How should interest charged on a partners drawings account be treated?
A credited to the appropriation account
B credited to the income statement
C debited to the appropriation account
D debited to the income statement
Interest on drawings is debited in current account and
credited to appropriation account (added into profit
for the year).
X and Y are in partnership sharing profits and losses in the ratio 2: 1.
Z will be admitted with the following new arrangements.
Profit and loss sharing ratio will be 2: 1:2 respectively.
Goodwill is valued at $90 000. Z will pay the partners for his share of the goodwill.
How much will Z pay X?
X and Y had been in partnership sharing profit and losses in the ratio of 1:2 respectively.
Z was later admitted to the partnership.
It was agreed that the goodwill is valued at $120 000. No goodwill account is to be retained in the books of account.
Profit and losses were to be shared between X, Y and Z in the ratio of 2: 1: 1 respectively.
What was the effect of the goodwill adjustment in X’s capital account?
A decreased by $20000
B decreased by $60 000
C increased by $20000
D increased by $60000
Why is goodwill adjusted in the books of account when a new partner is admitted?
A A more accurate value of non-current assets is shown in the statement of financial position.
B Original partners can be credited for their efforts in building up the partnership business.
C Partners can take higher drawings as a result of their share of the goodwill.
D The new partner knows how much they have to introduce as capital
Meena was a sole trader. On 1 July 2018, Hanna entered into a partnership with her sharing profits equally.
Profit for the year ended 31 December 2018 was $168000 accruing evenly over the year.
An irrecoverable debt of $8000 was incurred during March 2018 and it was agreed that this would be
paid for by Meena.
What is Hanna's share of profit?
J and K shared profits equally.
Their capital account balances were J $400000 and K $160000.
L was admitted as a partner. The three partners then shared profits equally.
On admission of L as a partner, assets were increased in value by $210000. L paid in capital equal to the average new capital balances of J and K.
What was the capital paid in by L?
Which item is not taken into account when a partner joins a partnership?
A balances on the partners’ current accounts
B capital introduced by the new partner
C changes in the profit sharing ratio
L, M and N are in partnership sharing profits and losses equally.
L retired when the credit balances on her capital and current accounts were $100000 and $40 000.
Partnership assets were revalued upwards by $60 000.
L took half of the amount due to her on retirement. The other half was left as a loan to the business.
How much was L paid from the partnership bank account on her retirement?
Which items would not be in the appropriation account for a partnership?
1 interest on capital
2 interest on a partner’s loan
3 share of profit on revaluation of assets
4 share of residual profit
D, E and F are in partnership, sharing profits in the ratio 2:2: 1.
D is allowed an annual salary of $10000.
E has made a loan to the partnership on which the partnership pays interest of $5000 each year.
Profit for the year before appropriation was $150 000.
What was F’s total share of profit for the year?
Which rule does not apply in the absence of a partnership agreement?
A interest on loans is charged at 6% per annum
B no interest on capital is charged
C no salaries are paid to partners
D profits and losses are shared equally between the partners
A partnership maintains capital accounts and current accounts.
Which statements are correct?
1 The capital accounts show the total amount owed to each partner.
2 The capital accounts represent the retained earnings of the business.
3 The capital and current accounts equal the net assets.