Recent Lessons

Show all results for ""

Feature Overview

Ace your exams with our all-in-one platform for creating and sharing quizzes and tests.

Quizzes

Create quizzes and tests automatically from your content using AI.

Flashcards

Automatically turn your notes into digital flashcards.

Share, Export & Embed

Share with classmates or export to Excel and your learning management system.

Stats & Reporting

Auto-grading quizzes and tests with detailed stats and reports.

Mobile Apps

The smarter way to study – wherever you are.

Pricing Schools Business

Features Pricing Schools Business

5 Questions

0 Views

Partnership Loans Overview

Choose a study mode

Play Quiz

Study Flashcards

Spaced Repetition

Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Where does the loan from a partner appear on a Statement of Financial Position?

Current Liability

Non-Current Liability (correct)

Current Asset

Non-Current Asset

How is interest on a loan from a partner recorded when it is due but not yet paid?

Debit: Partner X Current Account; Credit: Interest on Loan Account

Debit: Bank Account; Credit: Partner X Current Account

Debit: Interest on Loan Account; Credit: Partner X Current Account (correct)

Debit: Interest on Loan Account; Credit: Bank Account

How is the interest on loan account treated in the income statement?

Transferred to the credit side

Added to the capital account

Transferred to the debit side (correct)

Ignored

Which of the following statements is NOT true about loans from partners?

<p>Interest on the loan is a fixed percentage of the capital invested. (B)</p> Signup and view all the answers

Which accounting entry is used when a partnership repays a loan obtained from a partner?

<p>Debit: Loan from Partner X Account; Credit: Bank Account (C)</p> Signup and view all the answers

Study Notes

Partnership Loans

Partnerships can borrow money from a partner if needed, for a set period. These loans aren't part of the business's capital. They're treated like outside loans.
Unlike investing more capital, loans to a partnership from a partner have a set repayment time and interest.
Interest on partner loans is a business expense, not affected by the profit or loss amount.

Loan Recording

Obtaining a loan: Debit bank account, Credit loan from partner X account
Repaying a loan: Debit loan from partner X account, Credit bank account
Financial Position: The loan account is a non-current liability.
Interest Payment (Paid): Debit interest on loan account, Credit bank account
Interest Payment (Due, but not paid): Debit interest on loan account, Credit partner X current account
Interest (Income Statement): Interest on the loan account is transferred to the income statement's debit side.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers essential concepts of partnership loans, including their recording and treatment as non-current liabilities. Understand the implications of loan repayment and interest calculations in a partnership setting. Test your knowledge on how these loans differ from capital investments.