Class 12 accounts Tuition: An overview of partnership accounts
An account is a systematic management of all financial transaction in business and presentation of these analyses into reports that easily gives meaning. It is through accounts where raw financial transaction data from the entries in the ledger books are analyzed to make sure that every single coin used in and for the business is fully explained on how it as used. Accounts are very crucial for every business and even personal finances. This is because accounts are the basis that tells the progress of the business.
There three major types of accounts in Business. They are Personal accounts, real accounts, and nominal accounts. Personal accounts are related to a person and may either be real person’s accounts or partnerships and corporation accounts. The accounts’ rule for these accounts remains as debit the receiver and credit the giver.
Real accounts are related to properties and assets a person or business has. These accounts’ assets can also be classified into tangible and intangible assets where tangible ones are what you can touch and feel with physical existence like land, building and many other. Nonetheless, on the other hand, intangible accounts’ assets are what you cannot physically touch but can evaluate its financial value and worth. These accounts are mostly the intellectual rights in business.
Class 12 Accounts
From the changing economic conditions in businesses, it has now been a need to include business education on accountancy to senior secondary class 12 students to equip them with the fundamental principles and methodology of management of accountancy. The students are also taught the changing standards of business accounts’ rules to prepare them for the changing accounts trends in financial management in the current world. Accounts education is made a must cover for the online class 12 accountancy subjects with an option to do an advanced accountancy level education for the students who may develop interests of pursuing accounts related careers.
Class 12 accounts curriculum mainly focuses on educating the class 12 students on the nature and purposes of accountancy in business management. Through these, some critical skills are developed in the students’ logical reasons, careful analytic skills, and even considerate accounts judgment. Online Class 12 accounts syllabus covers financial analysis information about Not-for-profit organizations, partnerships firms, and companies.
Partnership in business is a situation where two or more individual and entities decides to be the co-owners of a certain business they start altogether. In such case partnership accounts involves creating capital accounts for each co-owner at the beginning of the investment into the business. Drawing accounts are also created for each co-owner in the business. In the case where the co-owner invest cash into the business accounts, the cash accounts for the partnership are debited while the personal capital accounts credited with the amount of the cash value the co-owner has invested. The same is done for assets investment. The market value of the asset is debited at the capital investment accounts while the capital personal accounts of the co-owner investing in this are credited with the same market value. In the case where the invested asset has a liability, the liability is assumed by the partnership accounts and it is the difference in the market value of the asset with the value of the liability that is credited to the capital accounts of the investing partner. The capital accounts of each partner represent his or her equity in the partnership accounts. This shows the much that a partner can withdraw from the partnership accounts. These capital accounts can be increased when the owner makes an additional investment into the partnership accounts during the year or when the owner made guaranteed payment to the partnership accounts. When shares of proceeds from the partnership accounts are added to the capital accounts of the partner, then his or her capital accounts are also increased.
Remember that it is the partnership agreement that directs the financial moves of the partnership accounts management. Therefore, in such an agreement, it can be decided that a partner who contributes much and renders more services than the others in managing the partnership should receive some compensation for services allowance in form of salary. This salary allowance is to be allocated without regard to the personal capital accounts of that person in the partnership accounts. This allowance payable as salary is added to the capital accounts of that person.
Treatment of Goodwill in Partnership Accounts
Goodwill in partnership is considered as the extra profit above normal that is earned by the partnership in business because of the reputation the firm has built over time. This is the value of profit earned in partnership accounts due to the customers ‘preference of the firm’s products or services in business courtesy of the reputation and confidence the customers have on the quality of the products and services the firm offers. Goodwill is not easily calculated but it is considered an intangible asset of partnership accounts. This is because though it is not seen, accounts can give the worth value in terms of money.
There are factors that influence the goodwill of a partnership. These factors are:
(a) The ability of the partner to attract customers due to their personal reputation.
(b) The quality of the goods and services offered by the firm.
(c) The customers’ satisfaction with the goods and services offered.
(d) Location of the business
(e) Intellectual rights of the firm.
(f) Good management of the firm.
(g) Possession of specific contracts to sell products and make them easily available.
Some basic principles are followed when treating goodwill in partnership accounts.
(1) The first principle is that goodwill is only recordable when some consideration is paid in accounts, in monetary terms only.
(2) Goodwill cannot be recorded for unpurchased products and services. This means that goodwill cannot be recorded without any purpose or not arising from purchased goods and services.
(3) The firm’s partners must write off the goodwill over time. There are situations when the goodwill may be written off. For example in the case where the constitution of partnership wants to be revised, then the goodwill has to be written off first before the next step can take place.
There are occasions when goodwill should be calculated and evaluated. Some of these situations may include:
(a) When a new partner wants to join the partnership
Goodwill is only recorded in the financial accounts books when money or money worth is gained as a giving towards goodwill in a firm. It is explained that however in the case of a new partner joining a firm or retires and even dies, the goodwill must not be raised in the firm’s accounts books. In the case where a person is added to the partnership, he or she should bring some amount of money or asset worth as a compensation to the old partners for the decrease in their future profits arising from the added beneficiary of those profits in the firm’s accounts. This monetary value is not raised in the goodwill books of the firm and be dealt with in two ways.
– Premium method
When the new partner pays the goodwill amount in cash to the old partners’ accounts, the old partners share the goodwill amount in their capital accounts in a sacrificing ration. Nonetheless, when this goodwill amount is paid privately to the old partners’ accounts, then they as well share it according to their sacrificing ratios but no record in raised in the accounts books of record in the firm.
– Revaluation Method
This is done in the case where the added person to the partnership does not bring his or her share in the goodwill accounts. In this case, the old partners have to debit the goodwill accounts after calculation of its value and credit their accounts in accordance with their sharing ratio.
(b) A partner retires or dies
In the case when a partner retires or even dies, it means that the present value of goodwill has his share from the collective efforts that owe to the gaining of the goodwill the time when the retired person was in the firm. It is, therefore, fast enough to ensure that the present goodwill value is shared with all the partners. This is done according to the agreement provisions of the firm’s constitution. The goodwill thereafter is then adjusted to accreditation of the remaining partners’ capital accounts and with a gaining allocation to the retiring partner. This is done for the cases of either dead or retired partner of a partnership.
Other cases where goodwill can be evaluated and shared is when:
– When the partners want to dissolve the firm.
– The partners change their profit sharing ratio.
As earlier said, some of the components of online class 12 accounts are mandatory in senior secondary. This means that they account for the general text exam which in turn accounts for the gross performance and award of the student in school. This implies that there is a great need of a online class 12 student to prepare thoroughly on online class-12 account subjects to equip themselves with the content necessary for passing the exams. In regard to this, digitalization has created easy online tuitions platforms where class12 students can access online tuitions’ e-resources to equip and prepare them for exams. Online tuitions are offered by a variety of tuitions’ institutions with options to choose online tuitions’ customization of the specific areas you need help in the tuitions. Online tuitions have proved over time efficient in preparing the student to face exams with confidence. Depending on the online tuitions you choose, some of these tuitions have online tuitions-human-tutors who are there to give a person to person online tuitions help to students over class12 accounts. This means that you can personally study online tuitions on your hardship area with the help of an online tuitions’ human resource and therefore optimize your understanding from these online tuitions platforms.
The benefits of online tuitions are immensurable. They include:
When we speak about online tuitions we mean academic tuitions assistance at a click of a button. This means that the student can take online tuitions in the comfort of their homes or holidays. This is because in tuitions you do not need to attend physical classrooms to acquire these online tuitions. You only need to tuitions-enroll for the tuitions from a reputable online facility and start your tuitions at the convenience of your time.
(b) Secure and confidential
This is in relation to the tuitions mock exams associated with online tuitions. The information provided in these tuitions is authentic because it is only prepared for the tuitions from the curriculum of class 12 accounts. The tuitions providers of these online tuitions here understand that they are dealing with tuitions-couching a student who is preparing for commerce exams. Therefore the tuitions mock exams you take from online tuitions are secure and confidential. It is only you who takes the online tuitions exams and the results are shared with you only in the tuitions. The online tuitions mock exam question keeps on changing and is drafted to ensure that tuitions assessment thoroughly assesses the level of your understanding and preparedness for the class 12 accounts exams.
(c) Provision of human resource help
As earlier said, most of the online tuitions platforms are equipped with human resources available in the tuitions from the other end to handle any specific query raised by a student. This is an overwhelming aspect of these online tuitions as it compensates for the unavailability of teaching instructors outside classrooms.
(d) Saves time
Online tuitions can be taken from anywhere and are not restricted to classrooms and physical buildings. Therefore, the time is taken to access classrooms for physical teaching and the general downtime incurred as obstruction and travel are saved when undertaking online tuitions.
It is apparent that online tuitions are easy for the revision burden experienced by most students.