Partnership Accounting | Baamboozle - Baamboozle

Salaries and other performance related payments are subtracted in the appropriation account. True or False?

True

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On a partners current account drawings and interest on drawings are found on the debit side of the account. Is this True or False?

True

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Name one method of calculating goodwill

1) Average sales method, 2) Annual Fees Method , 3) Super profits method

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What does an appropriation account do?

refers to a breakdown of how a firm's profits are divided up i.e how owners of a business split losses and profits

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What does interest on drawings mean?

To deter the partners from taking out cash unnecessarily, the concept can be used of charging the partners interest on each drawing or withdrawal

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What is a partnership deed and why may it be helpful to have one created?

Partnership deed is a formal contractual agreement among all partners to agree to terms and conditions of a partnership and it helps to resolve potential issues

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Salaries will be found on the credit side of the current account. True or False?

True

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If a partnership agreed to share a profit of $15,000 amongst 3 members equally what would be each persons share of profit?

15,000 / 3 = $5000 each

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What are 2 advantages of a partnership business?

More capital can be raised with additional partners or partners can help bring extra skills or responsibility is shared

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What does interest on capital mean?

if the partner’s capital is unequal to the profit-sharing ratio, this is used to compensate for partners who invested more capital than others

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Interest on capital is found on the debit side of the current account. True or False?

False - This is found on the credit side

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Why is fixed capital accounts preferred over fluctuating capital accounts?

Because it is easier to located situations when a partners takes excess amounts of money out of the business

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Is interest on capital added or subtracted from undistributed profits in the appropriation account?

Subtracted

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