MCQs - Financial Statement of Partnership Business

If partners do not have any agreement, how should profits or losses be shared?

• equally

• equally after interest has been allowed on capital

• in proportion to the amount of time that the partners work

• in the ratio of the partners' individual capitals

Bill and Ben are in partnership sharing profits and losses in the ratio 3:2. Bill receives a salary of $12000 per year. The firm's net profit for the year is $52 000. What are the amounts to be credited to the partners' Current Accounts?

• Bill $26,000, Ben $26,000

• Bill $31,200, Ben $20,800

• Bill $36,000, Ben $16,000

• Bill $24,000, Ben $16,000

The current account of a partner of a business is prepared from the following information. January 1 balance b/f $200 Dr December 31 share of profits $20000 31 interest on drawings $800 31 drawings $18 000 What is the balance of the account on 31 December?

• $3,000 Cr

• $2,600 Cr

• $1,000 Cr

• $1,000 Dr

In a partnership a separate capital account and current account is kept for each partner. What are the accounting entries for interest on a loan from a partner?

• Income statement Partner's capital account

• Income statement Partner's current account

• Profit and Loss Appropriation Account Partner's capital account

• Profit and Loss Appropriation Account Partner's current account

The profit of a partnership is $100,000. The partnership agreement provides for interest at 10 percent on partners' capitals, drawings and loans. The following is extracted from the books of the firm.

Partners' capitals $300,000

Total drawings $200,000

Partner's loan to firm $50,000

What is the residue of profit available for distribution?

• $55,000

• $85,000

• $90,000

• $105,000

A partner receives interest on capital. What are the bookkeeping entries?

• Current account Income statement

• Current account Profit and Loss Appropriation Alc

• Income statement Current account

• Profit and Loss Appropriation Alc Current account

X and Y are in partnership sharing profits equally and receiving 10% interest on capital. On 31 December 2000 their capital and current accounts show the following credit balances.

Capital Account $8,000 $12,000

Current Account $6,000 $4,000

What will be the total interest on capital allowed for the year?

• $800

• $1,000

• $1,200

• $2,000

What does a credit balance on a partner's current account represent to a business?

• current asset

• current liability

• non-current liability

• part of the capital

X and Y are partners who share profits and losses equally after allowing for interest on capitals and salary. Their net profit for the year is $28,750. The table shows information for the year.

Drawings $1,800 $2,400

Interest on capitals $1,250 $2,000

Salary $4,000

What is the share of profit for each partner?

• $8,650

• $12,375

• $10,750

• $12,750

H is a partner in the partnership of H, J and K. The table shows information relating to H for the financial year. Salary $8,000 Drawings $2,800 Share of profit $4,600 The opening credit balance on H's current account is $28,200. What is the closing balance on his current account?

• $30,000

• $40,800

• $38,000

• $43,600