (4:3:2:1)

P = ₹50,000 × 4/10 = ₹20,000

Q = ₹50,000 × 3/10 = ₹15,000

R = ₹50,000 × 2/10 = ₹10,000

S = ₹50,000 × 1/10 = ₹5,000

Step 2: Guarantee Analysis

S का normal share = ₹5,000

S की guarantee = ₹8,000

Deficiency = ₹8,000 - ₹5,000 = ₹3,000

Step 3: Deficiency Distribution (P:Q = 2:1)

P bear करेगा = ₹3,000 × 2/3 = ₹2,000

Q bear करेगा = ₹3,000 × 1/3 = ₹1,000

Step 4: Final Distribution

P = ₹20,000 - ₹2,000 = ₹18,000

Q = ₹15,000 - ₹1,000 = ₹14,000

R = ₹10,000 (unchanged)

S = ₹5,000 + ₹3,000 = ₹8,000

Practical Problem 22: No Deficiency Case

Question: X, Y partners हैं (1:1 ratio). Net profit = ₹80,000. Y को minimum ₹35,000 की guarantee है। Calculate profit distribution.

Solution:

Normal Distribution (1:1):

X = ₹80,000 ÷ 2 = ₹40,000

Y = ₹80,000 ÷ 2 = ₹40,000

Guarantee Check:

Y का normal share = ₹40,000

Y की guarantee = ₹35,000

Since normal share (₹40,000) > guaranteed amount (₹35,000)

No adjustment needed!

Final Distribution:

X = ₹40,000

Y = ₹40,000 (normal share, not guaranteed minimum)

Note: Guarantee only comes into play when normal share is less than guaranteed amount.

Practical Problem 23: Guarantee with Other Appropriations

Question: L, M, N partners हैं (2:2:1 ratio). Net profit = ₹60,000.

Interest on capital: L ₹4,000, M ₹3,000, N ₹2,000
L को salary: ₹6,000
N को minimum ₹15,000 guarantee है M द्वारा

Prepare P&L Appropriation Account.

Solution:

Step 1: Available for Distribution

Net Profit: ₹60,000

Less: Interest on Capital: ₹9,000

Less: Salary to L: ₹6,000

Available for profit sharing: ₹45,000

Step 2: Normal Distribution (2:2:1)

L = ₹45,000 × 2/5 = ₹18,000

M = ₹45,000 × 2/5 = ₹18,000

N = ₹45,000 × 1/5 = ₹9,000

Step 3: Total Benefits (Including Appropriations)

L = ₹4,000 + ₹6,000 + ₹18,000 = ₹28,000

M = ₹3,000 + ₹18,000 = ₹21,000

N = ₹2,000 + ₹9,000 = ₹11,000

Step 4: Guarantee Check

N की guarantee = ₹15,000

N का actual share = ₹11,000

Deficiency = ₹15,000 - ₹11,000 = ₹4,000

Step 5: Final Adjustment

L = ₹28,000 (unchanged)

M = ₹21,000 - ₹4,000 = ₹17,000

N = ₹11,000 + ₹4,000 = ₹15,000

9. Past Adjustments

Past Adjustments पिछले सालों में हुई errors या omissions को correct करने के लिए की जाती हैं। जब final accounts बनने के बाद गलतियां पता चलती हैं तो next year में adjustment entries pass करते हैं।

Common Past Adjustments:

Items Omitted (Missing):

• Interest on capital not given
• Partner's salary not paid
• Interest on drawings not charged
• Commission not allowed

Expenses Understated:

• Depreciation not provided
• Bad debts not written off
• Outstanding expenses not recorded
• Closing stock overvalued

Income Understated:

• Accrued income not recorded
• Commission receivable missed
• Interest on investments missed
• Closing stock undervalued

Wrong Treatment:

• Capital items treated as revenue
• Revenue items treated as capital
• Wrong profit sharing ratio used
• Advance income treated as current

Methods of Adjustment:

1. P&L Adjustment Account Method

Separate adjustment account बनाकर सभी past errors correct करें, फिर net effect को partners के capital accounts में transfer करें।

Recommended for multiple adjustments

2. Direct Method

Directly partners के capital accounts में adjustment करें बिना separate account बनाए।

Good for simple adjustments

Adjustment Process:

Identify the error: क्या गलती हुई है?
Calculate correct figures: सही amount क्या होनी चाहिए थी?
Find net effect: Each partner पर क्या impact है?
Prepare adjustment table: Gainer vs Sacrificing
Pass adjustment entry: Gainer Dr. To Sacrificing

Practical Problem 24: Simple Past Adjustment

Question: X और Y partners हैं (1:1 ratio). Year 2022-23 में following omissions हुए:

Interest on capital omitted: X ₹6,000, Y ₹4,000
X को salary omitted: ₹12,000
Interest on drawings not charged: X ₹1,500, Y ₹1,000

Prepare adjustment entry for year 2023-24.

Solution:

Adjustment Analysis:

Particulars	X (₹)	Y (₹)
Interest on Capital (Credit to partners)	6,000	4,000
Salary to X (Credit)	12,000	-
Interest on Drawings (Debit to partners)	(1,500)	(1,000)
Net Amount Due	16,500	3,000
Total omitted expenses	22,000 - 2,500 = 19,500
Loss shared equally (1:1)	(9,750)	(9,750)
Final Net Effect	6,750	(6,750)

Adjustment Entry:

X's Capital A/c Dr. ₹6,750
To Y's Capital A/c ₹6,750
(Being past adjustments made)

Practical Problem 25: P&L Adjustment Account Method

Question: A, B, C partners हैं (2:2:1 ratio). Following past adjustments required:

Depreciation understated by ₹15,000
Interest on capital omitted: A ₹8,000, B ₹6,000, C ₹4,000
Accrued income not recorded: ₹6,000
Interest on drawings not charged: A ₹2,000, B ₹1,500

Prepare P&L Adjustment Account और partners के capital accounts में adjustment करें।

Solution:

Profit & Loss Adjustment Account:

Dr. Side	Amount (₹)	Cr. Side	Amount (₹)
Depreciation	15,000	Accrued Income	6,000
Interest on Capital:		Interest on Drawings:
A: 8,000		A: 2,000
B: 6,000		B: 1,500
C: 4,000	18,000		3,500
Loss transferred:
A's Capital: 10,600
B's Capital: 10,600
C's Capital: 5,300	26,500
Total	59,500	Total	9,500

Net Loss: ₹59,500 - ₹9,500 = ₹50,000

Loss shared in 2:2:1 ratio: A: ₹20,000, B: ₹20,000, C: ₹10,000

Individual Impact Analysis:

Partner	Credits (₹)	Debits (₹)	Net Effect (₹)
A	8,000 + 2,000 = 10,000	20,000	(10,000)
B	6,000 + 1,500 = 7,500	20,000	(12,500)
C	4,000	10,000	(6,000)

Practical Problem 26: Wrong Profit Sharing Ratio

Question: P, Q, R partners हैं। Year 2022-23 में profit ₹90,000 को equal ratio (1:1:1) में distribute किया गया था, लेकिन सही ratio 3:2:1 है। Correct करें।

Solution:

Step 1: Wrong Distribution (Given)

P = Q = R = ₹90,000 ÷ 3 = ₹30,000 each

Step 2: Correct Distribution (3:2:1)

P = ₹90,000 × 3/6 = ₹45,000

Q = ₹90,000 × 2/6 = ₹30,000

R = ₹90,000 × 1/6 = ₹15,000

Step 3: Adjustment Required

Partner	Should Get	Already Got	Adjustment
P	45,000	30,000	+15,000
Q	30,000	30,000	0
R	15,000	30,000	-15,000

Adjustment Entry:

R's Capital A/c Dr. ₹15,000
To P's Capital A/c ₹15,000
(Being profit sharing ratio corrected)