Y11 Accounting - C19 Partnerships

What is a partnership?

• A type of corporation

• A non-profit organization

• A business owned by two or more people

• A business owned by one person

What is one advantage of forming a partnership?

• Profits must be shared among partners

• All partners are responsible for debts

• Additional source of financing from partners

• Business decisions must be made by one partner

What is a disadvantage of partnerships?

• Shared responsibilities

• Limited liability for partners

• Disagreements can occur

• Increased knowledge and skills

What is the purpose of a partnership agreement?

• To set rules for how partners will operate the business

• To outline the business's marketing strategy

• To determine the location of the business

• To establish a sole proprietorship

Which of the following is NOT a clause in a partnership agreement?

• Location of the business headquarters

• Interest rate on partners' loans

• How profits and losses are to be shared

• Amount of capital invested by each partner

What is recorded in a profit and loss appropriation account?

• Total revenue of the business

• How profit is shared between partners

• Expenses incurred by the business

• Assets owned by the business

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

• 15

• 10

• 25

• 20

What type of account records the permanent increase or decrease in capital invested by each partner?

• Capital account

• Profit account

• Drawing account

• Current account

What is the interest on a partner's loan considered?

• A capital gain

• A profit share

• A business expense

• A personal expense

What is the role of interest on drawings?

• To reward partners for their investment

• To increase the profit share

• To calculate salaries

• To discourage partners from withdrawing funds