Basics Of Accounting

Debentureholders are lenders of a company who are treated as creditors, so they match with (3). Loss on revaluation is transferred to the debit side of partners' capital accounts because it decreases capital, so it matches with (5). Equal profit and loss sharing ratio applies when there is no partnership deed, thus matching with (6). Loan given by a partner is an internal liability of the firm, hence linked to (2). Admission of a new partner requires old partners to sacrifice part of their share, matching with (1). Shareholders are owners of the company, so they match with (4).

Partnership begins with an agreement because a partnership is created only when two or more persons decide to run a business together with a clear understanding. Under the fixed capital method, capital accounts always maintain a fixed balance, with adjustments made through current accounts. When a new partner brings premium, it compensates old partners for their sacrifice, so it is shared in the sacrificing ratio. Purchased goodwill carries the highest value because it is acquired for consideration. Annual reports are issued to shareholders as they are stakeholders. Common size statements use vertical analysis. Sale of property is an investing activity.