K1 Partnerships

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

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

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

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

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

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