Deck 26: The Final Financial Statements of Partnerships

Question 1

In the absence of a partnership agreement how much interest should be charged on drawings made by partners in the period?

A) 0%
B) 5%
C) 7.5%
D) 10%

Answer 1

0%

Question 2

In the absence of a partnership agreement, how should profits made in the period be allocated amongst the partners?

A) According to hours input to the partnership by each partner
B) It should be apportioned to the partners in proportion to the capital balances at the end of the period.
C) It should be allocated to the partners in proportion to the years of service provided by each partner
D) It should be distributed evenly between the partners

Answer 2

It should be distributed evenly between the partners

Question 3

Stimpy has £100,000 of capital invested in the partnership on 1 January 20X1. He introduced a further £50,000 on 1 July 20X1. The partnership has a year end of 31 December 20X1. The partnership agreement states that interest should be credited to partners at the rate of 5% per annum on capital invested in the partnership. The interest on this drawing for the year to 31 December 20X1 will be
Recorded as follows:

A)
B)
C)
D)

Answer 3

Question 4

What is the net movement in the current account of Thomas in respect of interest on drawings and interest on capital?
Thomas and Anna are in a partnership sharing profits and losses equally. The partnership agreement states that interest on drawings is to be charged at a rate of 10% and interest on capital credited at the rate of 6%. The following information is available about the partners' transactions. The partnership has a year end of 31 December 20X1

A) Debit of £7,267
B) Credit of £7,267
C) Debit of £11,933
D) Credit of £11,933

Question 5

What is the net movement in the current account of Thomas in respect of interest on drawings and interest on capital?
Thomas and Anna are in a partnership sharing profits and losses equally. The partnership agreement states that interest on drawings is to be charged at a rate of 10% and interest on capital credited at the rate of 6%. The following information is available about the partner's transactions. The partnership has
A year end of 31 December 20X1

A) Debit of £10,333
B) Credit of £10,333
C) Debit of £13,667
D) Credit of £13,667
The correct answer was

Question 6

If the profit for the year before appropriation was £224,000, what would Roger's entitlement in total be?
Roger and Dodger have been in partnership for a number of years, investing capital of £112,000 and
£168,000 respectively. Details of the appropriation of partnership profits are as follows:

A) £40,200
B) £50,200
C) £60,600
D) £90,600

Question 7

If the profit for the year before appropriation was £224,000, what would Dodger's entitlement in total be?
Roger and Dodger have been in partnership for a number of years, investing capital of £112,000 and
£168,000 respectively. Details of the appropriation of partnership profits are as follows:

A) £116,600
B) £133,400
C) £77,400
D) £90,600

Question 8

If the profit for the year before appropriation was £300,000, what would Amy's entitlement in total be?
Amy and Emma have been in partnership for a number of years, investing capital of £156,000 and
£50,000 respectively. Details of the appropriation of partnership profits are as follows:

A) £63,665
B) £79,265
C) £128,665
D) £144,265

Question 9

If the profit for the year before appropriation was £300,000, what would Emma's entitlement in total be?
Amy and Emma have been in partnership for a number of years, investing capital of £156,000 and
£50,000 respectively. Details of the appropriation of partnership profits are as follows:

A) £155,735
B) £154,235
C) £120,735
D) None of the above

Question 10

Which of the following is not usually outlined in the deed of partnership?

A) Interest on partners loans
B) Interest on partners drawings
C) Interest on partner's capital accounts
D) Partners private investment strategy

Question 11

Which of the following items will not appear in the capital accounts of a partnership?

A) Portion of revaluation surplus
B) Goodwill adjustment
C) Capital introduced
D) Drawings

Question 12

Aaron withdrew £75,000 in cash from the partnership on 1 June 20X2. The partnership has a year end of 31 December 20X2. How will this transaction be recorded in the partnership books?

A)
B)
C)
D)

Question 13

Aaron has £50,000 of capital invested in the partnership on 1 January 20X1. He introduced a further £25,000 on 1 July 20X1. The partnership has a year end of 31 December 20X1. The partnership agreement states that interest should be credited to partners at the rate of 5% per annum on capital invested in the partnership. The interest on this drawing for the year to 31 December 20X1 is:

A) £2,500
B) £3,125
C) £3,750
D) None of the above

Question 14

Stimpy withdrew £150,000 in cash from the partnership on 1 April 20X1. The partnership has a year end of 31 December 20X1. The partnership agreement states that interest on drawings should be charged at the rate of 10% per annum. The interest on this drawing for the year to 31 December 20X1 will be recorded as follows:

A)
B)
C)
D)

Question 15

In the absence of a partnership agreement

A) Profits should be divided according to the time spent by each partner in the partnership in the period
B) Profits should be divided according to the length of service given by each partner
C) Profits should be divided according to the fee income generated by each partner
D) Profits should be divided equally between the partners.

Question 16

Which of the following is a cash transaction?

A) Interest on drawings
B) Drawings
C) Interest on capital
D) Partner salaries