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A, B and C were partners sharing profits and losses in the ratio of 3:2:1. A retired and firm received the joint life policy as Rs. 7,500 appearing in the balance sheet at Rs. 10,000. JLP is credited and cash debited with Rs. 7,500, what will be the treatment for the balance in Joint Life Policy?
- a)Credited to partner’s current account in profit sharing ratio.
- b)Debited to revaluation account.
- c)Debited to partner’s capital account in profit sharing ratio.
- d)Either ‘b’ or ‘c’.
Correct answer is option 'D'. Can you explain this answer?
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A, B and C were partners sharing profits and losses in the ratio of 3:...
The treatment for the balance in the Joint Life Policy (JLP) will be either debited to the revaluation account or debited to the partners' capital account in the profit sharing ratio. Let's understand the reasoning behind this.
**Explanation:**
1. **Joint Life Policy (JLP) in Balance Sheet:** The JLP appears in the balance sheet at Rs. 10,000. This means that the policy has a value of Rs. 10,000 as an asset for the firm.
2. **JLP Credited and Cash Debited:** When the JLP is credited, it means that the firm is receiving some amount related to the policy. In this case, the firm receives Rs. 7,500. The cash account is debited with this amount, indicating that cash has been received.
3. **Treatment for the Balance in JLP:** The balance in the JLP after receiving Rs. 7,500 is Rs. 2,500 (10,000 - 7,500). This balance needs to be adjusted in the accounting records.
4. **Revaluation Account:** The revaluation account is used to record any adjustments related to assets or liabilities. In this case, the balance in the JLP can be debited to the revaluation account to adjust the value of the policy.
5. **Partners' Capital Account:** Alternatively, the balance in the JLP can be debited to the partners' capital account in the profit sharing ratio. This means that the partners' capital accounts will be adjusted based on their profit sharing ratio to reflect the change in the value of the JLP.
6. **Option D: Either B or C:** Both options, debiting the revaluation account or debiting the partners' capital account in the profit sharing ratio, are correct treatments for the balance in the JLP. Hence, option D, which states either B (revaluation account) or C (partners' capital account), is the correct answer.
In summary, the balance in the JLP can be adjusted by either debiting the revaluation account or debiting the partners' capital account in the profit sharing ratio. Both options are acceptable treatments for the balance in the JLP.
**Explanation:**
1. **Joint Life Policy (JLP) in Balance Sheet:** The JLP appears in the balance sheet at Rs. 10,000. This means that the policy has a value of Rs. 10,000 as an asset for the firm.
2. **JLP Credited and Cash Debited:** When the JLP is credited, it means that the firm is receiving some amount related to the policy. In this case, the firm receives Rs. 7,500. The cash account is debited with this amount, indicating that cash has been received.
3. **Treatment for the Balance in JLP:** The balance in the JLP after receiving Rs. 7,500 is Rs. 2,500 (10,000 - 7,500). This balance needs to be adjusted in the accounting records.
4. **Revaluation Account:** The revaluation account is used to record any adjustments related to assets or liabilities. In this case, the balance in the JLP can be debited to the revaluation account to adjust the value of the policy.
5. **Partners' Capital Account:** Alternatively, the balance in the JLP can be debited to the partners' capital account in the profit sharing ratio. This means that the partners' capital accounts will be adjusted based on their profit sharing ratio to reflect the change in the value of the JLP.
6. **Option D: Either B or C:** Both options, debiting the revaluation account or debiting the partners' capital account in the profit sharing ratio, are correct treatments for the balance in the JLP. Hence, option D, which states either B (revaluation account) or C (partners' capital account), is the correct answer.
In summary, the balance in the JLP can be adjusted by either debiting the revaluation account or debiting the partners' capital account in the profit sharing ratio. Both options are acceptable treatments for the balance in the JLP.
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A, B and C were partners sharing profits and losses in the ratio of 3:2:1. A retired and firm received the joint life policy as Rs. 7,500 appearing in the balance sheet at Rs. 10,000. JLP is credited and cash debited with Rs. 7,500, what will be the treatment for the balance in Joint Life Policy?a)Credited to partners current account in profit sharing ratio.b)Debited to revaluation account.c)Debited to partners capital account in profit sharing ratio.d)Either b or c.Correct answer is option 'D'. Can you explain this answer?
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A, B and C were partners sharing profits and losses in the ratio of 3:2:1. A retired and firm received the joint life policy as Rs. 7,500 appearing in the balance sheet at Rs. 10,000. JLP is credited and cash debited with Rs. 7,500, what will be the treatment for the balance in Joint Life Policy?a)Credited to partners current account in profit sharing ratio.b)Debited to revaluation account.c)Debited to partners capital account in profit sharing ratio.d)Either b or c.Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A, B and C were partners sharing profits and losses in the ratio of 3:2:1. A retired and firm received the joint life policy as Rs. 7,500 appearing in the balance sheet at Rs. 10,000. JLP is credited and cash debited with Rs. 7,500, what will be the treatment for the balance in Joint Life Policy?a)Credited to partners current account in profit sharing ratio.b)Debited to revaluation account.c)Debited to partners capital account in profit sharing ratio.d)Either b or c.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A, B and C were partners sharing profits and losses in the ratio of 3:2:1. A retired and firm received the joint life policy as Rs. 7,500 appearing in the balance sheet at Rs. 10,000. JLP is credited and cash debited with Rs. 7,500, what will be the treatment for the balance in Joint Life Policy?a)Credited to partners current account in profit sharing ratio.b)Debited to revaluation account.c)Debited to partners capital account in profit sharing ratio.d)Either b or c.Correct answer is option 'D'. Can you explain this answer?.
A, B and C were partners sharing profits and losses in the ratio of 3:2:1. A retired and firm received the joint life policy as Rs. 7,500 appearing in the balance sheet at Rs. 10,000. JLP is credited and cash debited with Rs. 7,500, what will be the treatment for the balance in Joint Life Policy?a)Credited to partners current account in profit sharing ratio.b)Debited to revaluation account.c)Debited to partners capital account in profit sharing ratio.d)Either b or c.Correct answer is option 'D'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A, B and C were partners sharing profits and losses in the ratio of 3:2:1. A retired and firm received the joint life policy as Rs. 7,500 appearing in the balance sheet at Rs. 10,000. JLP is credited and cash debited with Rs. 7,500, what will be the treatment for the balance in Joint Life Policy?a)Credited to partners current account in profit sharing ratio.b)Debited to revaluation account.c)Debited to partners capital account in profit sharing ratio.d)Either b or c.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A, B and C were partners sharing profits and losses in the ratio of 3:2:1. A retired and firm received the joint life policy as Rs. 7,500 appearing in the balance sheet at Rs. 10,000. JLP is credited and cash debited with Rs. 7,500, what will be the treatment for the balance in Joint Life Policy?a)Credited to partners current account in profit sharing ratio.b)Debited to revaluation account.c)Debited to partners capital account in profit sharing ratio.d)Either b or c.Correct answer is option 'D'. Can you explain this answer?.
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