Financial Accounting Assignment for Lone Pine Cafe

A) 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 .

Amar Bhatt
PTMBA -Div “B”
Roll No -: 102