18Financial Accounting Quiz

One of the advantages of operating as a partnership is

• Limited liability

• Access to a larger amount of capital

• Ability to raise capital through issue of shares

• Greater control than a sole trade by each partner

• Firm is not affected by retirement of partners

Which of the following would NOT be recognised in a partnership statement of distribution of income?

• Interest on capital

• Interest on drawings

• Partners’ salary

• Interest on partner’s loan

• Share of residual profit

The following terms are implied by the Partnership Act of your country EXCEPT

• All the partners are entitled to equal share in the firm’s profits

• Every partner may take part in the management of the firm

• No person may be introduced as a partner without the consent of all the other partners

• Every partner has the right to inspect and take a copy of the firm’s books

• All partners are entitled to be fairly remunerated for management of the firm.

The double entry for recording losses on revaluation in a partnership account is to

• Dr. Partners’ current account Cr. Revaluation

• Dr. Statement of income distribution Cr. Revaluation

• Dr. Partners’ Drawings accounts Cr. Revaluation

• Dr. Revaluation account Cr. Partners’ current account

• Dr. Revaluation account Cr. Partners’ capital account

Ade and Kofi were in partnership sharing profits or losses equally. They agreed to admit Ibrahim as a partner and to share profits equally among the three partners. Goodwill is valued at ¢12 million and will be immediately written off upon admission of Ibrahim. The effect of this on Ade’s capital is

• Increase by GH¢2 million

• Decrease by GH¢2 million

• Increase by GH¢4 million

• Decrease by GH¢4 million

• Increase by GH¢6 million

The correct entry to record a partner’s interest on drawings is

• Dr. Statement of profit or loss account Cr. Partner’s current account

• Dr. Partner’s current account Cr. Statement of income distribution account

• Dr. Partner’s capital account Cr. Statement of income distribution account

• Dr. Statement of income distribution account Cr. Partner’s current account

• Dr. Statement of income distribution account Cr. Partner’s capital account

A business that marked up its cost by 50% will make a gross profit of

• 33 1/3% on the cost price

• 33 1/3% on the selling price

• 50% on the selling price

• 66 2/3% on the selling price

• 66 2/3% on the market price

Discount allowed would appear on the

• Debit side of sales control account and the credit side of purchases control account

• Debit side of sales ledger control account only

• Debit side of purchases ledger control account

• Credit side of the sales ledger control account

• Credit side of the purchases ledger control account

The balance in the purchases ledger control account is the

• Total purchases

• Total sales

• Total receivables

• Total of trade payables

• Total of credit purchases

N10,000 received from John Marku was entered on the payments side of the cash book with the double entry completed in his account. The journal entries to correct the error are

• Dr. John Marku account N10,000 Cr. Cash book with N10,000

• Dr. Cash book with N10,000 Cr. John Marku account N10,000

• Dr. Cash book with N20,000 Cr. John Marku account N20,000

• Dr. John Marku account N20,000 Cr. Cash book with N20,000

• Dr. Suspense account with N20,000 Cr. John Marku account N20,000