Question Tag: Partnership Accounts

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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.

Question

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.

Answer

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Tags: Asset Valuation, Partnership Accounts, Revaluation
Level: Level 1

Topic: Accounting for Property, Plant, and Equipment (PPE) IAS 16
Series: MAY 2012

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

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

Question

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

Answer

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Tags: Financial Reporting, Partnership Accounts
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2013

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

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

Question

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

Answer

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Tags: Double Entry, Drawings, Partnership Accounts
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2018

FA – Nov 2014 – L1 – SB – Q5 – Partnership Accounts

Preparing a statement of profit or loss and partners’ current accounts for a partnership.

Question

Garuba and Ngozi have been together in partnership for several years in a newspaper publishing business, sharing profits and losses in the ratio 3:2 after charging salaries of N3,000,000 per annum for each partner.

On 1 September 2013, Bola was admitted into the partnership on the following terms:

i. That he pays N2,800,000 to the original partners.
ii. He would be entitled to a salary of N2,700,000 per annum and a 20% share of profits after charging all salaries.

Garuba and Ngozi are to continue their old profit-sharing ratios, and Bola’s 20% share of profit is guaranteed at a minimum of N1,500,000 per annum.

On 31 December 2013, the following balances were extracted from the partnership books of Garuba, Ngozi, and Bola:

Additional Information:
i. Provision for doubtful debts should be maintained at 5% of receivables.
ii. Inventory at 31 December 2013 was valued at N12,000,000.
iii. Depreciation on plant and machinery to be 20% per annum and on motor vehicles 25% per annum.

Required:
a. Prepare the Statement of Profit or Loss for the year ended 31 December 2013 accounting for Bola on a pro-rata time basis. (10 Marks)
b. Prepare the Partners’ Current Accounts for the period. (10 Marks)
(Total 20 Marks)

Answer

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Tags: Partner’s Current Account, Partnership Accounts, Profit or Loss
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2014

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

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

Question

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

Answer

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Tags: Loan, Non-current Liabilities, Partnership Accounts, Partnership Financing
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2017

FA – Nov 2019 – L1 – SA – Q20 – Partnership Accounts

Calculate the balance in Ora’s current account at the end of the reporting period.

Question

What is the balance in Ora’s current account at the end of the reporting period?

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)
- Drawings: Obi N20,000, Ora N30,000
- Salaries: Obi N28,000, Ora N24,000

A. N79,000
B. N82,000
C. N101,000
D. N115,000
E. N163,000

Answer

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Tags: Current Account, Partnership Accounts, Share of Profit
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2019

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

Determine Obi’s share of profit in the partnership.

Question

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

Answer

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Tags: Partnership Accounts, Profit Sharing, Share of Profit
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2019

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.

Question

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:

Inventory on 31st December 2014 amounted to:
- Head office: GH¢14,440
- Branch: GH¢6,570
Administrative expenses are to be apportioned between head office and the branch in proportion to sales.
Depreciation is to be provided on furniture and fittings at 10% of cost.
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.
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.

Answer

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Tags: Branch accounts, Current Accounts, Financial Position, Partnership Accounts, Profit appropriation
Level: Level 2

Topic: Preparation of Financial Statements
Series: MAY 2016

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.

Question

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)

Answer

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Tags: Capital Accounts, Goodwill, Partnership Accounts, Profit Sharing
Level: Level 1

Topic: Preparation of Partnership accounts
Series: MAR 2024

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.

Question

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:

The partners’ cash drawings for the year under review have been debited to purchases.
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.
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)

Answer

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Tags: Drawings, Interest on Capital, Partnership Accounts, Profit and Loss Adjustment, Salaries, Statement of Financial Position
Level: Level 1

Topic: Preparation of Partnership accounts
Series: NOV 2023

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

Prepare a ledger account for rental income and a partnership's profit and loss appropriation account with related partners' current accounts.

Question

a) A company owns a number of properties which are rented to tenants. The following information is available for the year ended 30 June 2021:

Date	Rent in advance (GHȼ)	Rent in arrears (GHȼ)
30 June 2020	140,500	5,200
30 June 2021	148,200	9,200

Cash received from tenants for the year ended 30 June 2021 was GHȼ820,400. All rent in arrears was subsequently received.

Required:

Prepare the ledger account for rental income showing the transfer to the Statement of Profit and Loss, for the year ended 30 June 2021. (5 marks)

b) Awuni, Adjetey, and Kwame are in partnership, running an evening school, and sharing residual profits and losses in the ratio 4:3:3 respectively. At 1 October 2021 their capital and current account balances were:

By formal agreement, the partners are entitled to receive interest at 5% on capital. In addition, Adjetey is paid an annual salary of GHȼ5,455 for his part in running the business.

On 1 April 2022, by mutual agreement, Kwame increased his capital by paying a further GHȼ4,000 into the partnership bank account. Awuni reduced his capital by GHȼ5,000, but kept this in the partnership as a loan bearing interest at 10% per annum. Interest on the loans, by agreement, is credited to Awuni’s current account.

The partners are allowed to take out drawings at any time during the year, but they have agreed to charge interest on such drawings. The date of taking out the drawings, the amount drawn out by each partner, and the interest payable, were as follows during the year to 30 September 2022:

Required:

i) Prepare the profit and loss appropriation account for the year ended 30 September 2022. (8 marks)
ii) Prepare the partners’ current accounts for the year ended 30 September 2022. (7 marks)

Answer

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Tags: Current Accounts, Drawings, Interest on Capital, Ledger Accounts, Partnership Accounts, Profit and Loss Appropriation, Profit Sharing, Rental Income
Level: Level 1

Topic: Preparation of Partnership accounts
Series: JULY 2023

FA – Nov 2017 – L1 – Q7 – Preparation of Partnership accounts

Prepare the partners' appropriation account, capital accounts, current accounts, and explain advantages and disadvantages of partnership business.

Question

Moon, Sun and Star are in partnership with an agreement to share profits and losses in the ratio
of 3:2:1.
They also agreed the following terms:
i) Interest on capital is agreed at 12% per annum.
ii) Star is to receive a salary of GH¢8,400 per annum.
iii) Interest is to be charged on drawings at the rate of 5% on balances at the end of the year.
iv) The interest on Moon loan is 5% per annum.

The Statement of Financial Position of the partnership as at 31 December 2015 revealed the following:

Capital accounts balances	GH¢’000	GH¢’000
Moon	28,000
Sun	11,200
Star	8,400	47,600

Current Accounts balances	GH¢’000	GH¢’000
Moon	4,900
Sun	(980)
Star	2,520	6,440

Loan account (Moon)		8,400
Capital Employed		62,440

Drawings made during the year to 31 December 2015 were as follows:

	GH¢’000
Moon	8,400
Sun	5,600
Star	9,800

The net profit for the year 31 December 2015 was GH¢34,342,000 before deducting loan
interest.
Required:
a) Prepare the partners appropriation account for the year ended 31 December 2015.
(5 marks)
b) Prepare partners’ capital accounts for the year ended 31 December 2015
c) Prepare partners’ current accounts for the year ended 31 December 2015. (5 marks)
d) i) State THREE advantages of a partnership business (3 marks)
ii) List TWO demerits of a partnership business.

Answer

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Tags: Appropriation Account, Capital Accounts, Current Accounts, Partnership Accounts
Level: Level 1

Topic: Preparation of Partnership accounts
Series: NOV 2017

FA – Nov 2015 – L1 – Q4 – Preparation of Partnership accounts

Define Books of Prime Entry and list examples, prepare partnership accounts including profit/loss, partners' current accounts, and statement of financial position.

Question

(a)
i. Define Book of Prime Entry. (1 mark)
ii. Mention any four (4) Books of Prime Entry. (4 marks)

(b) Felicia, Jackson, and Elizabeth are in Partnership Sharing Profits and Losses in the ratio of 5:3:2 respectively. According to the Partnership Agreement, Partners’ Capital Accounts attract an interest of 20% per annum, while any Drawings by a Partner also attract 10% interest per annum.

The following understated Trial Balance has been extracted after the preparation of the Profit and Loss Account for the period ending 31st December 2014:

The following entries have not been recorded in the books:
i. Salary of GH¢5,000 was paid to Elizabeth during the period.
ii. Felicia personally paid General Expenses of GH¢2,500 on behalf of the Partnership.
iii. Cash Drawings made by partners: Felicia GH¢500, Jackson GH¢1,500, and Elizabeth GH¢1,200.
iv. Interest on loan – Elizabeth – GH¢2,000.
v. Jackson took goods worth GH¢2,000 for personal use.
vi. Interest on Capital Account. All Capital Accounts were to remain fixed.

You are required to prepare:
i. Profit or Loss and Appropriation Account. (7 marks)
ii. Partners’ Current Account. (3 marks)
iii. Statement of Financial Position as at 31st December, 2014 (5 marks)

Answer

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Tags: Accounting Records, Books of Prime Entry, Financial Statements, Partnership Accounts
Level: Level 1

Topic: Preparation of Partnership accounts
Series: NOV 2015

Question Tag: Partnership Accounts

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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.

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

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

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

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

FA – Nov 2014 – L1 – SB – Q5 – Partnership Accounts

Preparing a statement of profit or loss and partners’ current accounts for a partnership.

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

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

FA – Nov 2019 – L1 – SA – Q20 – Partnership Accounts

Calculate the balance in Ora’s current account at the end of the reporting period.

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

Determine Obi’s share of profit in the partnership.

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.

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.

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.

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

Prepare a ledger account for rental income and a partnership's profit and loss appropriation account with related partners' current accounts.

FA – Nov 2017 – L1 – Q7 – Preparation of Partnership accounts

Prepare the partners' appropriation account, capital accounts, current accounts, and explain advantages and disadvantages of partnership business.

FA – Nov 2015 – L1 – Q4 – Preparation of Partnership accounts

Define Books of Prime Entry and list examples, prepare partnership accounts including profit/loss, partners' current accounts, and statement of financial position.

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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.

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

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

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

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

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FA – Nov 2014 – L1 – SB – Q5 – Partnership Accounts

Preparing a statement of profit or loss and partners’ current accounts for a partnership.

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

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

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FA – Nov 2019 – L1 – SA – Q20 – Partnership Accounts

Calculate the balance in Ora’s current account at the end of the reporting period.

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

Determine Obi’s share of profit in the partnership.

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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.

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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.

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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.

You're reporting an error for "FA – Nov 2023 – L1 – Q2 – Preparation of Partnership accounts"

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

Prepare a ledger account for rental income and a partnership's profit and loss appropriation account with related partners' current accounts.

You're reporting an error for "FA – July 2023 – L1 – Q2 – Preparation of Partnership accounts"

FA – Nov 2017 – L1 – Q7 – Preparation of Partnership accounts

Prepare the partners' appropriation account, capital accounts, current accounts, and explain advantages and disadvantages of partnership business.

You're reporting an error for "FA – Nov 2017 – L1 – Q7 – Preparation of Partnership accounts"

FA – Nov 2015 – L1 – Q4 – Preparation of Partnership accounts

Define Books of Prime Entry and list examples, prepare partnership accounts including profit/loss, partners' current accounts, and statement of financial position.

You're reporting an error for "FA – Nov 2015 – L1 – Q4 – Preparation of Partnership accounts"

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