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K1 Partnerships
6 ACCA New at Knowledge level questions with answers and explanations.
Printable worksheet with answer key
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Two partners have no partnership agreement. How are profits shared?
- 1 Equally
- 2 In proportion to capital
- 3 According to who works the most hours
- 4 In proportion to drawings
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Correct answer: Equally
Without an agreement, partners share profits equally.
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Profit is $90,000. Partner A has a salary of $10,000. Interest on capital at 5 percent is $5,000 for A and $3,000 for B. The residual is shared 3:2. What is A's total share of the profit?
- 1 $43,200
- 2 $54,000
- 3 $60,000
- 4 $58,200
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Correct answer: $58,200
Residual = 90,000 - 10,000 - 5,000 - 3,000 = 72,000. A gets 43,200 of it, so A's total = 10,000 + 5,000 + 43,200 = 58,200.
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What does a partner's capital account normally record?
- 1 The partner's drawings
- 2 Interest on drawings
- 3 The partner's share of profit each year
- 4 The fixed amount of capital contributed
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Correct answer: The fixed amount of capital contributed
Drawings and profit shares go through the current account.
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A partner is charged interest of $400 on drawings. What is the entry?
- 1 Debit bank, credit the current account
- 2 Debit the appropriation account, credit the partner's current account
- 3 Debit the partner's current account, credit the appropriation account
- 4 Debit the capital account, credit bank
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Correct answer: Debit the partner's current account, credit the appropriation account
The interest reduces the partner's share and increases the profit available to share.
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A and B share profits 3:2 and C joins, with a new ratio of 2:2:1. Goodwill of $50,000 is created and then written off. What is the net effect on A's account?
- 1 A debit of $10,000
- 2 A credit of $10,000
- 3 No effect
- 4 A credit of $30,000
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Correct answer: A credit of $10,000
A is credited with 3/5 of 50,000 = 30,000 and debited with 2/5 of 50,000 = 20,000.
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A debit balance on a partner's current account means that the partner:
- 1 Has contributed more capital
- 2 Is owed money by the partnership
- 3 Has drawn more than the partner's share of profit
- 4 Has left the partnership
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Correct answer: Has drawn more than the partner's share of profit
A debit balance shows an over-drawing.