CEDEC INTERNATIONAL SECONDARY SCHOOL

REVIEW QUESTIONS FOR FIRST TERM 2022/2023

YEAR 11 FINANCIAL ACCOUNTING
Topic Introduction to Partnership
Part A: Multiple Choice Questions (MCQ)
1. An ordinary partnership business can have … A.) not more than 50 partners B.) not more than 20
partners C.) any number of partners D.) any number than 2 partners.
2. A banking partnership business can have … A.) not more than 10 partners B.) not more than 20
partners C.) not more than 50 partners D.) any number of partners.
3. In the absence of an agreement profit and loss are divided by partners in the ratio of ... A.) capital
B.) equally C.) time devoted by each partners D.) none of these
4. In the absence of an agreement, Interest on loan advanced by the partner to the firm is allowed at the
rate of ... A.) 6% B.) 5% C.) 12% D.) 9%
5. Current accounts of the partners should be opened when the capitals are ... A.) fluctuating
B.) fixed C.) either fixed or fluctuating D.) none of these
6. Investment in partnership is made by introducing ... A.) cash B.) none – cash assets C.) cash or
non – cash assets D.) none of these
7. Partnership is formed by the partners by ... A.) written agreement B.) oral agreement C.) written
or oral agreement D.) none of these
8. Any partner who investments in the business but does not take active part in the business is ...
A.) secret partner B.) sleeping partner C.) active partner D.) nominal partner
9. The written agreement of partnership is called ... A.) Partnership Deed B.) Articles of Association
C.) Memorandum of Association D.) Certificate of Incorporation
10. Under fixed capital methods, profit will be credited to ... A.) Capital Account B.) Drawings
C.) Current Account D.) Profit & Loss
11. Partnership business is governed by ... A.) Partnership Act B.) Act of Parliament C.) Companies
Act D.) Constitution
12. The members of partnership firm are individually called ... A.) director B.) investor C.) Partner
D.) Manager

Part B: Short Answer Questions (SAQ)

13. Define partnership account
14. Define partnership deed
15. Mention items contained in deed of partnership
16. State accounting procedure for a partnership where there is no agreement
17. Mention types of partner
18. Differentiate between active partner and dormant partner
19. Highlight the rights and privileges of partners
20. State the duties of partners
21. Explain partnership accounting
22. Name various accounts prepared under a partnership
23. Define partnership appropriation account
24. State items contained in the partnership appropriation account
25. Draw layout of current and capital accounts with fluctuation capital account.
26. Draw layout of capital account with fixed capital account
27. Draw layout of current account with fixed capital account
 CEDEC INTERNATIONAL SECONDARY SCHOOL
REVIEW QUESTIONS FOR FIRST TERM 2022/2023
YEAR 11 FINANCIAL ACCOUNTING
Topic Admission of New Partner
Part A: Multiple Choice Questions (MCQ)
1. A partnership … (a) has one owner (b) can issue stock (c) pays taxes on partnership income (c) can
have more than one general partner
2. Any assets invested by a particular partner in a partnership … (a) do not become a partnership asset
but instead remain with the partner (b) can be used only by the investing partner (c) become the
property of all the partners (d) are the basis for all profit sharing
3. Which of the following is a disadvantage of the partnership form of organization? (a) limited life
(b) no taxation at the partnership level (c) flexibility in business operations (d) combining of financial
resources
4. Mutual agency is defined as … (a) a mutual agreement (b) the right of all partners to represent the
company’s normal business operations (c) a synonym for partnership (d) a partnership between two
partnerships
5. Chani contributes equipment to a partnership that she purchased 2 years ago for $10,000. The current
book value is $7,500 and the market value is $9,000. At what value should the partnership record the
equipment? (a) $10,000 (b) $9,000 (c) $7,500 (d) $5,000
6. Juan contributes marketable securities to a partnership. The book value of the securities is $7,000 and
they have a current market value of $10,000. What amount should the partnership record in Juan’s
Capital account due to this contribution? (a) $10,000 (b) $7,000 (c) $3,000 (d) $1,000
7. Which one of the following would not be considered in the development of a partnership agreement?
(a) profit and loss levels (b) processing disputes (c) stock options (d) asset contributions
8. A well written partnership agreement should include each of the following except … (a) how to settle
disputes (b) the name of the partnership (c) division of responsibilities (d) Partner’s individual tax
rate
9. What type of assets may a partner not contribute to a partnership? (a) accounts receivable
(b) furniture (c) equipment (d) personal credit cards
10. How does a newly formed partnership handle the contribution of previously depreciated assets?
(a) continues the depreciation life as if the owner had not changed (b) starts over, using the
contributed value as the new cost basis (c) shortens the useful life of the asset per the partnership
agreement (d) does not depreciate the contributed asset
11. Thandie and Marco are partners with capital balances of $60,000. They share profits and losses at
50% each. Chris contributes $30,000 to the partnership for a 1/3 share. What amount should the
partnership record as a bonus to Chris? (a) $20,000 (b) $15,000 (c) $10.500 (d) $5,000
12. Thandie and Marco are partners with capital balances of $60,000. They share profits and losses at
50%. Chris contributes $30,000 to the partnership for a 1/3 share. What amount should Thandie’s
capital balance in the partnership be? (a) $60,000 (b) $50,000 (c) $45,000 (d) $30,000
13. Thandie and Marco are partners with capital balances of $60,000. They share profits and losses at
50%. Chris contributes $90,000 to the partnership for a 1/3 share. What amount should the
partnership record as an individual bonus to each of the old partners? (a) $10,000 (b) $7,000
(c) $3,000 (d) $20,000
14. Thandie and Marco are partners with capital balances of $60,000. They share profits and losses at
50%. Chris contributes $60,000 to the partnership for a 1/3 share. What amount should the
partnership record as an individual bonus to each of the old partners? (a) $10,000 (b) $7,000 (c) $0
(d) $5,000
15. When a partnership dissolves, the first step in the dissolution process is to … (a) allocate the gain or
loss on sale based on income sharing ratio (b) pay off liabilities (c) sell noncash assets (d ) divide the
remaining cash among the partners
16. When a partnership dissolves, the last step in the dissolution process is to … (a) allocate the gain or
loss on sale based on income sharing ratio (b) pay off liabilities (c) sell noncash assets (d) divide the
remaining cash among the partners
 CEDEC INTERNATIONAL SECONDARY SCHOOL
REVIEW QUESTIONS FOR FIRST TERM 2022/2023
YEAR 11 FINANCIAL ACCOUNTING
17. Prior to proceeding with the liquidation, the partnership should … (a) prepare adjusting entries
without closing (b) complete the accounting cycle for final operational period (c) prepare only closing
entries (d) complete financial statements only
Part B: Short Answer Questions (SAQ)
1. Define goodwill
2. Give three reasons for valuing goodwill
3. State three factors to consider in the computation of goodwill
4. Explain the accounting treatment of goodwill
5. Highlight the accounting treatment upon admission of new partner
6. Define revaluation of asset
7. Give two reasons for revaluation of assets
8. State the accounting procedure for revaluation of assets
9. Highlight the accounting treatment of revalued amount of assets
10. Explain the effect of revaluation of asset on the net worth of a partnership business
11. Does a partnership pay income tax?
12. Can a partner’s personal assets in a limited liability partnership be at risk?
13. Can a partnership assume liabilities as part of one of the partner’s contributions?
14. Does each partner have to contribute an equal amount of assets in order to split profit and losses?
15. What types of bases for dividing partnership net income or net loss are available?
16. Angela and Agatha are partners in Double A Partners. When they withdraw cash for personal use,
how should that be recorded in the accounting records?
17. On February 3, 2016 Sam Singh invested $90,000 cash for a 1/3 interest in a newly formed
partnership. Prepare the journal entry to record the transaction.
18. Why do partnerships dissolve?
19. What are the four steps involved in liquidating a partnership?
20. When a partner withdraws from the firm, which accounts are affected?
21. What is the first step in a partnership liquidation (termination and sale of assets)?
22. When a partnership liquidates, do partners get paid first or do creditors get paid first?
23. Coffee Partners decides to close due to the increased competition from the national chains. If after
liquidating the noncash assets there is not enough cash to cover accounts payable, what happens?

Theory Question
1. Taiwo and Bayo are in partnership business sharing profits and losses in ratio 4:2 respectively. At
31st December 2010, the balance sheet of the partnership was as follows:
BALANCE SHEET AS AT 31st DECEMBER 2010
N N N
Land and Building 5,250
Plant and Machinery 3,075
8,325
Current Assets
Stock 4,500
Debtors 3,000
Less: Prov. for doubtful debts (150) 2,850
Cash at bank 300
7,650
Current Liabilities
Creditors (3,975)
Working Capital 3,675
12,000
Financed by:
Capital accounts: A 8,500
 CEDEC INTERNATIONAL SECONDARY SCHOOL
REVIEW QUESTIONS FOR FIRST TERM 2022/2023
YEAR 11 FINANCIAL ACCOUNTING
B 3,500
12,000
On 1st January 2011, Yomi was admitted into the partnership to take one-fifth of profit while the
relative profit sharing ratio of Taiwo and Bayo remains the same. Yomi paid the sum of N4,500
for his capital. The goodwill of the firm was values at N6,000. For the purposes of the admission
of Yomi, some assets of the firm were revalued at the following amounts:
Land & Building N8,000
Plant & Machinery N5,000
Stock N4,325

You are required to show the ledger entries necessary upon the admission of Yomi on 1st January 2011