Question

Answer the question.
How is profit ascertained in partnership firms by using single entry system?

Answer 1

In case of partnership firms, the profit made by the business is ascertained by taking into consideration the capital accounts of all the partners. When partners have fixed capital system and current accounts are maintained, balances in the current accounts have to be considered while preparing statement of affairs. Adjustment should be made in partner's capital account for any fresh capital, introduced or withdrawn by the partners.