Past Adjustment

Topic Importance

• Past Adjustment: Weightage of 4 to 6 marks in exams
• Multiple entries to cover in the concept

Concepts

Error and Omission

• Sometimes errors and omissions take place while preparing partnership accounts
• Rectification: Pass journal entry

Approaches Among Partners

1. Single entry among partners
2. Various entries for each point separately (PNL Adjustment Account)

Types of Questions

• Various types of questions exist
• Questions may not be in the textbook
• You cannot memorize anything, attention, alertness, and intelligence are required for each question

Examples

Type One: Errors Related to Appropriate

Example 1: Omission of Appropriate

Steps

1. Credit the appropriate to partners
2. Debit total amount to profit-sharing ratio

Example

• X and Y are partners, profit of 60,000 rupees, IOC of 3,000 each omitted
• X: 38,000 - X Capital Account Debit 1,000 - To Y Capital Account 1,000

Type Two: Omission of ID

Example

1. Debit the ID to respective partners
2. Credit the total amount to profit sharing ratio

Example

• X and Y are partners, profit of 50,000 rupees, ID of 8,000 each omitted
• X: 4,000 - To Y Capital Account 4,000

Type Three: Omission of Both Appropriate and ID

Steps

1. Credit the appropriate
2. Debit the ID
3. Adjust against the weaker partner (in profit-sharing ratio)

Example

• X, Y, Z partners: 3:2:1, IOC of 4,000 each, salary 3,000 Y, ID of 6,000 each
• X: 14,000 - To X Capital Account Debit 14,000 - To Y Capital Account Debit 6,000 - To Z Capital Account 20,000

Tips for Practice

• Approach one is important in exams
• Solve questions with understanding and alertness

Revision Tips

• Appropriate: Credit
• ID: Debit
• Adjust against the weaker partner in profit-sharing ratio