Explanation

The goodwill brought in by an incoming partner in cash is shared by the old partners in their sacrificing ratio.

This ratio reflects the proportion in which the old partners give up part of their profit share to accommodate the new partner.

Explanation

To find the trader's drawings, use the following formula:

Drawings = Opening Capital + Net Profit - Closing Capital

Given:

• Opening Capital = $12,000
• Closing Capital = $13,800
• Net Profit = $3,000

Drawings = $12,000 + $3,000 - $13,800 = $1,200

So, the trader's drawings are $1,200.

Explanation

The current ratio is equal to current assets / current liabilities.

It measures a company's ability to cover its short-term liabilities with its short-term assets.

Explanation

The idiom "fly in the ointment" means something that spoils a pleasant or enjoyable experience.

It refers to a small but significant problem that detracts from an otherwise positive situation.

Explanation

Journal Voucher is used to record transactions that do not involve cash or bank accounts.

Such as adjustments or corrections to accounts.

Explanation

MOST stands for Mission, Objectives, Strategies, and Tactics.

It is a framework used for strategic planning, helping organizations define their mission, set objectives, develop strategies, and outline tactics to achieve their goals.

Explanation

Fundamental accounting assumptions are:

1. Business Entity: The business is separate from its owners.
2. Going Concern: The business will continue operating indefinitely.
3. Dual Aspect: Every transaction affects the accounting equation (Assets = Liabilities + Equity).
4. Materiality: Significant information must be disclosed to influence stakeholders' decisions.

Explanation

The basic assumptions of the law of demand include the commodity should not confer any distinction.

This means the law assumes that the commodity being analyzed is homogeneous and that the demand for it is influenced solely by changes in its own price, without considering differences in preferences or the presence of unique attributes.

Explanation

A project should be accepted if its internal rate of return (IRR) exceeds the company's required rate of return.

This indicates that the project is expected to generate returns higher than the company's minimum acceptable return, making it a potentially profitable investment.

Explanation

Small items like pencils and pens are written off within a year according to the materiality concept.

This concept allows minor expenses to be immediately recorded rather than capitalized, as their impact on financial statements is negligible.