L3 Partnerships Part 1

If a partnership agreement is non-existent or silent on profit sharing the Partnership Act requires _____ share of the profits.

Select all the reasons why profit is shared between the partners

• To recognise their capital contributions

• To recognise the labour they have provided

• To recognise their specialist skills

• To recognise the entrepreneurship or risk they have taken

Which is not an equity account (that has the partner's name attached) in a partnership?

• Capital

• Bank

• Current

• Drawings

Capital accounts are always in...

• Credit

• Debit

The capital account records the capital _____ of the partner

Drawings accounts are negative equity. This means they are always...

• Debit

• Credit

When a current account is a credit, this means...

• profit has been retained in the partnership

• drawings have been greater than profit share

When a current account is a debit, this means...

• profit has been retained in the partnership

• drawings have been greater than profit share

The ______ _______ account in the trial balance is the profit to share out between the partners

What is provided to partners to incentivise them to maintain or increase their capital contribution?

• Interest on capital

• Interest on drawings

• Salary

• Bonus