Intro to Partnership

What is the maximum number of persons allowed in a partnership?

• 2

• 20

• Unlimited

• 30

A partnership is restricted to certain business activities.

• True

• False

Which of these does not include in partnership agreement?

• Interest on drawings

• Interest on capital

• Profit and loss sharing ratio

• Interest on loss

• Interest on profit

Which of the following are the ADVANTAGES of partnership?

• Unlimited liability

• Minimal documentation and paperwork

• Easy decision making

• Difficult decision making

• Easy to set up

Interest on drawings is charged to the partners to prevent the partners from taking too much cash for personal use.

• True

• False

What is the entry to record investment of each partner?

• Dr Appropriate assets acc

  Cr Capital acc

• Dr Capital acc

  Cr Appropriate assets acc

Current account is a ______ of the capital account to accumulate all changes to each partners equity.

Which of these are written in the Partnership Act 1961

• Partners are eligible for salary

• All profits or losses are shared equally

• All partners are entitled to take part in managing the business

• Partners are eligible on their capital injected into the partnership

Partners in partnership have limited liability.

• True

• False

What are the methods that are used in maintaining the owners's equity account?

• Fluctuating drawing account

• Fixed capital account

• Fluctuating capital account