Question

There are two methods of recording changes in the membership of a partnership – the bonus method and the goodwill method. Describe these two methods of recording changes in partnership membership.

          There are two methods of recording changes in the membership of a partnership – the bonus method and the goodwill method. Describe these two methods of recording changes in partnership membership.
        

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Horngren’s Cost Accounting
Horngren’s Cost Accounting
Srikant M. Datar, Madhav V. Rajan 16th Edition
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There are two methods of recording changes in the membership of a partnership – the bonus method and the goodwill method. Describe these two methods of recording changes in partnership membership.
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00:01 So this question says, what are the two methods of recording account receivable transaction when a cash discount situation is involved and which is more theoretically correct and which is used in practice more of the time? so let's start with the first part, which are the two methods of recording account receivable.
00:34 So the first is record receivables and sales gross.
00:49 And the second method is to record receivables and sales net so as for the second question which is more theoretically correct and which is used in practice more of the time the one that is theoretically correct is the net method which is record receivables and sales net so the net method is more theoretically correct and the reason why it's more theoretically correct is because the net method values the receivable at its net realizable value and it also provides a better assessment of the revenue that was recognized from the sale of that products...
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