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WorksheetsPartnership Accounts
Total questions: 15
Worksheet time: 8mins
A partnership business prepares
Income statement
Financial statement
Profit & Loss Appropriation Account
All 3
Residual profit or Divisible profit means
Net profit
Profit distributed among partners
Gross profit
Net Profit plus drawings
Advantage of parnership business are
Risk and responsibility are shared
Additional finance is available
Additional knowledge and skill
All 3
Disadvantage of Parnership are
Profit is shared
Disagreement between partners
Longer time spent on decision making
All 3
Partnership agreement states
the amount of capital invested
Profit sharing ratio
Partners salary
Interest on capital, drawings and loan
All
Interest on loan from Partner is debited to
Income statement
Profit & loss Appropriation Account
Partner's Capital account
Statement of Financial Statement
Current Account does not include
Interest on drawings & capital
Partners salary
Interest on loan when not paid
Share of profit /loss
Capital invested by partners
A debit balance in Current Account implies
Money owed by the firm to partners
Money owed by partners to the firm
Money owed by one partner to another
Money owed by the firm to government
What discourages partners to withdraw money from the firm
Partner's salary
Interest on capital
Interest on drawings
Interest on loan
Advantage of maintaing both capital and current account for each partner
Easy to see the amount invested and calculate interest
Easy to see whether drawings exceed the total profit share
Easy to calculate partners salary
Easy to claculate interest on drawings
Partners Capital Account records
Profit earned by the business
Loan given by partner
Drawings made by partners
Permanent increase or decrease in capital
How is Interest on capital recorded
Interest on capital Dr
P/L Appropriation A/C
Cr
Interest on capital Dr
Partners Current A/C
Cr
Interest on capital Dr
Partners Capital A/C
Cr
Interest on capital Dr
Profit & Loss A/C
Cr
How is Interest on drawings recorded
Interest on drawings
Dr
Drawings
Cr
Interest on drawings
Dr
Partners Current A/C
Cr
Interest on drawings
Dr
Profit & Loss A/C
Cr
Interest on drawings Dr
P/L Appropriation A/C
Cr
How is Interest on loan recorded
Interest on loan
Dr
Partners Loan A/C
Cr
Interest on loan
Dr
Proift & Loss A/C
Cr
Interest on loan
Dr
P/L Appropriation A/C
Cr
Profit & Loss A/C
Dr
Interest on loan A/C
Cr
Partnership refers to a business where the number of partners is
unlimited
2 or more
2 or more upto 20
2 or more upto 50
