FINANCIAL
ACCOUNTING
Peicemeal Distribution Of Cash
Acknowledgement
◦ I wish to extend my heartfelt appreciation to my teacher, Prof. Milind Shankar Gaikwad, for
affording me the chance to undertake this fantastic project on financial accounting, specifically
on piecemeal distribution of cash. Additionally, I am grateful for his invaluable guidance
throughout the project.
◦ Thanking you,
Rudra Suresh Shah
◦ FYBCOM DIV- B
◦ ROLL NO. - 269
INDEX
01 02 03 04
Meaning Order of Surplus Capital Procedure of
and Payments Method Distribution of
Definition Cash
Meaning and Definition
Meaning Definition
◦ Realization of assets one by one or ◦ Piecemeal cash distribution involves
part by part. When the cash is the gradual realization of assets, with
received on realization of assets, it is. resulting cash being allocated to
distributed among the various outside external liabilities. Any remaining
liabilities. If cash remains it should be surplus is distributed to partners as
payable to partners in some. per agreements
Order of Payments
◦ The assumption of realisation of all the Assets and payments of all liabilities as on the date of dissolution is far away
from practice. in actual practice the assets are gradually realised and the cash available is applied in the following order
◦ Step 1 : Realisation expenses are paid for
◦ Step 2 : Then outside creditors are paid the point to be noted here is that whenever an asset charged is realised the
payment is made first to the concerned creditor whenever an asset not charged is realised payment is made to all the
creditors in proportion to their respective claims
◦ Step 3 : After the payment of all outside liabilities the partners loans are discharged in proportion to the respective
amount
Order of Payments
◦ step 4 : After the payment of all partners loan but before partners capital are paid of as a
prudent measure. An advocate provision should be made for contingent liability (e.g.
Discounted bills receivable the maturity of which has not yet reached)
◦ Step 5 : Finally the partners capital are paid off
Surplus Capital Method
◦ This is a simple method of distribution of cash among the partners, as the name indicates.
Under this method, the surplus capital of the partners is found out first. Such surplus capital,
once paid off, will leave the remaining capital in the profit-sharing ratio. Then it can be easily
repaired, the balance if any, indicating the realization loss will be shared by the partners in the
profit-sharing ratio automatically. If there is any realization profit, the partners would get that
much amount more than the capital balance. Surplus capital means the capital that is more
than the required capital according to the share of profit, and individual partner is sharing
Procedure for Distribution of Cash
DISTRIBUTE RESERVED AND UNDISCLOSED PROFITS
MAKE A PROVISION FOR REALISATION EXPENSES
PAY OFF SECURED LIABLITIES
PAY OFF UNSECURED LIABILITIES
PAY FOR PARTNERS LOAN
PAY TO PARTNERS
Biblography
◦ All the information used in the assignment has been taken from the following
sources
◦
◦ 1.) [Link]
◦ 2.) FYBCOM Financial Accounting (Nirali publications)
◦ - Dr. Mahesh kulkarni
◦ - Dr. Suhas mahajan
THANK YOU
