17 Questions
What happens to the assets contributed by partners in a partnership?
They become partnership property, jointly owned by all parties
According to Partnership Act 1908, what do partners share equally in?
Capital and profits
In a partnership, what happens if there is a Partnership Deed?
It overrides Section 27 of the Partnership Act 1908
What type of entity are partnerships in terms of taxation?
Partnerships are not taxed, but individual partners pay tax
What must partners do if they want to change the nature of their partnership?
Obtain unanimous consent from all partners
What method of settling accounts is typically used when changes occur in a partnership?
A predetermined formula in the Partnership Deed
In a partnership using the Fixed Capital Method, what is the purpose of the Current Account?
To monitor partners' entitlements like profit share and salaries
What is the main function of the Drawings Account in a partnership?
To record assets taken by partners for personal use
Which accounts are credited for liabilities assumed by a partnership?
Liability Accounts
What type of transactions are typically recorded in the Capital Accounts of partners?
Net investments made by each partner
Which financial statement would show the revenues and expenses of a partnership?
Profit and Loss Statement
When are assets withdrawn by partners for personal use typically recorded in a partnership's accounts?
In Drawings Accounts
What is the meaning of a partnership according to the Partnership Act 1908?
The relation between two or more persons for the purpose of conducting business with a view to profit
Why is the receipt of a share of profits considered prima facie evidence of a partnership?
To establish that a partnership has been formed
What is the main difference between a partnership being an accounting entity and a legal entity?
A partnership as an accounting entity is not separate from its owners, whereas a legal entity is separate from its owners
Why does every partner in a partnership have unlimited liability?
To make each partner individually liable for the firm’s obligations
What leads to the dissolution of a partnership based on the text?
Withdrawal or bankruptcy of an existing partner
This quiz covers the meanings, characteristics, and special features of partnerships according to the Partnership Act 1908. Topics include partnership deeds, record keeping, accounting entries, preparation of financial statements, and appropriations to partners.
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