will insurance fund and workman profit sharing fund coming in the books be distributed among old partners when a new partner is admitted in a partnership firm
Dear Student,
When workers are allowed to share in firm's profits, firm creates a fund that is known as workmen profit sharing fund.This fund totally belongs to workers and is a liability for the firm. So, it cannot be distributed among the partners.
Similarly, insurance fund is created to pay premium in near future and is like a provision to pay a future expense. Therefore, it cannot be distributed.
When workers are allowed to share in firm's profits, firm creates a fund that is known as workmen profit sharing fund.This fund totally belongs to workers and is a liability for the firm. So, it cannot be distributed among the partners.
Similarly, insurance fund is created to pay premium in near future and is like a provision to pay a future expense. Therefore, it cannot be distributed.