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Adjustment of Capital Video Lecture | Accountancy Class 12 - Commerce
FAQs on Adjustment of Capital Video Lecture - Accountancy Class 12 - Commerce
| 1. What is the purpose of capital adjustment in a business? |  |
Ans. The purpose of capital adjustment in a business is to ensure that the company's capital structure is optimal for its operations and growth. This may involve altering the amount of equity, debt, or reserves to align with the business's financial strategy, improve liquidity, and support future investments.
| 2. How is capital adjusted in a partnership? | |
Ans. In a partnership, capital can be adjusted through various methods, such as revaluation of assets, admission of new partners, or withdrawal of existing partners. Adjustments may involve distributing profits or losses, altering the partners' capital accounts, and ensuring that the partnership reflects the current financial status and contributions of each partner.
| 3. What factors influence the need for capital adjustment? | |
Ans. Factors that influence the need for capital adjustment include changes in business operations, financial performance, market conditions, regulatory requirements, or strategic shifts in the company's goals. Additionally, external economic factors and investor expectations can also necessitate capital adjustments.
| 4. What are the common methods used for capital adjustment? | |
Ans. Common methods for capital adjustment include issuing new shares, buying back existing shares, altering dividend policies, and restructuring debt. Other methods may involve asset revaluation and capital contributions from partners or shareholders to enhance the company's financial position.
| 5. How does capital adjustment affect stakeholders in a company? | |
Ans. Capital adjustment can significantly impact stakeholders, including shareholders, creditors, and employees. For shareholders, it may affect dividend payouts and share value. Creditors may be concerned about the company's ability to repay debt. Employees might be influenced by changes in company performance or job security as a result of financial restructuring.
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