can anyone help with this...

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
My tutor wont sign off my devolved assessment as he does not feel that i am confident enough in my understanding of Capital and Current accounts, or with the introduction and elimination of goodwill.<BR>Can anyone confirm what things go in the debit and credit sides of both capital and current accounts, and if goodwill is split between the partners in the same ratio as the profit share?<BR>I was sure what i wrote was the same as the AAT book, but he says it's wrong.<BR>Any help anyone can be would be great...kinda eager to get this year all signed off and behind me.

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    can anyone help with this...

    Current Accounts:-<BR>Debit side is for any drawings taken in cash or goods<BR>Credit side is for interest given on capital, share of profits, salaries allowed.<BR><BR>Capital Accounts:-<BR>Credit side is the money loaned to the business<BR>Debit side is money paid back to partner/person<BR><BR>Goodwill is 'created' in the ratio of the current profit share<BR>and 'eliminated' at the new ratio - (depending on what has then happened, ie new partner, retirement, death etc etc)<BR><BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    can anyone help with this...

    Thank-you very much!<BR>So to confirm... <BR>if all the data given was profit share at Xratio, interest on capital at X% per year and goodwill introduced at £X...<BR>the interest and profits would be a credit in the current account and the only thing in the capital account would be the goodwill on both sides.

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