Accounting for Partnership Lecture 1: Definitions and Features

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What happens to the assets contributed by partners in a partnership?

They become partnership property, jointly owned by all parties (correct)

They are taxable entities

They are sold and divided among the partners

They remain the exclusive property of the partner who contributed them

According to Partnership Act 1908, what do partners share equally in?

Capital and profits (correct)

Assets and liabilities

Debts and losses

Interest on capital

In a partnership, what happens if there is a Partnership Deed?

It is no longer considered a partnership

It becomes a taxable entity

It overrides Section 27 of the Partnership Act 1908 (correct)

It exempts partners from paying taxes

What type of entity are partnerships in terms of taxation?

Partnerships are not taxed, but individual partners pay tax Signup and view all the answers

What must partners do if they want to change the nature of their partnership?

Obtain unanimous consent from all partners Signup and view all the answers

What method of settling accounts is typically used when changes occur in a partnership?

A predetermined formula in the Partnership Deed Signup and view all the answers

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 Signup and view all the answers

What is the main function of the Drawings Account in a partnership?

To record assets taken by partners for personal use Signup and view all the answers

Which accounts are credited for liabilities assumed by a partnership?

Liability Accounts Signup and view all the answers

What type of transactions are typically recorded in the Capital Accounts of partners?

Net investments made by each partner Signup and view all the answers

Which financial statement would show the revenues and expenses of a partnership?

Profit and Loss Statement Signup and view all the answers

When are assets withdrawn by partners for personal use typically recorded in a partnership's accounts?

In Drawings Accounts Signup and view all the answers

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 Signup and view all the answers

Why is the receipt of a share of profits considered prima facie evidence of a partnership?

To establish that a partnership has been formed Signup and view all the answers

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 Signup and view all the answers

Why does every partner in a partnership have unlimited liability?

To make each partner individually liable for the firm’s obligations Signup and view all the answers

What leads to the dissolution of a partnership based on the text?

Withdrawal or bankruptcy of an existing partner Signup and view all the answers

Accounting for Partnership Lecture 1: Definitions and Features

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