Types of business entity

P entered the partnership of G and H. The assets he contributed to the business were as follows: non-current assets cost $25000, valued at $38000; inventory cost $6000, valued at $4500; cash $20000. No goodwill arose when P joined the partnership. What was the balance on P’s capital account?

Feb/March 2016

X and Y each have capital accounts of $50000 and divide profits equally. They intend to bring Z into the partnership. After admission, the profit-sharing ratio will become $2:2:1$. The capital account balances are also to be kept in this ratio. Goodwill has been assessed at $20000 and will not be carried in the books of account. How much cash must Z contribute to become a partner?

Feb/March 2016

David and Jane have traded together for several years, sharing profits in the ratio of $2:1$. Jane now wants to retire. Her capital account stands at $15800$ and her current account has a debit balance of $3500$. Goodwill is valued at $6600$. The book values of certain tangible assets are to be increased by $3000$. What amount is payable to Jane on her retirement from the business?

Feb/March 2016

James and Lewis have been partners for several years, dividing profits and losses equally. No partnership agreement was in place. Their statement of financial position at 30 September 2015 contained the following details.

Feb/March 2016

At $31$ December $2014$, Howard Limited’s statement of financial position showed the equity and reserves section as follows.

Feb/March 2016

Why does goodwill need to be adjusted in the books of account when a new partner joins the partnership?

Feb/March 2017

X and Y are partners in a partnership. They bring in Z as a new partner. The profits will be shared in the ratio $2:1:1$ respectively. Goodwill is valued at $100000$. The goodwill is not to remain in the books of account. All other assets are reassessed at $40000$ above their net book value. Z contributes $250000$ in cash and office equipment worth $30000$. What is the balance on Z’s capital account after admission?

Feb/March 2017

Which statements concerning preference shares are correct?

Feb/March 2017

In the absence of a partnership agreement, which rule does not apply?

Feb/March 2018

The partnership of Ravi and Tania, who divided profits equally, was dissolved. Before dissolution, the capital accounts stood at Ravi $50000$ and Tania $60000$. Before dissolution, the current account balances were Ravi $35000$ credit and Tania $35000$ credit. The loss on disposal of partnership net assets was $10000$. How much money did each partner receive when the partnership was dissolved?

Feb/March 2018

Paul and Angela run a partnership, sharing profits and losses in the ratio of $3:2$ respectively. Separate current accounts are not kept. On $1\ \text{May}\ 2017$, Rachael joined the partnership.

Feb/March 2018

Meena operated as a sole trader. On 1 July 2018, Hanna joined her in a partnership, with profits divided equally. For the year ended 31 December 2018, profit was $168000 and this arose evenly throughout the year. During March 2018, an irrecoverable debt of $8000 was incurred, and it was agreed that Meena would settle this amount. What is Hanna’s share of profit?

Feb/March 2019

Z joins the partnership formed by X and Y as a new partner. He contributes the following items to the business. Cash $20000 Inventory $6000 Vehicle $11000 Interest on capital is calculated at $10\%$ per annum. No goodwill arises on Z’s admission. What is Z’s interest on capital per annum?

Feb/March 2019

L and M are partners and divide profits equally. The accounts do not include a goodwill account. N becomes a partner and contributes $30000 cash for his share of the goodwill. Profits will now be shared equally by L, M and N. What increases are made to the capital accounts when N is admitted to the partnership?

Feb/March 2019

A shareholder disposes of some shares at a price lower than the amount he originally paid. What effect does this have on the company’s share capital?

Feb/March 2019

F and P are carrying on a business and sharing profits and losses in the ratio $3:1$. Their capital account balances stand at: F $90{,}000 P $60{,}000 B joins as a new partner and contributes $50{,}000 as capital. Goodwill is assessed at $20{,}000 and is not to remain in the books of account. The revised profit sharing ratio will be $2:2:1$ for F, P and B respectively. What will be the new capital account balance of F after B’s admission?

Feb/March 2020

Which of the following statements about bonus shares is correct?

Feb/March 2020

X and Y were partners and divided profits and losses equally. Z joined the partnership, and the profit and loss sharing ratio for X, Y and Z will be $2:2:1$ respectively. On the admission date, the carrying value of non-current assets was raised by $48000$. Goodwill had a value of $30000$ but would not be kept in the books of account. What effect did this have on X’s capital account?

Feb/March 2021

Which items would be shown in a partnership’s appropriation account, if there is no partnership agreement?

Feb/March 2021

Which rule does not apply when there is no partnership agreement?

Feb/March 2022

P and Q are partners and divide profits and losses equally. On 1 January 2021, the partnership’s net assets amounted to $410\,000. On that date, R joined the business under the following conditions: 1. The net assets were to be restated at $480\,000. 2. Goodwill had a value of $50\,000, but it would not be kept in the books of account. 3. Future profits and losses would be shared as follows: P $40\%$, Q $40\%$ and R $20\%$. How much did Q’s capital alter immediately after R joined the partnership?

Feb/March 2022

X and Y are partners, and the residual profits and losses are divided equally between them. A $2\%$ interest charge applies to the partners’ drawings. Y receives a salary of $10\,000. The partners’ drawings during the year were: X: $12\,000 Y: $8\,000 The profit for the year amounted to $52\,000. Calculate the amount of residual profit that each partner was allocated.

Feb/March 2022

Bipin, Feroz and Neeru have operated as partners for many years, sharing profits and losses in the ratio $3:1:2$ respectively. Feroz chose to retire from the partnership with effect from 1 January 2022. A statement of financial position was available on this date.

Feb/March 2022

Why did Amitav choose to enter a partnership with Lennie instead of starting as a sole trader?

Feb/March 2023

At the close of the financial year, the partnership has the following details. residual loss $3000 total salaries to partners $5000 total interest on capital $27000 total drawings $14000 total interest on drawings $700 What profit was earned for the year?

Feb/March 2023

Which statement concerning sole traders is correct?

Feb/March 2024

Which clause of the Partnership Act 1890 is applied when no partnership agreement exists?

Feb/March 2024

A partnership gave the following figures for the year: - gross profit $\$76\,000$ - operating costs $\$30\,000$ - bank interest $\$1\,300$ - interest on partner’s loan $\$600$ - interest on capital $\$5\,600$ - interest on drawings $\$2\,000$ What were the profit for the year and the residual profit shared by the partners?

Feb/March 2024

Which source of finance could a public limited company obtain that a partnership could not?

Feb/March 2024

A company’s issued share capital consisted of $400\,000$ ordinary shares of $1$ each. It then carried out a bonus issue of one ordinary share for every five ordinary shares held. After this, it made a rights issue of one ordinary share for every three ordinary shares held. Calculate the balance on the share capital account after these transactions.

Feb/March 2025

X, Y and Z have been operating a business with profits shared in the ratio $3:2:1$. Y chose to retire at the end of the year, when the balance on his capital account was $39400. On that date, the assets were revalued upwards by $57000. The partnership does not account for goodwill. Y took a car valued at $4800 as part of the amount owed to him. How much cash did Y receive?

May/June 2016

Which statement is correct about rights issues?

May/June 2016

A and B were partners, dividing profits and losses equally, when they chose to retire. The details of the realisation are shown in the table. On realisation, what amount of profit was each partner entitled to?

May/June 2016

X, Y and Z have been trading as partners, with profits divided in the ratio $3:2:1$. Y chose to retire at the end of the year, when the balance on his capital account stood at $39400$. At that moment, the assets were revalued upwards by $57000$. Goodwill is not recorded by the partnership. Y accepted a car worth $4800$ as part of what was owed to him. How much cash did Y receive?

May/June 2016

Which of the following statements about rights issues is correct?

May/June 2016

Wang and Yuan, who share profits and losses in the ratio 2:1, chose to end their partnership. Their summarised statement of financial position at 30 September 2015 was as follows:

May/June 2016

Colin, Darim and Emran are partners who share profits and losses in the ratio $3:2:1$. Their statement of financial position at 30 November 2015 is given, together with extra details about Darim’s retirement.

May/June 2016

When a partner retires and the partnership assets are revalued, what ratio is used to apportion the surplus or deficit on revaluation?

May/June 2017

X and Y are partners and divide profits and losses in the ratio $2 : 1$ respectively. The capital account balances are X $80000$ and Y $50000$. Z joins as a new partner and brings in capital of $30000$. Goodwill is valued at $18000$. Goodwill is not to remain in the books of account. The profit sharing ratio after Z joins will be $5 : 3 : 2$ respectively. What will be the balance on X’s capital account following the introduction of Z?

May/June 2017

L, M and N operated as partners, dividing profit and losses in the ratio $4 : 3 : 1$ respectively. N left the partnership on 31 October 2016, at which time the balance on her capital account stood at $142000$. Goodwill had been assessed at $54000$ and was not to be kept in the books of account. Non-current assets were reassessed and changed from $180000$ to $144000$. N received every amount owing to her from the business bank account. What amount did N receive on leaving the partnership?

May/June 2017

Which item is not considered when a partner joins a partnership?

May/June 2017

Ali, Bharti and Chan were partners, and they shared profits and losses in the ratio $3:2:1$. Bharti left the partnership on 30 June 2016. The balances shown at 30 June 2016 were as follows: Capital account balances: Ali $60000$ Cr, Bharti $40000$ Cr, Chan $20000$ Cr. Current account balances: Ali $18650$ Cr, Bharti $6100$ Dr, Chan $8950$ Cr. When she retired, Bharti took over a partnership motor vehicle at an agreed value of $4000$. Goodwill had a valuation of $39000$. What amount was payable to Bharti on her retirement?

May/June 2017

Which statement concerning ordinary shares is correct?

May/June 2017

X and Y had been in partnership and divided profits equally. Z joined as a partner, after which the three partners divided profits equally. Goodwill was valued at $90000$. No goodwill account is to remain in the books of account. Which statement explains the effect on capital accounts when Z was admitted?

May/June 2017

The following share issues were carried out by a limited company. Bonus issue of $20000$ ordinary shares of $0.50$ each. Rights issue of $10000$ ordinary shares of $0.50$ each at a price of $0.75$ each. By what amount did these issues raise the equity of the company?

May/June 2017

Amit and Binu are partners, with profits and losses shared in the ratio $3:2$ respectively. A partnership statement of financial position as at 30 June 2016 is given, together with details of the partnership’s dissolution.

May/June 2017

Amit, Wang and Susi have been operating as partners for several years, and they draw up their financial statements each year to 31 March. They have never entered into a partnership agreement.

May/June 2017

On 1 January 2016, Ramadhin, Statham and Trueman set up a partnership. Before appropriation, the draft profit for the year ended 31 December 2016 was $232000$, although some items had been omitted.

May/June 2017

The partnership made a profit of $60\,000$, and this was earned evenly across the year ended 31 December 2017. Jim joined as the third partner on 31 March 2017, after which the three partners shared profits equally. An irrecoverable debt of $12\,000$ shown in the financial statements would not be included when working out Jim’s share of the profit. What amount of profit did Jim receive for the year ended 31 December 2017?

May/June 2018

Which company reserves are not permitted to be used to pay dividends?

May/June 2018

L, M and N were partners, with profits and losses shared in the ratio $3:2:1$. M retired on 31 December 2017. On that date, the balance on M’s capital account stood at $37000$. There were no current accounts. The terms for M’s retirement were as follows. Goodwill was assessed at $24000$. Freehold property was increased in value by $30000$. M accepted a motor vehicle at a valuation of $7000$. What amount was ultimately payable to M for his retirement?

May/June 2018

P, Q and R are partners in a partnership. Q is leaving the partnership, and the following conditions have been accepted. Goodwill is valued at $35000$ but will not be kept in the books of account. Net assets are written down. Which items in Q’s capital account show these adjustments?

May/June 2019

X and Y are operating as partners, dividing profits and losses in the ratio $2:1$. Z is to be admitted under the following revised terms. The profit and loss sharing ratio will then be $2:1:2$ respectively. Goodwill has been valued at $90\,000$. Z will compensate the partners for his share of the goodwill. How much must Z pay X?

May/June 2019

D, E and F form a partnership and divide profits in the ratio $2:2:1$. D receives an annual salary of $10\,000$. E has advanced a loan to the partnership, and the partnership pays interest of $5000$ per year on it. The profit for the year before appropriation amounted to $150\,000$. What was E’s total share of the profit for the year?

May/June 2019

L and M had been operating as partners, with profits and losses divided equally. P joined the partnership, and the partners then continued to divide profits and losses equally. Goodwill was valued at $48000, but the partners decided that no goodwill account should be left in the accounting records. State the accounting entries needed to record the goodwill.

May/June 2019

Goodwill is adjusted in partners’ accounts when the profit sharing ratio changes. In what way is this recorded?

May/June 2019

X, Y and Z formed a partnership and divided profits and losses in the ratio $5:3:2$ respectively. Before any adjustments, the capital account balances were $40000$, $30000$ and $20000$ respectively. Z then retired from the partnership. X and Y carried on as partners, sharing profits and losses in the ratio $3:2$ respectively. The net assets were to be increased in value by $10000$. What was the capital account balance for partner X after Z’s retirement?

May/June 2019

L and M are business partners who divide profits and losses in the ratio $2:1$. At 31 December 2018, the credit balances on their capital and current accounts were as follows. On 1 January 2019, M brought his private motor vehicle into the partnership. The motor vehicle had originally cost $15000$. Its present market value is $8000$. Each partner withdrew $20000$ in drawings. What was the combined total on each partner’s capital and current accounts after these adjustments?

May/June 2019

John, Kathy and Liz have been in partnership, sharing profits and losses in the ratio $4:3:3$. They have decided to dissolve the partnership.

May/June 2019

The proprietor of a business bought a camera to take some photographs of her family. She wants to show it as an asset in the financial statements of the business. Her accountant says that she must not do this. Which accounting principle is the accountant using?

May/June 2020

What items would be shown in a partnership appropriation account?

May/June 2020

X and Y were partners and divided their profits equally. On 1 March 2019, Z joins as a partner. In future they will share profits in the ratio X:Y:Z = $3:2:1$. The net assets valued at $20000$ have fallen by $8000$ in value. Goodwill is valued at $9000$ but will not be kept in the books of account. What entries should be made in Y's capital account to record these changes?

May/June 2020

At 31 December 2019, the statement of financial position listed these balances. Capital accounts: L $20000, M $10000. Current accounts: L $1000 debit, M $2500 credit. Net assets on 1 January 2019 amounted to $14000. During the year ended 31 December 2019, property was revalued upwards by $12000. No drawings were taken during the year. What profit was made for the year ended 31 December 2019?

May/June 2020

“Shareholders receive a fixed annual dividend, and any dividends not paid are covered from future profits.” What does this statement refer to?

May/June 2020

Which statements regarding a bonus issue of ordinary shares are correct?

May/June 2020

X, Y and Z operated as partners and divided profits equally. After Z withdrew from the business, the assets were revalued. Goodwill was also measured, but it was not kept in the books of accounts. Which statement about Z’s retirement is correct?

May/June 2020

A business owner bought a camera for taking photographs of her family. She wants to record it as an asset in the business’s financial statements. Her accountant tells her that this should not be done. Which accounting principle is the accountant applying?

May/June 2020

What items would be entered in a partnership appropriation account?

May/June 2020

X and Y formed a partnership and divided the profits equally. On 1 March 2019, Z joins the partnership as a partner. In the future, profits are to be shared in the ratio X:Y:Z = $3:2:1$. The net assets, valued at $20\,000$, have fallen by $8\,000$ in value. Goodwill is valued at $9\,000$ but is not to be kept in the books of account. What entries should be made in Y's capital accounts to record these changes?

May/June 2020

“Shareholders have the right to receive a fixed annual dividend, and any dividends not paid can be covered from later profits.” What does this statement refer to?

May/June 2020

Which statements concerning a bonus issue of ordinary shares are correct?

May/June 2020

Xu and Zoe had been partners for several years. They agreed to end their partnership on 1 October 2019.

May/June 2020

L, M and N are partners, and they divide profits and losses in equal shares. N retired on 31 December 2020. On that date: 1 N had a capital account balance of $30000 and a current account debit balance of $5400. 2 The profit for the year was $21000 before L’s salary of $6000 was paid. 3 Goodwill was assessed at $18000, but it will not be kept in the accounting records. 4 The remaining assets are to be increased in value by $6000. How much will N be entitled to on his retirement?

May/June 2021

Charlie and Daphne are partners, and profits and losses are divided in the ratio $2:1$. On 31 December 2019, their fixed capital account balances stood at $20000 and $13000 respectively. On 1 January 2020, they revised the partnership terms so that interest on capital would be paid at the rate of $10\%$ per annum. What effect did this revision have on Charlie’s total share of profit for the year ended 31 December 2020?

May/June 2021

Which item would not be included in the financial statements of a sole trader?

May/June 2021

L and M are partners who divide profits and losses equally. In this year, M’s profit share is $18000. For next year, they intend to revise the partnership agreement so that L gets an annual salary of $10000 and a one-third share of any profits or losses. What must the total partnership profit be for next year so that M receives the same profit amount as in this year?

May/June 2021

V and E are partners, with profits and losses divided equally. Their capital accounts had the following credit balances on 31 March 2021. V: $80000$ E: $40000$ Z joined the partnership as a partner on 1 April 2021. On that date, the following matters were considered. 1. Non-current assets were revalued downward by $20000$. 2. Goodwill was valued at $80000$, but it will not remain in the books of account once Z has been admitted. The revised profit-sharing ratio will be V 40%, E 30% and Z 30%. What balance was on E’s capital account after Z had been admitted?

May/June 2021

Which account is used to work out the profit or loss arising on the dissolution of a partnership?

May/June 2021

X operates as a sole trader. Which statement about X is correct?

May/June 2021

Karis and Lara operate a partnership.

May/June 2021

Cherry, Winston and Yupar formed a partnership and split profits and losses in the ratio $3:5:2$. They agreed to dissolve the partnership on 1 December 2020. On that date, the partnership’s statement of financial position was as follows.

May/June 2021

What will be applicable to a partnership if no partnership agreement exists?

May/June 2022

X and Y operated as partners, with profits and losses being divided equally. On 1 January, P joined the partnership as a partner. He introduced $20000$ cash and $10000$ in other assets. On this date, the non-current assets were written up by $12000$. No adjustment was made for goodwill. The sharing of profits and losses remained equal. What was the balance on P’s capital account after all the necessary entries had been posted?

May/June 2022

Daisy, Freddie and Harry had been partners for several years, and the profits were divided equally between them. Harry chose to leave the partnership. At the time of retirement, Harry’s capital account and current account showed credit balances of $40000$ and $8000$. The partnership’s total assets were recorded in the books at $98000$, but their estimated realisable value was $116000$. No goodwill adjustment was made. How much did Harry obtain from the partnership when he retired?

May/June 2022

A company carried out a bonus issue of one ordinary share for every five ordinary shares held. What is the impact on share capital and reserves and net assets?

May/June 2022

If the partners fail to prepare a partnership agreement, the terms of the Partnership Act will apply. Which statement is correct as a rule under the Partnership Act?

May/June 2022

Dua and Noor are partners and divide profits and losses equally. Zee was admitted, and profits and losses are now shared in the ratio Dua : Noor : Zee, $2:2:1$. When Zee was admitted, the value of tangible assets fell by $20\,000$ and goodwill was assessed at $60\,000$, although it was not kept in the books of account. What was the net decrease on Noor’s capital account?

May/June 2022

L and M formed a partnership and divided profits and losses in the proportion $2:1$. On 31 December 2021, the partnership statement showed these assets and liabilities: Non-current assets at net book value: $600000 Inventory: $50000 Trade receivables: $40000 Bank: $5000 debit Trade payables: $20000 Capital and current account L: $350000 Capital and current account M: $325000 The partnership ended on 31 December 2021. On that date, the following transactions occurred: 1 The non-current assets were disposed of for $654000. 2 Inventory was sold for $80000. 3 All trade receivables were received in full and trade payables were paid at their book values. 4 Realisation expenses amounted to $6000. Calculate L’s share of the realisation profit.

May/June 2022

Maria and Rio have been partners for several years, and they are now thinking about bringing in a new partner.

May/June 2022

Joe is a sole trader. Which statements about his business are incorrect?

May/June 2023

Which row gives the correct description of one advantage and one disadvantage of a partnership?

May/June 2023

What advantages come from operating as a partnership? 1 All partners enjoy limited liability. 2 The task of running the business is shared. 3 Shares are able to be sold. 4 Compared with a sole trader, the business can obtain capital from more sources.

May/June 2023

If there is no partnership agreement, the Partnership Act 1890 may be used. Which statement about the provisions of the Partnership Act 1890 is not correct?

May/June 2023

Jamie is establishing a business. Three details matter to Jamie. 1 Jamie wants to receive a salary for the work he does in managing the business. 2 Jamie wants complete ownership of the business. 3 Jamie wants to avoid the danger of losing personal assets. Which type of business should Jamie choose?

May/June 2024

A partnership is running without a partnership agreement. Which set of rules will govern the partnership?

May/June 2024

Which of the following statements apply to a sole trader?

May/June 2024

Vicram and Walter are partners, but no partnership agreement has been drawn up. At the close of a financial period, the partnership’s net assets amounted to $180\,000$. The partners keep capital accounts and current accounts. The opening balances on the current accounts were: Vicram $3\,200$ debit Walter $6\,800$ credit The partnership profit for the period, before appropriation, was $85\,000$. Vicram had lent $20\,000$ to the business. What is the balance on Vicram’s capital account at the end of the period?

May/June 2024

What benefits come from being a sole trader?

May/June 2024

X and Y are partners in a partnership. They have no partnership agreement. Which statement is correct?

May/June 2024

A company intends to put money into a project. Interest rates are currently high, and the company wants to prevent any alteration in shareholder control. Which method should the company use to finance the project?

May/June 2024