Match items in List I with items in List II using the codes given below the Lists:
List I:
A. Partner's Current A/c.
B. Goodwill Account
C. Partner's Drawings A/c.
D. Realisation A/c.
List II
1. Dissolution of Partnership
2. Admission of a partner
3. Fixed capital of partners
4. Goods taken by a partner for self-consumption
Answer (1)
To match the items between List I and List II, we need to understand each term in the context of accounting and partnership management.
List I consists of accounts related to partnership firms, and List II describes situations or concepts in partnership accounts. Here’s the match with explanations:
A. Partner's Current A/c - 3. Fixed capital of partners
In partnership firms, especially those with a fixed capital system, each partner's fluctuating balances, such as current year’s profit share, interest on drawings, etc., are recorded in Partner's Current Accounts. These accounts help manage the residual funds related to each partner if fixed capital accounts are maintained separately.
B. Goodwill Account - 2. Admission of a partner
Goodwill is an intangible asset of the business, and its accounting becomes significant during the reconstitution of a firm, like when a new partner is admitted. During the admission of a partner, existing partners may need to be compensated for relinquishing a share of profits through goodwill valuation.
C. Partner's Drawings A/c - 4. Goods taken by a partner for self-consumption
When a partner takes goods from the business for personal use, it is recorded as a drawing, reflecting the reduction of the firm’s inventory for personal uses. This account calculates each partner's share of the year's drawings.
D. Realisation A/c - 1. Dissolution of Partnership
A Realisation Account is prepared during the dissolution of a partnership. It helps in realizing the firm's assets and settling its liabilities. It accounts for the assets sold, liabilities paid, and gains or losses from the dissolution process.
Thus, the correct matches are:
A - 3, B - 2, C - 4, D - 1.
