Financial Accounting Assignment for Lone Pine Cafe
Realization Accounting effect of $870 as per the Accounting Concept for Lone Pine Cafe Accounting Books-:
A fixed equal period of time ascertained to report the financial performance of an enterprise. Normally, these fixed equal periods may be of any length of time but periods of one year in length are the most commonly used. As per the Realization Accounting Period Concept, Any revenue or expense that has occurred in the statements of financial position of the financial reports. The amount of income is determinable, and collection of amounts due is reasonably assured. The income statement presents the changes in owners' equity due to operations and other events between one balance sheet and the next balance sheet.
In the Lone Pine Cafe case, Ski Instructor are Account Receivable for $870 for the financial balance sheet as on 30thMarch'2006. It has effect in Asset for Closing Balance Sheet as A/c Receivable. In the Successive Financial year, it has the effect in Profit and Loss A/c Revenue as the amt of $ 870 was paid by the Ski Instructors.
Thus, $870 are Realizable amount for the Financial Reports of 30thMarch'2006.
B) Proportional Share in Equity determined considering Partnership Dissolved on 30th March'2006 -:
As per the section 39 of The Indian Partnership Act 1932 , dissolution of partnership between all the partners of a firm is called the dissolution of the firm. As per section 4, Partnership is the relation between persons who have agreed to share profits and Loss of business carried on by all or any of them acting for all. Thus, if some partner is changed/added/ goes out, the ‘relation' between them changes and hence ‘partnership' is dissolved, but the ‘firm' continues. Hence, the change is termed as ‘reconstitution of firm'. However, complete breakage between relations of all partners is termed as ‘dissolution of firm'. After such dissolution, the firm no more exists.
The settlement of accounts after dissolution - of a firm is dissolved as provided in the Act. In the Lone Pine Cafe Case also, disregarding the marital complications of Mr. and Mrs. Antoine considering the Partnership as dissolved we would be able to conclude that , As per the balance sheet as on 30th March'2006 , the financial balance sheet had Net Loss of $10,854 which has to be deducted from the Total owner's Equity of $48000 (16000 contributed by each of all the Partners during the start of the Business ) .The balance equity left with the Cafe was of $37,146 , which has to be proportionately divided among all the partners i.e. $12,382 per partner.
Thus , as the business was in Loss for the said financial period, all the partners also had to bear Loss in the returns for the capital invested in the Lone Pine Cafe