These eight questions use original figures. Attempt each on paper before opening the answer, and check that the partners’ shares add up to the profit.
The set belongs to the partnerships chapter. To practise against the clock, use the timed original practice session builder.
Questions
Question 1. Two partners have no agreement. The net profit is RM30 000. How is it shared?
Answer
With no agreement, the default rule applies: profit is shared equally, with no interest or salary. Each partner gets RM15 000.
Question 2. Partners M and N share profit 2:1. Interest on capital is 4%, with capital of M RM70 000 and N RM30 000. N has a salary of RM8 000.
Net profit is RM66 000. Find each partner’s total share.
Answer
Interest: M 2 800 and N 1 200, a total of RM4 000.
Residual = 66 000 − 4 000 − 8 000 = RM54 000. M gets 36 000 and N gets 18 000.
M: 2 800 + 36 000 = RM38 800. N: 1 200 + 8 000 + 18 000 = RM27 200. Check: 38 800 + 27 200 = RM66 000.
Question 3. Using Question 2, N’s capital is fixed. N’s opening current account has a debit balance of RM1 200, and N’s drawings are RM20 000. Find the closing balance.
Answer
Start with −1 200, add N’s total share of 27 200, then subtract the drawings of 20 000.
−1 200 + 27 200 − 20 000 = RM6 000 credit.
Question 4. State whether each goes to the capital account or the current account under the fixed capital method: (a) share of profit, (b) drawings, (c) additional capital introduced.
Answer
(a) Current account. (b) Current account. (c) Capital account, because it changes the partner’s agreed contribution.
Question 5. Profit for the year is RM48 000, earned evenly. Partners share 1:1 for the first 5 months and 3:1 for the last 7 months. Find each partner’s total.
Answer
First period: 48 000 × 5/12 = RM20 000, so 10 000 each.
Second period: 48 000 × 7/12 = RM28 000, shared 3:1, so 21 000 and 7 000.
First partner: RM31 000. Second partner: RM17 000. Check: 48 000.
Question 6. A student credits a partner’s salary of RM6 000 to the capital account, although the capital is fixed. Explain the error.
Answer
Under the fixed capital method the capital account only changes when the agreed contribution changes. A salary is part of the partner’s yearly earnings, so it is credited to the current account.
Question 7. A partner draws RM6 000 on 1 July. The year ends on 31 December, and interest on drawings is 5%. Find the interest.
Answer
The money was out for 6 months. Interest = 6 000 × 5% × 6/12 = RM150.
Question 8. The agreement is silent on interest on drawings. A student charges 5% anyway. Explain why this is wrong.
Answer
Only items stated in the agreement are applied. If it does not mention interest on drawings, none is charged, and the partners’ shares change if it is added.
If you got these wrong
Questions 1 and 2 point to preparing profit appropriation. Questions 3, 4 and 6 belong to updating partners’ current and capital accounts.
Questions 7 and 8 belong to applying a stated partnership agreement, and question 5 to handling a change in profit ratio. Record each slip in the mistake log and paper-error review tool.
If you want a teacher to go through your working, see online one-to-one Accounting tuition.