Day: June 11, 2023

Accounting Multiple Choice Question – 11 June 2023

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

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Partnership capitals is respectively £60K for Alex and £90k for Lucy.

The partnership agreement provides for interest on capital at 10% per annum, but makes no other financial provisions

Profits for the current year is shown as £75k in the Income Statement.

How will the total profits be divided between the partners Alex and Lucy?

Select ONE answer:

  1. Alex £30.0k and Lucy £45.0k
  2. Alex £36.0k and Lucy £39.0k
  3. Alex £37.5k and Lucy £37.5k
  4. Alex £39.0k and Lucy £36.0k

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 2

  1. Not correc
  2. Correct – If a partnership agreement allows interest on capitals but makes no other financial provisions, then under the Partnership Act the balance of profits is shared equally by the partners. Therefore, £75k – £15k (£150k * 10%) = £60k / 2 = £30k each then Alex £30k = £6k = £36k and Lucy £30k + £9k = £39k
  3. Not correct
  4. Not correct

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