1. Accounting for Not-For-Profit Organisations (NPOs)

Accounting for Not-For-Profit Organisations (NPOs), such as charities, schools, and clubs, differs from profit-making entities. NPOs focus on achieving social objectives rather than profit. Their main financial statements include the Receipts and Payments Account (a cash-based summary), the Income and Expenditure Account (an accrual-based summary of surplus/deficit), and the Balance Sheet.

2. Peculiar Items in NPO Accounts

NPO accounts often include peculiar items not found in sole proprietorships. These include subscriptions (members' fees), donations (general or specific), legacies, and entrance fees. Special treatment is required for items like life membership fees (often treated as capital receipts) and specific donations (treated separately, potentially as capital receipts or income depending on conditions).

3. Accounting for Partnership: Basic Concepts

A partnership is a business owned and managed by two or more individuals who agree to share profits and losses. Basic concepts include the Partnership Deed (agreement outlining terms), capital accounts (fixed or fluctuating), profit and loss appropriation account (distributing profits), interest on capital/drawings, and salary/commission to partners. The partnership is governed by the Indian Partnership Act, 1932.

4. Reconstitution of Partnership - Admission

A partnership firm may undergo reconstitution when there is a change in the existing partnership agreement. The admission of a new partner is one such event. This requires adjustments for goodwill, revaluation of assets and liabilities, distribution of accumulated profits or losses, and determination of the new profit-sharing ratio and capital contributions.

5. Goodwill Valuation and Treatment (Partnership Reconstitution)

Goodwill represents the reputation and future earning capacity of a partnership. When a partnership is reconstituted, goodwill needs to be valued and treated appropriately. Various methods exist for valuation, such as average profit, super profit, and capitalization methods. Upon admission, it's usually brought in by the new partner; upon retirement or change in ratio, it's adjusted among partners.

6. Adjustments on Partnership Reconstitution

During partnership reconstitution (admission, retirement, death, or change in profit-sharing ratio), several adjustments are necessary. These include the treatment of accumulated profits/losses, revaluation of assets and liabilities to reflect their current market value, and adjustments related to partner's capital and profit-sharing ratios to ensure fairness among all partners.

7. Reconstitution of Partnership - Retirement and Death

Partnership reconstitution also occurs upon the retirement or death of a partner. In such cases, adjustments for goodwill, revaluation of assets and liabilities, distribution of accumulated profits/losses, and settlement of the retiring/deceased partner's dues are made. The outgoing partner's share is often calculated based on their capital account balance and any accrued profits or goodwill entitlement.

8. Dissolution of Partnership Firm

Dissolution of a partnership firm signifies the end of the partnership business. It involves winding up the business, selling off assets, paying off liabilities, and distributing any remaining surplus to the partners in their final profit-sharing ratio. The process is typically recorded in a Realisation Account.