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X, Y and Z are partners sharing profits and losses in the ratio 5:3:2 decide to share the future profits in the ratio 2:3:5. What will be the treatment for workmen compensation fund appearing in the balance sheet on the date if no information is available for the same?
  • a)
    Distributed to the partners in old profit sharing ratio.
  • b)
    Distributed to the partners in new profit sharing ratio.
  • c)
    Distributed to the partners in capital ratio.
  • d)
    Carried forward to new balance sheet without any adjustment.
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
X, Y and Z are partners sharing profits and losses in the ratio 5:3:2 ...
Answer:

The treatment for the workmen compensation fund appearing in the balance sheet depends on the information available. In this case, since no information is provided, we can assume that the workmen compensation fund is a liability of the partnership.

The correct treatment for the workmen compensation fund would be to distribute it to the partners in the old profit sharing ratio, which is 5:3:2. This means that the partners will bear the liability of the workmen compensation fund in the same ratio as their profit sharing ratio.

Here is the explanation for why option 'A' is the correct answer:

Distribution to the partners in old profit sharing ratio:
- The workmen compensation fund is a liability of the partnership.
- When the partnership is dissolved or there is a change in profit sharing ratio, the partners have to decide how to settle the liabilities.
- In this case, since no information is available for the workmen compensation fund, it is assumed to be a liability of the partnership.
- As per the old profit sharing ratio (5:3:2), the partners will bear the liability of the workmen compensation fund in the same ratio.
- Therefore, the workmen compensation fund would be distributed to the partners in the old profit sharing ratio of 5:3:2.

Conclusion:
In conclusion, if no information is available regarding the treatment of the workmen compensation fund, the correct treatment would be to distribute it to the partners in the old profit sharing ratio of 5:3:2. This ensures that the partners bear the liability of the fund in the same ratio as their profit sharing ratio.
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Community Answer
X, Y and Z are partners sharing profits and losses in the ratio 5:3:2 ...
Explanation:
Background:
- X, Y, and Z are partners sharing profits and losses in the ratio 5:3:2.
- They have decided to share future profits in the ratio 2:3:5.
Workmen Compensation Fund:
- Workmen Compensation Fund is a provision made by a business for the welfare and benefits of its employees in case of any work-related injury or accident.
- It is usually shown as a liability in the balance sheet.
Treatment for Workmen Compensation Fund:
- In the absence of any specific information, the treatment for the Workmen Compensation Fund appearing in the balance sheet on the date will be as follows:
1. Distributed to the partners in old profit sharing ratio:
- The Workmen Compensation Fund can be distributed among the partners in the old profit sharing ratio of 5:3:2.
- This means that the amount will be divided among the partners based on their respective profit sharing ratios before the change in profit sharing ratio.
2. Reasoning behind this treatment:
- Since no information is available about the treatment of the Workmen Compensation Fund in the new profit sharing ratio, it is logical to distribute it in the old profit sharing ratio.
- This ensures that the partners receive their respective shares based on their previous profit sharing ratios.
Therefore, the correct answer is A: Distributed to the partners in old profit sharing ratio.
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X, Y and Z are partners sharing profits and losses in the ratio 5:3:2 decide to share the future profits in the ratio 2:3:5. What will be the treatment for workmen compensation fund appearing in the balance sheet on the date if no information is available for the same?a)Distributed to the partners in old profit sharing ratio.b)Distributed to the partners in new profit sharing ratio.c)Distributed to the partners in capital ratio.d)Carried forward to new balance sheet without any adjustment.Correct answer is option 'A'. Can you explain this answer?
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