Essential Book Keeping - Qp19

8 Questions | Total Attempts: 37

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Essential Book Keeping - Qp19

Questions and Answers
  • 1. 
    The law dictates that a partnership must have between ______ partners.
    • A. 

      2 and 10

    • B. 

      2 and 15

    • C. 

      2 and 20

    • D. 

      2 and 25

  • 2. 
    A partnership usually has limited liability in the same way that a sole trader would.
    • A. 

      True

    • B. 

      False

  • 3. 
    The major piece of legislation covering partnerships is the Partnership Act ______.
    • A. 

      1990

    • B. 

      1890

    • C. 

      1790

  • 4. 
    The following are useful tests of whether a partnership is in place: (Select three)
    • A. 

      The business must exist with the aim of making a profit

    • B. 

      The business must be mutually beneficial to all members

    • C. 

      Each member is authorised to act on behalf of the firm and enter into contract on its behalf

    • D. 

      An arrangement exists to share expenses

  • 5. 
    If one or more partners were unable (or unwilling) to pay their share of the tax, then the Inland Revenue is free to recover tax from any partner who they believe is able to pay.
    • A. 

      True

    • B. 

      False

  • 6. 
    Advantages of trading as a Partnership includes: (Select three)
    • A. 

      Shared responsibility

    • B. 

      Additional capital availability

    • C. 

      Unlimited liability

    • D. 

      A new partnership is formed when anyone joins or leaves

    • E. 

      Greater range of skills available

    • F. 

      Disputes between members can be troublesome.

  • 7. 
    A partnership salary is a means of appropriating profit and makes up a part of the total share of profit for work performed.
    • A. 

      True

    • B. 

      False

  • 8. 
    The following points will be crucial to  the appropriation of profit and how the process is accounted for which includes: (Select three)
    • A. 

      Partnership salaries and interest on capital are paid out in cash and do not form part of the profit and loss account as expenses.

    • B. 

      Any profit left over after this appropriation is shared out amongst the partners in the pre-agreed ratios.

    • C. 

      An actual payment to a partner, however taken, should be treated as drawings and will be processed through the balance sheet.

    • D. 

      Interest on drawings will decrease the amount of profit to be shared by the other partners.

    • E. 

      All cash in from partners is capital and all cash they take out is drawings.

    • F. 

      All cash in from partners is capital and all cash they take out is drawings.

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