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BPP FA > Module 15 > Flashcards

Module 15 Flashcards

1
Q

When did the partnership act come into affect?

A

1890

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2
Q

When is the partnership act default?

A

If no partnership agreement

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3
Q

Partnership agreements involve?

A

Salaries (not an expense)
Interest on capital (not and expense)
Profit/loss share ratio (always do last)

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4
Q

When there is a change in members (partners) you?

A

Transfer current a/c to capital a/c

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5
Q

New members in a partnership constitute a new

A

Business so new PSR

Existing members use old PSR

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6
Q

A change in membership requires what?

A

Revaluation or net assets (capital)

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7
Q

What are the two types of goodwill?

A

Inherent (never permitted to stay in accounts)

Purchased

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8
Q

Revolution accounts for partnerships is

A

Temporary

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9
Q

What are the 3 journal entries for a leaving member?

A

Dr net current assets
Cr revaluation a/c

Dr revaluation a/c
Cr capital a/c P1 and P2 (old PSR)

Dr capital a/c P1
Cr bank or loan

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10
Q

What are the 2 journal entries of introducing a new member?

A

Dr current a/c
Cr capital a/c of remaining partner

Dr bank
Cr capital a/c of new member

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11
Q

What could be an example of goodwill?

A

Good reputation

Strong customer base

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12
Q

Goodwill comes

A

In on the old PSR

Out on the new PSR

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13
Q

Journal entry for introducing goodwill?

A

Dr Goodwill
Cr P1
Cr P2

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14
Q

Journal entry for removing goodwill?

A

Dr P1
Dr P3 (new partner paying off old partners share)
Cr Goodwill

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15
Q

What is the order or calculation of goodwill?

A
  1. Revaluation a/c
  2. Introduce new partner
  3. Remove goodwill
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16
Q

What is the revaluation journal entries?

A

Dr Asset + Goodwill
Cr Revaluation
Dr Revaluation
Cr capital a/c P1 and P2

17
Q

What is the journal entry for introducing a new partner?

A

Dr Bank

Cr Capital

18
Q

What is the journal entry to remove goodwill?

A

Dr capital a/c P1 and P3

Cr Goodwill

19
Q

What account do we use to dissolute a partnership?

A

Realisation account

20
Q

Journal entry for realisation account?

A

Dr realisation a/c (not bank)

Cr Asset

21
Q

Journal entry for when assets are sold during dissolution?

A 
Dr Bank (cash from sale)
  Cr Realisation a/c
22
Q

Journal entry for any expenses during dissolution?

A

Dr Realisation a/c

Cr Bank

23
Q

What happens to any assets not sold during dissolution?

A

Taken by the partners

24
Q

Journal entry for assets not sold during dissolution?

A

Dr capital a/c P1 and P2

Cr realisation a/c

25
Q

Journal entry for paying creditors during dissolution?

A 
Dr trade payables 
  Cr bank (paid)
  Cr realisation a/c (discount received)(credit balance on realisation a/c = profit)

Dr realisation
Cr capital a/c on PSR

26
Q

Final journal for dissolution of partnership?

A

Dr capital a/c

Cr bank

27
Q

What are the steps in dissolution?

A 
Realisation account
Sell assets 
Expenses 
Assets not sold taken 
Pay creditors 
Final journal
28
Q

Incorporation of a partnership is?

A

Setting up as a separate legal entity (limited company)

29
Q

Share capital is?

A

Capital + current

30
Q

What account is used for incorporation of a partnership?

A

Vendor account

31
Q

What are the journal entries for removing every account relating to partners for incorporation?

A

Dr capital a/c P1, P2, P3
Dr current a/c P1, P2, P3
Cr vendor a/c

32
Q

Journal entry for paying cash and shares in incorporation?

A

Dr vendor a/c (net assets transfer)
Cr bank
Cr ordinary share capital

33
Q

If vendor a/c has a debit balance in an incorporation this means?

A

There is purchased goodwill
Dr goodwill
Cr vendor a/c

34
Q

Goodwill is a what?

A

Net current asset

BPP FA (18 decks)

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