Partnership Accounting | Baamboozle - Baamboozle

Name one method of calculating goodwill

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

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Win 25 points!

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Lose 5 points!

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Reset score!

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Go to last place!

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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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Share of profits is found on the credit side of the current account. True or False?

True

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Give any 2 reasons why someone would pay for goodwill

1) Good employees may come with the business, 2) Having a good location , 3) Customer loyalty, 4) Business has a good reputation

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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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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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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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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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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 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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What are 2 disadvantages of a partnership?

Partners have unlimited liability in most cases (at least 1 partner) or capital is still limited in most regards or difficult to transfer partnerships

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