Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Accounting > Partnership Accounts > Flashcards

Partnership Accounts Flashcards

1
Q

What is an appropriation account?

A

sharing statement’ for the profits or losses of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What goes on an appropriation account in order?

A

Profit for the year
Add: interest on drawings
Less: interest on capital
Less: salaries
Equals: remaining profit share
Share of profit
Total of shared profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What should you do to the total figures on appropriation accounts?

A

Should equal and be double underlined

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

When was the partnership act created?

A

1890

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

When is the partnership act in effect?

A

When there is no partnership agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How are loans treated under the partnership act?

A

Loans to the partnership by partners will receive 5% interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Is there interest on drawings under the partnership act?

A

None charged

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Is there interest on capital under the partnership act?

A

None charged

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

How are partnership salaries treated under the partnership act?

A

Partners are not entitled to a salary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How are profits/ losses shared under the partnership act?

A

Shared equally

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the income statement like for a partnership?

A

The same as a sole trader down to profit for the year then the appropriation account

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

How is the statement of financial position laid out for a partnership?

A

Same as a sole trader apart from the capital section that will contain the end of year capital and current account balances of each partner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the purpose of capital accounts?

A

Record the permanent contributions of partners

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What would mean the capital account would have to change?

A

If structural change happens in the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are some examples of structural changes to a business?

A

Partner introduces or withdraws capital
A partner leaves
A partner joins
Assets are revalued
Profit sharing ratio is changed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What goes on the debit side of a capital account?

A

Balance b/d (owe business)
Good will written off
Decrease in revaluation
Capital withdrawn

17
Q

What goes on the credit side of the capital account?

A

Balance b/d
Goodwill created
Increase in revaluation
Capital introduced

18
Q

What are current accounts?

A

A more flexible sort of capital account
Record regular fluctuations in partners stake in the business

19
Q

What side of the account is increase for capital and current?

A

Credit

20
Q

What side of the capital/ current accounts would be decreasing value?

A

Debit

21
Q

What goes on the debit side of the current account?

A

Balance b/d take more then they’re entitled to
Drawings
Interest on drawings
Share of loss

22
Q

What goes on the credit side of the current account?

A

Balance b/d
Salaries
Interest on capital
Share of profits
Interest on loan

23
Q

What are the main changes expected in a partnership?

A

Partner leaves
Partner joins
Assets are revalued
Profit sharing ratio changed

24
Q

What is goodwill?

A

Difference between value of business as a whole and the net value of its separate assets and liabilities
What SFP says its worth and what it can be sold as going concern

25
Q

When is goodwill used?

A

When a change in partnership takes place to ensure the partners benefit ( or otherwise) from the change in value of the business

26
Q

What is the first step for goodwill?

A

Create goodwill to all partners in existence before change using original sharing ratio

27
Q

What are the debits and credits for creating goodwill?

A

Debit= goodwill
Credit= capital

28
Q

What is step 2 of good will in accounts?

A

Written off between all partners in existence after changes using new sharing ratio

29
Q

What side would a loss in asset value go in the revaluation account?

A

Credit- goes to debit on capital (liabilities increased)

30
Q

Where would a gain in asset value go on the revaluation account?

A

The credit side and the debit of capital

31
Q

How do you balance the revaluation account?

A

Instead of balance c/d you split the amount between the partners using sharing ratio

32
Q

What is the procedure for when a partner leaves?

A

Make all necessary adjustments to capital and current accounts
Transfers current account balance to capital account
Close capital account

33
Q

How do you close a capital account?

A

Paying the partner from the business bank account
Transfer the balance owing into a loan account

34
Q

What are split years?

A

When a change in the business occur partway though a accounting year
Split the year into before and after change and then do everything twice for time period (7 months and 5 months)

Accounting (30 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions