In a piecemeal distribution of cash during the dissolution of a partnership firm, which method is typically used?
A. Both B and C
B. Maximum Loss Method
C. Proportionate Capital Method
D. Surplus Capital Method
Answer: Option A
Solution (By JKSSB Mock Tests)
When cash is realized in installments during dissolution, it is distributed using either the Maximum Loss Method or the Surplus Capital (Proportionate Capital) Method to ensure partners' capital accounts are correctly adjusted.
Explanation:
JIT ensures funds are released only when actually needed for expenditure, minimizing the government's borrowing costs on idle parked funds.
Explanation:
Posting to the wrong account (error of principle or wrong personal account) keeps the debit and credit totals equal, so the trial balance still agrees.
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