Q. How is the profit or loss of a partnership typically distributed among partners?
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A.
Equally among all partners
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B.
Based on the capital contribution ratio
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C.
Based on the time invested by each partner
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D.
At the discretion of the managing partner
Solution
Profits or losses are usually distributed based on the capital contribution ratio unless otherwise agreed.
Correct Answer:
B
— Based on the capital contribution ratio
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Q. How should goodwill be treated in the accounts of a partnership?
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A.
As an asset
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B.
As a liability
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C.
Not recorded
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D.
As an expense
Solution
Goodwill is treated as an intangible asset in the accounts of a partnership.
Correct Answer:
A
— As an asset
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Q. What is the effect of a partner withdrawing from a partnership on the capital accounts?
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A.
Increase in total capital
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B.
Decrease in total capital
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C.
No effect on total capital
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D.
Increase in liabilities
Solution
When a partner withdraws, it typically results in a decrease in total capital as their capital account is settled.
Correct Answer:
B
— Decrease in total capital
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Q. What is the journal entry for a partner's share of profit in a partnership?
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A.
Debit Partner's Capital Account, Credit Profit and Loss Account
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B.
Debit Profit and Loss Account, Credit Partner's Capital Account
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C.
Debit Cash, Credit Partner's Capital Account
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D.
Debit Partner's Capital Account, Credit Cash
Solution
The correct entry is to debit Profit and Loss Account and credit Partner's Capital Account to reflect the share of profit.
Correct Answer:
B
— Debit Profit and Loss Account, Credit Partner's Capital Account
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Q. What is the journal entry to record depreciation expense for a partnership?
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A.
Debit Depreciation Expense, Credit Accumulated Depreciation
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B.
Debit Accumulated Depreciation, Credit Depreciation Expense
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C.
Debit Depreciation Expense, Credit Cash
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D.
Debit Cash, Credit Depreciation Expense
Solution
The correct entry is to debit Depreciation Expense and credit Accumulated Depreciation to reflect the expense.
Correct Answer:
A
— Debit Depreciation Expense, Credit Accumulated Depreciation
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Q. What is the journal entry to record the initial capital contribution of a partner in a partnership?
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A.
Debit Cash, Credit Partner's Capital Account
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B.
Debit Partner's Capital Account, Credit Cash
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C.
Debit Cash, Credit Income Account
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D.
Debit Partner's Capital Account, Credit Revenue
Solution
The correct entry is to debit Cash and credit the Partner's Capital Account to reflect the contribution.
Correct Answer:
A
— Debit Cash, Credit Partner's Capital Account
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Q. What is the purpose of preparing final accounts for a partnership?
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A.
To determine the net income or loss
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B.
To assess the financial position
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C.
To distribute profits among partners
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D.
All of the above
Solution
Final accounts serve multiple purposes including determining net income, assessing financial position, and profit distribution.
Correct Answer:
D
— All of the above
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Q. Which accounting standard governs the recognition of revenue in partnerships?
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A.
IFRS 15
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B.
IAS 1
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C.
GAAP
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D.
IFRS 9
Solution
IFRS 15 provides the framework for revenue recognition, applicable to partnerships as well.
Correct Answer:
A
— IFRS 15
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