Q) Explain this Give example also When Claim for Workmen Compensation is accepted, it becomes a - Accountancy - Reconstitution- Change in Existing Profit Sharing Ratio

Question

Q) Explain this Give example also

When Claim for Workmen Compensation is accepted, it
becomes a liability In this case, Workmen Compensation Claim
Account is credited instead of Provision for Workmen Compensation
Claim Account

Neha Chopra · Accepted Answer

Dear Student,

The statement is absolutely true and is instating the fact that a
provision is an estimate but a claim is an actual expense/liability
to be borne;
Thus when we get an actual claim amount it gets credited and
provision A/c is replaced ;

Say for example, Provision for Workmen Compensation was made at Rs
50,000 and actual claim made by workers came out to Rs 45,000;

So now this amount of Rs 45,000 would become a liability for the
firm so Provision A/c would be debited by Rs 50,000, Claim credited
by rs 45,000 and Revaluation/Realisation/Partners' Capital A/c
would be credited by Rs 5,000

Regards,

Q). Explain this. Give example also. When Claim for Workmen Compensation is accepted, it becomes a liability. In this case, Workmen Compensation Claim Account is credited instead of Provision for Workmen Compensation Claim Account.

Q). Explain this. Give example also.

When Claim for Workmen Compensation is accepted, it becomes a liability. In this case, Workmen Compensation Claim Account is credited instead of Provision for Workmen Compensation Claim Account.