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How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:
- a)Credited; Partner’s Current
- b)credited; Profit & Loss
- c)Debited; Partner’s Capital
- d)Debited; Profit & Loss
Correct answer is option 'D'. Can you explain this answer?
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How is the premium paid on the JLP of partners treated? It is ______ t...
Treatment of Premium Paid on the JLP of Partners:
Debited to Profit & Loss Account
- When partners decide to join a partnership firm, they may be required to pay a premium for the goodwill or other benefits associated with the partnership.
- The premium paid on the JLP (Joining of New Partner) of partners is treated as an expense for the partnership firm.
- This premium is debited to the Profit & Loss Account because it represents an outgoing or expense for the firm.
- By debiting the premium to the Profit & Loss Account, the partnership firm recognizes the cost incurred in bringing in the new partner.
Importance of Correct Treatment:
- It is important for the partnership firm to correctly account for the premium paid on the JLP of partners to ensure accurate financial reporting.
- By debiting the premium to the Profit & Loss Account, the firm reflects the true cost of bringing in a new partner and maintains transparency in its financial statements.
- This treatment also helps in determining the profitability of the firm and assessing the impact of the premium on the overall financial performance.
Conclusion:
- In conclusion, the premium paid on the JLP of partners is debited to the Profit & Loss Account to reflect the expense incurred by the partnership firm in bringing in a new partner.
- This treatment ensures accurate financial reporting and helps in evaluating the financial impact of admitting a new partner to the firm.
Debited to Profit & Loss Account
- When partners decide to join a partnership firm, they may be required to pay a premium for the goodwill or other benefits associated with the partnership.
- The premium paid on the JLP (Joining of New Partner) of partners is treated as an expense for the partnership firm.
- This premium is debited to the Profit & Loss Account because it represents an outgoing or expense for the firm.
- By debiting the premium to the Profit & Loss Account, the partnership firm recognizes the cost incurred in bringing in the new partner.
Importance of Correct Treatment:
- It is important for the partnership firm to correctly account for the premium paid on the JLP of partners to ensure accurate financial reporting.
- By debiting the premium to the Profit & Loss Account, the firm reflects the true cost of bringing in a new partner and maintains transparency in its financial statements.
- This treatment also helps in determining the profitability of the firm and assessing the impact of the premium on the overall financial performance.
Conclusion:
- In conclusion, the premium paid on the JLP of partners is debited to the Profit & Loss Account to reflect the expense incurred by the partnership firm in bringing in a new partner.
- This treatment ensures accurate financial reporting and helps in evaluating the financial impact of admitting a new partner to the firm.
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How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:a)Credited; Partner’s Currentb)credited; Profit & Lossc)Debited; Partner’s Capitald)Debited; Profit & LossCorrect answer is option 'D'. Can you explain this answer?
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How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:a)Credited; Partner’s Currentb)credited; Profit & Lossc)Debited; Partner’s Capitald)Debited; Profit & LossCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:a)Credited; Partner’s Currentb)credited; Profit & Lossc)Debited; Partner’s Capitald)Debited; Profit & LossCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:a)Credited; Partner’s Currentb)credited; Profit & Lossc)Debited; Partner’s Capitald)Debited; Profit & LossCorrect answer is option 'D'. Can you explain this answer?.
How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:a)Credited; Partner’s Currentb)credited; Profit & Lossc)Debited; Partner’s Capitald)Debited; Profit & LossCorrect answer is option 'D'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:a)Credited; Partner’s Currentb)credited; Profit & Lossc)Debited; Partner’s Capitald)Debited; Profit & LossCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:a)Credited; Partner’s Currentb)credited; Profit & Lossc)Debited; Partner’s Capitald)Debited; Profit & LossCorrect answer is option 'D'. Can you explain this answer?.
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How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:a)Credited; Partner’s Currentb)credited; Profit & Lossc)Debited; Partner’s Capitald)Debited; Profit & LossCorrect answer is option 'D'. Can you explain this answer?, a detailed solution for How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:a)Credited; Partner’s Currentb)credited; Profit & Lossc)Debited; Partner’s Capitald)Debited; Profit & LossCorrect answer is option 'D'. Can you explain this answer? has been provided alongside types of How is the premium paid on the JLP of partners treated? It is ______ to the _______accounts:a)Credited; Partner’s Currentb)credited; Profit & Lossc)Debited; Partner’s Capitald)Debited; Profit & LossCorrect answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
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