Question Tag: Partnership Accounts

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  • 1 Marks

FA – May 2012 – L1 – SA – Q7 – Accounting for Property, Plant, and Equipment (IAS 16)

Identifying the correct accounting entry for an increase in asset value due to revaluation.

Which accounting entries should be raised to record an increase in the value of assets on revaluation by the partners?

A. Debit revaluation account and credit partners’ capital account
B. Debit partners’ capital account and credit revaluation account
C. Debit revaluation account and credit partners’ current account
D. Debit revaluation account and credit assets account
E. Debit assets account and credit revaluation account.

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  • 1 Marks

FA – May 2013 – L1 – SA – Q16 – Partnership Accounts

This question tests the knowledge of accounts kept by a partnership.

Which of the following accounts will NOT be kept by a partnership?

A. Statement of Financial Position
B. Current Account
C. Realisation Account
D. Statement of Profit or Loss and other comprehensive income
E. Income and Expenditure Account

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  • 1 Marks

FA – May 2018 – L1 – SA – Q13 – Partnership Accounts

Identifies the correct double entry for partners' drawings in a partnership account.

The double entry for partners’ drawings is to:
A. Debit appropriation account and credit drawings account
B. Debit partners’ current accounts and credit cash account
C. Debit cash account and credit appropriation account
D. Debit partners’ current accounts and credit appropriation account
E. Debit appropriation account and credit cash account

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  • 1 Marks

FA – May 2017 – L1 – SA – Q12 – Partnership Accounts

Identifies the correct treatment of a partner’s loan in partnership accounts.

Loan advanced by a partner to the partnership would be shown in
A. Receivables account
B. Partner’s capital account
C. Partner’s current account
D. Non-current liability account
E. Goodwill account

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  • 1 Marks

FA – Nov 2019 – L1 – SA – Q19 – Partnership Accounts

Determine Obi’s share of profit in the partnership.

What is Obi’s share of profit for the year?

The extract from the partnership books for the period ended September 30, 2019, is as follows:

  • Obi and Ora are partners, trading under the name, Obiora & Co.
  • The profit-sharing ratio is equal.
  • Profit for the period amounted to N240,000.
  • Interest on capital is 10%.
  • Other details:
    • Obi: N200,000 (opening capital), N40,000 (current account balance)
    • Ora: N100,000 (opening capital), N80,000 (current account balance)

A. N20,000
B. N28,000
C. N39,000
D. N79,000
E. N89,000

 

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  • 15 Marks

FR – May 2016 – L2 – Q5 – Preparation of Financial Statements

Prepare the statement of profit or loss, statement of financial position, and current accounts for Dum and Sor's partnership.

Dum and Sor were in partnership as retail traders, sharing profits and losses: Dum three quarters (3/4) and Sor one quarter (1/4). The partners were credited annually with interest at the rate of 6% per annum on their fixed capitals, but no interest was charged on their drawings. Sor was responsible for the buying department of the business, while Dum managed the head office. Sor was employed as the branch manager, and both Dum and Sor were each entitled to a commission of 10% of the net profits (after charging such commission) of the shop managed by him. All goods were purchased by the head office, and goods sent to the branch were invoiced at cost.

The following was the trial balance as at 31st December 2014:

Additional Information:

  1. Inventory on 31st December 2014 amounted to:
    • Head office: GH¢14,440
    • Branch: GH¢6,570
  2. Administrative expenses are to be apportioned between head office and the branch in proportion to sales.
  3. Depreciation is to be provided on furniture and fittings at 10% of cost.
  4. The provision for bad and doubtful debts is to be increased by GH¢50 in respect of head office receivables and decreased by GH¢20 in the case of the branch.
  5. On 31st December 2014, cash amounting to GH¢2,400 was in transit from the branch to head office and had been recorded in the branch books but not in those of the head office. Goods invoiced at GH¢800 were in transit from head office to the branch and had been recorded in the head office books but not in the branch books. Necessary adjustments are to be made in the head office books.

Required:
a) Prepare the statement of profit or loss and the appropriation account for the year ended 31st December 2014, showing the net profit of the head office and branch respectively.
b) Prepare the statement of financial position as at 31st December 2014.
c) Prepare the current accounts for head office and the branch.

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  • 10 Marks

FA – Mar 2024 – L1 – Q2b – Preparation of Partnership accounts

Prepare the capital accounts for Armah, Siameh, and Benya following the admission of a new partner.

Armah and Siameh were in partnership and shared profits and losses in the ratio of 3:2 respectively. The balances on the partners’ capital accounts at July 1, 2022, were: Armah GH¢187,500, Siameh GH¢300,000.

Due to expansion of their business, Benya was admitted as a partner on October 1, 2022, under the following arrangements:

i) The new profit-sharing ratio between Armah, Siameh, and Benya would be 35%, 35%, and 30% respectively.

ii) Benya was to introduce capital of GH¢375,000 but was unable to bring cash into the business immediately. Instead, he contributed his share of goodwill of GH¢180,000.

iii) Goodwill was valued at GH¢450,000 and was to be written off immediately after Benya’s admission. The existing partners agreed that goodwill should not be retained in the books of the partnership.

Required:

Prepare the partners’ capital accounts to reflect the admission of Benya into the partnership. (10 marks)

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  • 20 Marks

FA – Nov 2023 – L1 – Q2 – Preparation of Partnership accounts

Adjust the net profit or loss of a partnership firm and prepare the revised current accounts and statement of financial position.

Adu, Boateng, and Dogbe are trading in partnership under an agreement which provides for interest on partners’ capital accounts at the rate of 10% per annum, annual salaries of GHȼ7,500 and GHȼ4,000 for Boateng and Dogbe respectively, and the balance of the profit or loss shared among Adu, Boateng, and Dogbe in the proportion 5:3:2 respectively.

Partners’ cash drawings for the year ended 30 April 2021 were as follows:

Partner Amount (GHȼ)
Adu 8,000
Boateng 5,000
Dogbe 6,000

The draft Statement of Financial Position as at 30 April 2021 of Adu, Boateng, and Dogbe is as follows:

After the preparation of the draft final accounts for the year ended 30 April 2021, which disclosed a net loss of GHȼ10,500, it was discovered that:

  1. The partners’ cash drawings for the year under review have been debited to purchases.
  2. On 1 November 2020 it was agreed that Boateng should increase his partnership capital from GHȼ25,000 by transferring to the partnership a freehold property bought by Boateng five years earlier at a cost of GHȼ10,000 and currently valued at GHȼ30,000. Although the appropriate debit entry has been made in the non-current asset account, the corresponding credit entry appeared in the profit and loss appropriation account.
  3. The partners’ salaries for the year ended 30 April 2021 have been debited to staff salaries and credited to the relevant partners’ current accounts.

The partners have now decided that an allowance for receivables should be 4% of trade receivables.

Required:

a) Compute the revised net profit or loss of the partnership for the year ended 30 April 2021. (5 marks)
b) Prepare the revised partners’ current accounts for the year ended 30 April 2021. (Note: the partners’ current accounts should commence with the balances shown in the draft partnership Statement of Financial Position as at 30 April 2021). (7 marks)
c) Redraft the Statement of Financial Position of the partnership as at 30 April 2021. (8 marks)

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  • 1 Marks

FA – May 2012 – L1 – SA – Q7 – Accounting for Property, Plant, and Equipment (IAS 16)

Identifying the correct accounting entry for an increase in asset value due to revaluation.

Which accounting entries should be raised to record an increase in the value of assets on revaluation by the partners?

A. Debit revaluation account and credit partners’ capital account
B. Debit partners’ capital account and credit revaluation account
C. Debit revaluation account and credit partners’ current account
D. Debit revaluation account and credit assets account
E. Debit assets account and credit revaluation account.

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  • 1 Marks

FA – May 2013 – L1 – SA – Q16 – Partnership Accounts

This question tests the knowledge of accounts kept by a partnership.

Which of the following accounts will NOT be kept by a partnership?

A. Statement of Financial Position
B. Current Account
C. Realisation Account
D. Statement of Profit or Loss and other comprehensive income
E. Income and Expenditure Account

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  • 1 Marks

FA – May 2018 – L1 – SA – Q13 – Partnership Accounts

Identifies the correct double entry for partners' drawings in a partnership account.

The double entry for partners’ drawings is to:
A. Debit appropriation account and credit drawings account
B. Debit partners’ current accounts and credit cash account
C. Debit cash account and credit appropriation account
D. Debit partners’ current accounts and credit appropriation account
E. Debit appropriation account and credit cash account

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  • 1 Marks

FA – May 2017 – L1 – SA – Q12 – Partnership Accounts

Identifies the correct treatment of a partner’s loan in partnership accounts.

Loan advanced by a partner to the partnership would be shown in
A. Receivables account
B. Partner’s capital account
C. Partner’s current account
D. Non-current liability account
E. Goodwill account

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  • 1 Marks

FA – Nov 2019 – L1 – SA – Q19 – Partnership Accounts

Determine Obi’s share of profit in the partnership.

What is Obi’s share of profit for the year?

The extract from the partnership books for the period ended September 30, 2019, is as follows:

  • Obi and Ora are partners, trading under the name, Obiora & Co.
  • The profit-sharing ratio is equal.
  • Profit for the period amounted to N240,000.
  • Interest on capital is 10%.
  • Other details:
    • Obi: N200,000 (opening capital), N40,000 (current account balance)
    • Ora: N100,000 (opening capital), N80,000 (current account balance)

A. N20,000
B. N28,000
C. N39,000
D. N79,000
E. N89,000

 

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  • 15 Marks

FR – May 2016 – L2 – Q5 – Preparation of Financial Statements

Prepare the statement of profit or loss, statement of financial position, and current accounts for Dum and Sor's partnership.

Dum and Sor were in partnership as retail traders, sharing profits and losses: Dum three quarters (3/4) and Sor one quarter (1/4). The partners were credited annually with interest at the rate of 6% per annum on their fixed capitals, but no interest was charged on their drawings. Sor was responsible for the buying department of the business, while Dum managed the head office. Sor was employed as the branch manager, and both Dum and Sor were each entitled to a commission of 10% of the net profits (after charging such commission) of the shop managed by him. All goods were purchased by the head office, and goods sent to the branch were invoiced at cost.

The following was the trial balance as at 31st December 2014:

Additional Information:

  1. Inventory on 31st December 2014 amounted to:
    • Head office: GH¢14,440
    • Branch: GH¢6,570
  2. Administrative expenses are to be apportioned between head office and the branch in proportion to sales.
  3. Depreciation is to be provided on furniture and fittings at 10% of cost.
  4. The provision for bad and doubtful debts is to be increased by GH¢50 in respect of head office receivables and decreased by GH¢20 in the case of the branch.
  5. On 31st December 2014, cash amounting to GH¢2,400 was in transit from the branch to head office and had been recorded in the branch books but not in those of the head office. Goods invoiced at GH¢800 were in transit from head office to the branch and had been recorded in the head office books but not in the branch books. Necessary adjustments are to be made in the head office books.

Required:
a) Prepare the statement of profit or loss and the appropriation account for the year ended 31st December 2014, showing the net profit of the head office and branch respectively.
b) Prepare the statement of financial position as at 31st December 2014.
c) Prepare the current accounts for head office and the branch.

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  • 10 Marks

FA – Mar 2024 – L1 – Q2b – Preparation of Partnership accounts

Prepare the capital accounts for Armah, Siameh, and Benya following the admission of a new partner.

Armah and Siameh were in partnership and shared profits and losses in the ratio of 3:2 respectively. The balances on the partners’ capital accounts at July 1, 2022, were: Armah GH¢187,500, Siameh GH¢300,000.

Due to expansion of their business, Benya was admitted as a partner on October 1, 2022, under the following arrangements:

i) The new profit-sharing ratio between Armah, Siameh, and Benya would be 35%, 35%, and 30% respectively.

ii) Benya was to introduce capital of GH¢375,000 but was unable to bring cash into the business immediately. Instead, he contributed his share of goodwill of GH¢180,000.

iii) Goodwill was valued at GH¢450,000 and was to be written off immediately after Benya’s admission. The existing partners agreed that goodwill should not be retained in the books of the partnership.

Required:

Prepare the partners’ capital accounts to reflect the admission of Benya into the partnership. (10 marks)

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  • 20 Marks

FA – Nov 2023 – L1 – Q2 – Preparation of Partnership accounts

Adjust the net profit or loss of a partnership firm and prepare the revised current accounts and statement of financial position.

Adu, Boateng, and Dogbe are trading in partnership under an agreement which provides for interest on partners’ capital accounts at the rate of 10% per annum, annual salaries of GHȼ7,500 and GHȼ4,000 for Boateng and Dogbe respectively, and the balance of the profit or loss shared among Adu, Boateng, and Dogbe in the proportion 5:3:2 respectively.

Partners’ cash drawings for the year ended 30 April 2021 were as follows:

Partner Amount (GHȼ)
Adu 8,000
Boateng 5,000
Dogbe 6,000

The draft Statement of Financial Position as at 30 April 2021 of Adu, Boateng, and Dogbe is as follows:

After the preparation of the draft final accounts for the year ended 30 April 2021, which disclosed a net loss of GHȼ10,500, it was discovered that:

  1. The partners’ cash drawings for the year under review have been debited to purchases.
  2. On 1 November 2020 it was agreed that Boateng should increase his partnership capital from GHȼ25,000 by transferring to the partnership a freehold property bought by Boateng five years earlier at a cost of GHȼ10,000 and currently valued at GHȼ30,000. Although the appropriate debit entry has been made in the non-current asset account, the corresponding credit entry appeared in the profit and loss appropriation account.
  3. The partners’ salaries for the year ended 30 April 2021 have been debited to staff salaries and credited to the relevant partners’ current accounts.

The partners have now decided that an allowance for receivables should be 4% of trade receivables.

Required:

a) Compute the revised net profit or loss of the partnership for the year ended 30 April 2021. (5 marks)
b) Prepare the revised partners’ current accounts for the year ended 30 April 2021. (Note: the partners’ current accounts should commence with the balances shown in the draft partnership Statement of Financial Position as at 30 April 2021). (7 marks)
c) Redraft the Statement of Financial Position of the partnership as at 30 April 2021. (8 marks)

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