method 1 & 2 in partnership accounting (1 Viewer)

[s.m.i.t.h]

can someone explain please?

 

[kow_dude]

I was studying this a few days ago. I couldnt really distinguish between the two methods until i actually did the questions. You should do the questions in the partnership booklet. The answers are on blackboard, but here it is for your convenience:

 

[fush]

from what i understand

method 1
when distributing the profit from the profit distribution account you distributed straight to each partners capital account

method 2
you distribute the profit straight to a partners retained profit account



this means that under method 2, the capital accounts never change for the partners, hence it is easy to see at all times what was the initial investment of each partner


but having said that, i still dont know which mehod to use in questions, i guess if there is a retained profit account then u use method 2, is that right?

 

[absolution*]

but having said that, i still dont know which mehod to use in questions, i guess if there is a retained profit account then u use method 2, is that right?

Id assume so yes. Im quite sure in the exam they would specify though.

 

[kow_dude]

Absolution, is that part of you in your avatar?

 

[absolution*]

Absolution, is that part of you in your avatar?

why, do you wanna fuck me?

 

[kow_dude]

jst curious

 

[ressul]

Petty cash

I just can not understand why they replenish the petty cash fund is like shown on Page 343 of the textbook. Why can't we replenish the fund by Dr petty cash 74(87-13) and Cr cash 74? I think that makes more sense. Anyone has any idea?

 

[sarevok]

Because then you're not recognising the expenses...