Net profit before any distributions were $10,000 and a partner had to get a salary of $1500 also he was charged drawing of $2000 how much profits will remain after calculations?
12,000 - 1500 = 10,500
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10
Define goodwill
Goodwill is an intangible asset that accounts for the excess purchase price of another company.
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10
What does a debit amount mean on a current account?
This means a partner has taken out more than their share of profits than they were entitled to
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10
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10
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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10
In the appropriation section interest on drawings is added to net profit. True or False?
True
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10
How are profits and losses shared in a partnership?
According to a profit and loss sharing ratio determined by the partnership
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10
What does interest on capital mean?
if the partnerâs 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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eraser
Reset score!
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magnet
Take 25 points!
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shark
Other team loses 25 points!
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banana
Go to last place!
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heart
Other team wins 5 points!
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magnet
Take 15 points!
Okay!
shark
Other team loses 20 points!
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banana
Go to last place!
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trap
No points!
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seesaw
Swap points!
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rocket
Go to first place!
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baam
Lose 20 points!
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10
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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10
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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5
Define a partnership business
A partnership is a business that has 2 to 20 owners who all work together with the main aim of making profits and also who shares these profits/losses
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10
Salaries will be found on the credit side of the current account. True or False?
True
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10
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