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Questions and Answers
Which one of these is an essential feature of a partnership?
Which one of these is an essential feature of a partnership?
- Limited liability
- Unlimited liability (correct)
- Separate legal entity
- Single owner
Under which method are partners' capital accounts prepared when the capital of partners remains fixed throughout the accounting period?
Under which method are partners' capital accounts prepared when the capital of partners remains fixed throughout the accounting period?
- Fluctuating capital method (correct)
- Interest on capital method
- Fixed capital method
- Guaranteed capital method
What is the purpose of the Profit and Loss Appropriation Account in a partnership?
What is the purpose of the Profit and Loss Appropriation Account in a partnership?
- To distribute profit or loss among the partners (correct)
- To make necessary adjustments to rectify past errors in partners' capital accounts
- To prepare final accounts of the partnership firm
- To calculate interest on capital
How does a guarantee for a minimum amount of profit affect the distribution of profits among the partners?
How does a guarantee for a minimum amount of profit affect the distribution of profits among the partners?
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What is the purpose of making necessary adjustments to rectify past errors in partners' capital accounts?
What is the purpose of making necessary adjustments to rectify past errors in partners' capital accounts?
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