What treatment should be given to Employee rsquo s Provident Fund appearing in the liabilities side ...........

General Accounting Principles Partnership

What treatment should be given to Employee’s Provident Fund appearing in the liabilities side of the Balance Sheet in case of admission of a partner

Not to be distributed

Should be distributed in equal ratio

both treatment can be done

Should be distributed as a part of reserve

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Explanation:

Employee provident fund is not a free reserve.It is not an accumulated profit. Partners cannot distribute it among themselves. This is outsiders’ liability which has to be paid to the employees after sometime. It will be shown in the new balance sheet of the firm (if not paid).