Author: stuart001uk2014

In order for partners’ capitals to remain fixed, their respective shares of profits must be . . .?

Select ONE answer:

1. debited to their capital accounts.
2. credited to their capital accounts.
3. debited to their current accounts.
4. credited to their current accounts.

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 4

1. Not correct – By debiting a partner‘s share of profits to his / her capital account the balance on the account will decline (not remain fixed).
2. Not correct – By crediting a partner‘s share of profits to his / her capital account the balance on the account will increase (not remain fixed).
3. Not correct – By debiting a partner‘s share of profits to his her current account the balance on that account will decline, indicating that the firm owes less to the partner as a result of making a profit!
4. Correct

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The minimum number of general partners which a limited partnership must have is?

Select ONE answer:

1. 1
2. 2
3. 3
4. 7

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 1

1. Correct – Someone must always be responsible for the debts of the firm. This is a major disadvantage of partnerships relative to companies. However, once one person accepts this responsibility, all other partners can be limited partners.
2. Not correct
3. Not correct
4. Not correct

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The rights and liabilities of partners among themselves . . .?

Select ONE answer:

1. may be freely agreed.
2. must be agreed with the partnership’s creditors.
3. are governed by the Partnership Act, 1890.
4. None of the above.

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 1

1. Correct
2. Not correct – The creditors of the firm have no say in the matter (the partnership wouldn‘t have any creditors until after it has been formed anyway).
3. Not correct – The Partnership Act 1890 governs the rights and liabilities of partners among themselves only in the absence of verbal or written agreement.
4. Not correct

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A partnership . . .?

Select ONE answer:

1. must be formed by deed.
2. must be formed by agreement in writing.
3. may be formed by verbal agreement.
4. None of the above.

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 – All that’s required to form a partnership is for two or more people to agree to become business partners. They do not have to agree anything else. However. in order to avoid disputes and ill- feeling later on, it is preferable that they agree all relevant matters and record these in some kind of formal written agreement.
4. Not correct

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The following information relates to a hardware merchant, who is not registered for VAT and who makes all purchases on credit.

at 31 December 1996         at 31 December 1995

Stock:                  £10,600                                  £10,300
Debtors:             £5,400                                    £4,800
Creditors:          £5,900                                    £6,300

Transactions during 1996:

• Amount received from debtors £127,600
• Amount paid to creditors £93,200
• Cash sales £23,200
• Discount allowed to debtors £2,400
• Bad debts written off £800
• Increase in provision for doubtful debts £250
• Refunds received from creditors £80

The gross profit earned by the merchant during 1996 was?

Select ONE answer:

1. £38,820
2. £38,870
3. £61,750
4. £62,180

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

• • • • • • Debtors

• Dr Balance b/d £4,800
  Dr Sales £131,400
  Dr Totals £136,200
  • • • • • Cr Bank £127,600
            Cr Discount Allowed £2,400
            Cr Bad Debts £800
            Cr Balance b/d £5,400
            Cr Total £136,200

             

• Total Sales = Cash Sales + Credit Sales = £23,200 + £131,400 = £154,600

• • • • • Creditors

• Dr Bank £93,200
  Dr Balance c/d £5,900
  • • • • • Cr Balance b/d £6,300
            Cr bank 80
            Cr Purchases credit £92,720
            Cr Totals £99,100

             

• Cost of Sales = Opening Stock + Purchases – Closing Stock = £10,300 + £92,720 – £10,600 = £92,420
• Gross profit = Sales – Cost of sales = £154,600 – £92,420 = £62,180

This work is licensed under a Creative Commons Attribution 4.0 International License.