Accounting Multiple Choice Question – 14 April 2020

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

In the absence of a partnership agreement, the Partnership Act. 1890, among other things requires that . . .?

Select ONE answer:

  1. partners share profits equally and interest on capital is paid at the rate of 5% per annum.
  2. partners share profits in relation to the balances on their capital accounts and interest on capital is paid at the rate of 5% per annum.
  3. partners share profits equally and interest on capital is not paid.
  4. partners share profits in relation to the balances on their capital accounts and interest on capital is not paid.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

  1. Not correct
  2. Not correct
  3. Correct – In the absence of a partnership agreement, the main provisions of the Partnership Act, 1890 are:
    – That partners share profits and losses equally.
    – Interest on capital is not paid to partners.
    – Interest is not charged on partners“ drawings.
    – Partners are not paid salaries.
    – Interest is paid to partners at the rate of 5% per annum on advances made by them to the partnership in excess of the capital they have agreed to contribute.
  4. Not correct

 

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