Partnership

Where do interest on capital and interest on partners’ loans appear?

• A

• B

• C

• D

Why does a partnership prepare an appropriation account?

• to allocate profit for the year to each partner

• to calculate interest on partners’ loans

• to ensure that drawings are accounted for

• to record dividends paid and proposed

Benjamin and Cody’s partnership agreement states that Benjamin is to receive an annual salary of $10 000 and that profits and losses are to be shared in the ratio 3:2. The partnership’s profit for the year is $45 000.

What is Benjamin’s total allocation of profit?

• $14 000

• $23 000

• $27 000

• $31 000

• $13 000

• $27 000

• $29 000

• $31 000

David and Edward are in partnership.

Where are Edward’s interest on drawings and interest on capital recorded in his current account?

• A

• B

• C

• D

• $7 000

• $14 000

• $17 000

• $27 000

Pat and Mike are in partnership. Pat is credited with an annual salary of $20 000. The balance of the partnership’s profit for the year is shared equally between the partners. The profit for the year was $100 000.

What is the total amount credited to Pat’s current account for the year?

• $40 000

• $50 000

• $60 000

• $70 000

Raj and Rohit are in partnership sharing profits and losses in the ratio of 2 : 1. Raj is entitled to an annual salary of $3000. The profit for the year ended 31 December 2020 was $14 100. On 1 January 2020, Raj’s current account had a debit balance of $1800.

What was the credit balance on Raj’s current account on 1 January 2021?

• $8 600

• $10 400

• $12 200

• $12 400

John and Mark are in partnership. Profits and losses are shared in the ratio 3 : 2. John is entitled to an annual salary of $12 000. The profit for the year ended 31 August 2020 was $52 000.

How much would be credited to the partners’ current accounts on 31 August 2020?

• A

• B

• C

• D

What is a disadvantage of operating a business as a partnership?

• The financial statements must be published.

• The risks and responsibilities are shared.

• Partners may not agree on how to run the business.

• Partners may not have the same skills.