GWC Higher Accounting Partnerships 1

Which of the following is not an advantage of a partnership?

• Owners have cover if they have to take time off for holidays or sickness.

• Unlimited liability

• New partners bring more expertise to the business.

A partnership, except for example solicitors & accountants, can have between how many partners?

• 2-100

• an unlimited amount

• 2-20

A limited partner...

• does not get a share of the profits

• can only lose the money they put into the business

• can lose everything if the business fails

Which of the following appears on the CREDIT side of the partner's current account?

• drawings

• interest on drawings

• none of the above

Which of the following does not appear in the partnership agreement?

• the amount of equity invested by each partner

• the share of the profit earned by each partner

• the amount of profit earned by each partner

Smith and Jones are in partnership sharing profits and losses in the ratio of equity invested. Smith invested £40,000 and Jones £20,000. If the profit available for distribution was £270,000 how much would Jones receive?

• £135,000

• £90,000

• £180,000

If a partner leaves of dies...

• a new partner must be found immediately

• the partnership is dissolved

• the existing partners can continue to run the business

The purpose of the Appropriation section in the Income Statement of a Partnership is to...

• show how the profits are divided up amongst the partners

• show the various expenses of the partners

• show the liabilities of the partners

Which of the following does not appear in the appropriation section of a partnership?

• Interest on equity

• interest on loans from partners

• interest on drawings

Items on the DEBIT side of the partners' current accounts...

• increase their overall equity in the business

• have no effect on their overall equity in the business

• decrease their overall equity in the business