CBSE Class 12 Accountancy Partnership Fundamentals Notes

• Integrity.

• Professional competence with due care

• Commitment to excellence

• Transparency

• Objectivity and independence

• Confidentiality

• Communicating the material information

• Analysis, problem solving and critical thinking

• Admitting errors and rectifying them

• Efficient utilisation of resources

• Commitment to pay its liabilities in time While learning Accountancy it is observed that the child remains upto a level of figure or intrinsic values only. There is a need that the child also appreciates and learns the moral values associated with these figures, imbibes the same in his day to day life and carries the same to his professional life to become a responsible and committed citizen of INDIA. In the following questions an attempt has been made to bring out these values for the teaching learning community to ponder and practice Values are the significant and fundamental dimensions of human life
and indicate how one adheres, attaches and reacts in life situations or circumstances. They are the blue prints or action plan which orient and decide the thinking, action feelings and behavior itself.

• Values does not mean going back to the superstitions but to bring in harmony with the present social and cultural conditions, which are acceptable to the society.

• Values Cannot be scientifically investigated orproven 

• Values affect how we practice 

CORE VALUES OF A BUSINESS:

• Accountability- Responsibility of our actions that influence the lives of our customers and fellow workers.

• Balance- Maintaining Healthy life and work balance for workers.

• Collaboration-Collaborating within and outside the company to give the best.

• Commitment-Commitment to roll great product, service and other initiatives that impact lives both within and outside the organization.

• Community- A sense of responsibility and contribution to society that define our existence.

• Consistency-Be consistent in offering the best for wonderful experience.

• Diversity- Respecting the diversity and giving the best of the composition.

• Efficiency- Being efficient and effective in our approach to give best solution each time.

• Empowerment- Empowering the employees to take initiative and give the best.

• Fun- Having fun and celebrating small successes in our journey to achieve big.

• Innovation- To come out with new creative ideas that have the potential to change the world.

• Integrity-To act with honesty and integrity without compromising the truth.

• Leadership- The courage to lead from front and shape future.

• Ownership- Taking ownership of the company and customer success.

• Passion-Putting the heart and mind in the work to get the best.

• Quality-Giving the best and unmatched results for all round satisfaction.

• Respect-Giving due respect to self and others and maintain the environment of team work and growth.

• Risk Taking- Encouraging self and others to take risk for a bright future.

• Safety- Ensuring the safety of people and making sure to give them trouble free experience.

• Service Excellence- Giving the best and world class service and achieving excellence each passing day.

Partnership – Fundamentals

• X, Y and Z are partners with ` 72,000, ` 80,000 and ` 1,00,000 as their capitals respectively. The profit for the year ending March 31, 2012 was ` 7,20,000. Before distributing profits they donated 10% of profits to a ‗Non-Govt. organization‘ as charity for welfare of educationally backward section of the society. Out of the remaining profit, ` 4,00,000 is divisible as 5:3:2 ratio and the remaining is to be divided amongst them equally.

Identify the value involves by the partnership form of X,Y and Z. Prepare Profit and Loss appropriation Account and partner‘s Capital Account.

• Aakash and Bhola entered into partnership on January 1, 2012 contributing ` 1,20,000 and ` 1,60,000 as capitals respectively. Their partnership firm started the business of manufacturing shoes. They decided to allow a discount of 30% on shoes for school going children. They share profits in the ratio of 7:3. The profits for the year were ` 9,60,000.

Prepare Profit and Loss Appropriation Account and the partner‘s Capital Accounts. Also identify the value involved in this question.

•  Renu and Reshma shared profits as 7:3. Renu want to give admission to her friend Rehana as a new partner. Reshma agrees with this decision of Renu. Rehana is a physically challenged lady and admitted with a ¼th share in profits. Renu and Reshma gave her a guarantee that her share of profit will never be less than ` 1,20,000 p.a., the profits for the last two years ended March 31, 2011 and March 31, 2012 were ` 1,60,000 and ` 2,40,000 respectively. Identify the human value involved in this case and prepare Profit and Loss Appropriation Account for the two years.

•  Ramesh and Gurmeet are two friends belonging to Hindu and Sikh religion respectively. They started a business of wire manufacturing in the form of a partnership firm. They know that the factory of wire manufacturing pollutes the environment. Therefore there are two options available before them. First option is that the factory can be opened in rural area where local residents are poor and illiterate. Second option is that an advanced pollution control plant can be installed in their factory to control the pollution. They decided to choose the second option which involves an additional cost of ` 2, 00,000. To arrange this amount, they admitted their fast friend John as a new partner for equal share in the future profits.

John brought` 2,50,000 as his share of capital. Ramesh and Gurmeet gave him a guarantee that his share of profit will not be less than ` 60,000 p. a. At the end of first year the firm earns a profit of ` 1,50,000.

Mention the value involved in this question. Write the effects of choosing option available before Ramesh and Gurmeet. Prepare the Profit and Loss Appropriation Account for the first year.

• A, B and C are in a partnership. A is appointed for carrying on the business of the firm by the other partners. A has decided to purchase the goods from a firm in which his wife and his son are partners at a double rate then the prevailing market rate without disclosing this fact to others partners of the firm.

State which values have been violated by A by not disclosing this information to B and C.

•  A, B and C are partners in a firm. C used firm‘s money to buy shares without disclosing it other partners. Which value C is violating and what will be the treatment of profit earned by C?

•  After completing MBA, Arun and Radha want to start a new business but they don‘t have sufficient capital. They contacted their common friend Sita, a rich lady with low vision. They decided to form a partnership firm with a capital of Rs.25,00,000 with a ratio of 80% by Sita, 10% each by Arun and Radha respectively. The partnership deed provided as follows:-

•  Interest on capital @12% p.a.

•  Salary to active partners Arun and Radha @ 9,000 p.m.The firm earned a net profit of 9,66,000 during the year. Sita decided to donate half of her profits to a school for differently abled children.

State which values are being reflected in the above case and also prepare Profit and loss appropriation a/c for the year.

•  A and B are partners in a firm having a workmen compensation reserve of 10,00,000. A worker, Rohan died in an accident while working for the firm. The firm paid 500,000 as compensation to his family and offered a job to his wife and also arranged for the education of his son. State which values are being reflected in the above case and also show the treatment of workmen compensation reserve if A and B now decide to change their profit sharing ratio
from 3:1 to equal ratio. Workmen compensation reserve will not be shown in the books of new firms.

•  A and B are partners in a firm. A manages all business as a representative of firm. For execution of a sales order to a valuable customer A incurred ` 5,000 for delivery in quick time. B is not agreeing to reimburse the above expenses from the firm‘s accounts.

Explain the treatment of above expense and describe which value is violatedby the partners.

•  What are the values involved in the formation of a partnership firm?

•  What are the values disclosed by a Partnership Deed?

Please click the link below to download pdf file for CBSE Class 12 Partnership - Partnership – Fundamentals Notes.