Question Tag: Partnership

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FA – Nov 2024 – L1 – Q1 – Partnership Financial Statements

Prepare the profit or loss and appropriation account and financial position statement for a partnership at retirement and admission of partners.

Question

Atsu, Baba, and Chawe are in partnership, providing management services, sharing profits in the ratio 5:3:2 after charging annual salaries of GH¢18,000 each. Current accounts are not maintained. On 30 June 2024, Atsu retired.

Dua was admitted on 1 July 2024 to the partnership and is entitled to 30% of the profits of the current partnership, with the balance being shared equally between Baba and Chawe.

The previous partnership trial balance as of 30 June 2024 was as follows:

Description	GH¢	GH¢
Capital accounts – Atsu		12,519
Capital accounts – Baba		65,844
Capital accounts – Chawe		33,618
Trade receivables	138,615
Inventories at 1 July 2023	6,000
Operating expenses	419,166
Investment	300
Bank overdraft		33,510
Trade payables		52,218
Revenue		565,296
Total	663,543	663,543

Additional Information:

Inventory remains at GH¢6,000.
Full provision is required for an irrecoverable debt of GH¢3,450.
Adjustments agreed by partners:
- The investment is to be included at GH¢4,500.
- Goodwill, which remains in the books, is valued at GH¢72,000.
On 1 July 2024, GH¢30,000 due to Atsu was transferred to Dua. The balance due to Atsu is to be repaid over three years, commencing on 1 July 2024.
Dua introduced cash of GH¢22,500 to the partnership.

Required:
i) Prepare the statement of profit or loss and appropriation account of the previous partnership for the year ended 30 June 2024 and a statement of financial position at that date. (9 marks)
ii) Prepare the statement of financial position for the current partnership as of 1 July 2024. (6 marks)

Answer

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Tags: Appropriation, Capital Accounts, Financial Position, Goodwill, Partnership, Profit or Loss
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: Nov 2024

AT – Nov 2017 – L3 – Q7 – Tax Implications of Mergers and Acquisitions

Advise on tax implications for Aba Foods merger/acquisition options with Ifedi Foods.

Question

The prevailing economic condition has led to the business cessation of many SMEs. Aba Foods Limited, a well-known food and beverage company in Abia State, faced difficulties in securing long-term loans, preventing the replacement of its outdated equipment and leading to losses. To ensure continuity, the company considered mergers or acquisitions and entered discussions with Chief Egodi of Ifedi Group. Chief Egodi, concerned about the tax implications of potential arrangements, sought advice from your firm, Aliyara & Co., Chartered Accountants.

Required:
Provide a presentation in the form of advice:

(a) Explain the tax implications of Aba Foods Limited merging with Ifedi Foods and Beverage Limited, with Ifedi inheriting all assets and liabilities. (5 Marks)
(b) Explain the tax implications if Ifedi Foods and Beverage Limited is reconstituted to take over Aba Foods’ assets and liabilities. (5 Marks)
(c) Explain the tax implications if Ifedi Foods and Aba Foods enter a Joint Venture or Partnership Agreement. (5 Marks)

Answer

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Tags: Acquisition, Capital gains tax, FIRS, Merger, Partnership, Taxation, VAT, WHT
Level: Level 3

Topic: Tax Implications of Mergers and Acquisitions
Series: NOV 2017

BL – Nov 2020 – L1 – SB – Q6c – Partnership Law

Assess the legality of different partnership arrangements.

Question

Comment on the legality of the following relationships operating as partnerships:

i. A partnership of 16 persons established for charitable purposes
ii. Adex cooperative society consisting of 500 members
iii. Black and Blue law firm consisting of 31 lawyers
iv. Stone Partnership firm comprising Segun aged 28, Tunde aged 17
v. A partnership of volunteers for the purpose of helping persons displaced by flood.

Answer

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Tags: Charitable Purpose, Cooperative Society, Law Firm, Legal Entity, Minor Partnership, Partnership, Volunteers
Level: Level 1

Topic: Partnership Law
Series: NOV 2020

TAX – Nov 2020 – L1 – SA – Q1 – Introduction to Taxation

Objective questions testing basic financial accounting principles.

Question

Which of the following items is NOT found on the debit column of a trial balance?
A. Capital
B. Motor vehicle
C. Rent and rates
D. Salaries and wages
E. Postage and stationary

Answer

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Tags: Accounting Conventions, Control Account, Financial Statements, Income Statement, Inventory, Partnership, Source Document, Trial Balance
Level: Level 1

Topic: Introduction to Taxation
Series: NOV 2020

BL – May 2012 – L1 – SA – Q11 – Partnership Law

Identify what a partner must do to dissolve a partnership.

Question

What must a partner do by himself in order to dissolve the partnership in which he is a partner?

Answer

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Tags: Business Law, Notice, Partnership
Level: Level 1

Topic: Partnership Law
Series: MAY 2012

BL – May 2012 – L1 – SA – Q17 – Partnership Law

Identify the usual range of membership in a general partnership.

Question

The membership of a general partnership is usually from:

A. Two to twenty persons
B. Two to twenty-five persons
C. One to thirty persons
D. One to twenty-five persons
E. Three to twenty-five persons

Answer

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Tags: Business Law, Membership, Partnership
Level: Level 1

Topic: Partnership Law
Series: MAY 2012

FA – May 2012 – L1 – SA – Q8 -Partnership Accounts

Identifying actions taken during the admission of a partner.

Question

Which of the following is NOT an action for admission of a partner during the year?

A. Preparing the financial statements up to the date of admission
B. Determining goodwill, if any, at that date
C. Preparing a statement of account
D. Preparing a statement of financial position
E. Partners will decide if goodwill should be maintained in books or not.

Answer

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Tags: Financial Statements, Goodwill, Partnership
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2012

BL – Nov 2011 – L1 – SA – Q6 – Partnership Law

Identify which aspect is not required in partnership agreements.

Question

The parties in a partnership arrangement must agree on all of the following EXCEPT:
A. Profit sharing
B. Business management
C. Capital contribution
D. Dissolution
E. Pension reform

Answer

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Tags: Agreement, Business Law, Partnership
Level: Level 1

Topic: Partnership Law
Series: NOV 2011

BL – Nov 2011 – L1 – SA – Q4 – Partnership Law

Identify the minimum number of general partners required in a valid limited partnership.

Question

The minimum number of general partner(s) in a valid limited partnership is:
A. Two
B. Three
C. One
D. Four
E. Five

Answer

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Tags: Business Law, General Partner, Limited Partnership, Partnership
Level: Level 1

Topic: Partnership Law
Series: NOV 2011

FA – Nov 2020 – L1 – SB – Q6b – Partnership Accounts

Prepare the revaluation account, partners' capital accounts, and the statement of financial position.

Question

b. Emeka has been in business as a Japan spare part dealer. The last statement of financial position of his business as at September 30, 2019, is given below:

	N’000	N’000
Equity
Capital	1,000
Retained earnings	130
	1,130
Drawings	(60)
	1,070
Non-current assets:
PPE		1,100
Current assets:
Inventories		190
Trade payables		40
Bank		45
	1,375	1,375

On October 1, 2019, he agreed with Bode to join him, and the new business will trade under the name and style EmBo Ventures.

Terms of the new business:

Bode is to contribute capital of N1,250,000 for an equal share of profits.
The firm will take over the assets and liabilities of Emeka at their book values, except for:
- PPE: N1,250,000
- Inventories: N175,000
The partners will maintain equal capital, and any shortfall in Emeka’s capital should be made good by credit from revaluation or through additional funds.

Required:

Prepare for EmBo Ventures: i. Revaluation account (5 Marks)
ii. Partners’ capital accounts (5 Marks)
iii. Statement of financial position as at October 1, 2019 (5 Marks)

(Total: 15 Marks)

Answer

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Tags: Capital Accounts, Partnership, Revaluation, Statement of Financial Position
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: NOV 2020

FA – May 2017 – L1 – SB – Q4a – Partnership Accounts

Define goodwill, its recognition, and circumstances leading to its creation in partnership accounts.

Question

A number of factors will lead to the creation of goodwill in a partnership.

Required:

i. Define goodwill and explain its recognition in partnership accounts. (3 Marks)

ii. State THREE examples of circumstances in which goodwill may be created in a partnership. (3 Marks)

Answer

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Tags: Goodwill, Partnership, Recognition, Valuation
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2017

BL – MarJul 2020 – L1 – SA – Q3 – Partnership Law

Question assessing understanding of partnership liability and the implications for legal action against partners.

Question

When the liability of partners in a partnership is described as several, it means an aggrieved party could sue the partners
A. Jointly
B. Collectively
C. With families
D. With firm only
E. Individually

Answer

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Tags: Aggrieved Party, Legal Terminology, Liability, Partnership, Several Liability
Level: Level 1

Topic: Partnership Law
Series: MAR/JULY 2020

FA – May 2017 – L1 – SA – Q17 – Partnership Accounts

Identifies the process when two partnerships combine into a new one.

Question

Where TWO or more partnerships combine to form a new partnership, the act is called
A. Amalgamation
B. Appropriation
C. Dissolution
D. Realisation
E. Revaluation

Answer

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Tags: Amalgamation, Appropriation, Partnership, Realisation
Level: Level 1

Series: MAY 2017

BL – May 2024 – L1 – SB – Q2b – Partnership Law

Explain three rules that determine the existence of a partnership under Nigerian law.

Question

A partnership is one of the business organisations that the Companies and Allied Matters Act provides for.
Required:
Explain THREE rules that could be applied to determine the existence of a partnership. (6 Marks)

Answer

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Tags: Business Law, Existence, Legal Rules, Partnership
Level: Level 1

Topic: Partnership Law
Series: MAY 2024

FA – May 2016 – L1 – SA – Q19 – Partnership Accounts

Identifying the journal entries required to remove goodwill upon the admission of a new partner.

Question

State the journal entries required to remove the goodwill recognized on the admission of a new partner in a partnership.
A. Dr Partners’ Accounts Cr Profit or Loss
B. Dr Partners’ Account, Dr Goodwill Account Cr Asset Revaluation Account
C. Dr Partners’ Account Cr Asset Revaluation Account
D. Dr Profit or Loss Account Cr Partners’ Account
E. Dr Partners’ Accounts Cr Goodwill Account

Answer

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Tags: Admission, Goodwill, Journal Entries, Partnership
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2016

BL – May 2015 – L1 – SB – Q3a – Partnership Law

Explain the positions of law in relation to partner contributions and the introduction of a new partner.

Question

‘X’, ‘Y’, and ‘Z’ formed a partnership in 2007 and contributed N400,000, N300,000, and N200,000, respectively. In the course of managing the firm, Y paid the electricity bills of the firm to keep the business of the partnership going, and wants to be reimbursed. X intends to introduce a friend to join the partnership.

Required:
What are the positions of the law in the situations above? (10 Marks)

Answer

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Tags: Contributions, Law of Partnership, Partnership
Level: Level 1

Topic: Partnership Law
Series: MAY 2015

BL – May 2015 – L1 – SB – Q2a – Company Law | Partnership Law

Explain three key differences between a partnership and a company.

Question

A partnership and a company are similar in some respects, but they are different in many ways.
Required:
Explain any THREE differences between a partnership and a company. (6 Marks)

Answer

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Tags: Business organization, Company, Differences, Partnership
Level: Level 1

Topic: Company Law, Partnership Law
Series: MAY 2015

FA – May 2024 – L1 – SB – Q6 – Partnership Accounts

Admission of a new partner, accounting for goodwill and the partnership's capital accounts.

Question

BIN Partnership is an existing partnership consisting of two partners, Bode and Igere, sharing profits and losses equally. On January 1, 2023, they decided to admit Ngor as a new partner into the partnership.

Additional Information: (i) The existing partnership’s statement of financial position before Ngor’s admission is as follows:

Capital:	Property, plant, and equipment	₦2,400,000
Bode: ₦1,750,000	Inventory	₦700,000
Igere: ₦1,750,000	Accounts Receivable	₦900,000
Loan Notes: ₦1,000,000	Cash	₦800,000
Accounts Payable: ₦300,000
Total Liabilities: ₦4,800,000	Total Assets: ₦4,800,000

(ii) Goodwill of the partnership is valued at ₦200,000.
(iii) Ngor invests ₦1,500,000 in cash and acquires a 30% share in the partnership’s profits and losses.
(iv) ₦600,000 from the cash contributed by Ngor will be used to reduce the existing partnership’s long-term liabilities.
(v) The partnership follows a policy of not recording goodwill on its financial statements.

Required: a. In the books of BIN partnership, prepare the following to give effect to the admission of Ngor:

i. Goodwill account (2 Marks)
ii. Partners’ capital accounts (4 Marks)
iii. Statement of financial position after the admission of Ngor (10 Marks)

b. Discuss two methods of goodwill valuation in a partnership. (4 Marks)

(Total 20 Marks)

Answer

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Tags: Capital Accounts, Financial Statements, Goodwill, Partnership
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2024

FA – MAY 2015 – L1 – SA – Q17 – Partnership Accounts

Identify the interest rate applied to excess capital contributions in the absence of a partnership agreement.

Question

Where there is no partnership agreement, any capital contribution in excess of the agreed amount attracts:
A. No interest
B. Interest at the rate of 2 1/2% per annum
C. Interest at the rate of 5% per annum
D. Interest at the rate of 10% per annum
E. Interest at the rate of 20% per annum

Answer

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Tags: Capital, Interest, Partnership
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2015

FA – Mar/July 2020 – L1 – SA – Q17 – Users of Accounting Information and Their Needs

Identifying users not interested in the financial statements of sole traders and partnerships

Question

Which of the following users is NOT likely to be interested in the financial statements of a sole trader and a partnership business?
A. Employees and proprietors of the business
B. The stock exchange and shareholders
C. Auditors and financial analysts
D. Banks and insurance companies
E. The government and tax authorities

Answer

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Tags: Financial Statements, Partnership, Sole Trader, Users
Level: Level 1

Topic: Users of Accounting Information and Their Needs
Series: MAR/JULY 2020

Question Tag: Partnership

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FA – Nov 2024 – L1 – Q1 – Partnership Financial Statements

Prepare the profit or loss and appropriation account and financial position statement for a partnership at retirement and admission of partners.

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AT – Nov 2017 – L3 – Q7 – Tax Implications of Mergers and Acquisitions

Advise on tax implications for Aba Foods merger/acquisition options with Ifedi Foods.

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BL – Nov 2020 – L1 – SB – Q6c – Partnership Law

Assess the legality of different partnership arrangements.

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TAX – Nov 2020 – L1 – SA – Q1 – Introduction to Taxation

Objective questions testing basic financial accounting principles.

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BL – May 2012 – L1 – SA – Q11 – Partnership Law

Identify what a partner must do to dissolve a partnership.

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BL – May 2012 – L1 – SA – Q17 – Partnership Law

Identify the usual range of membership in a general partnership.

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FA – May 2012 – L1 – SA – Q8 -Partnership Accounts

Identifying actions taken during the admission of a partner.

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BL – Nov 2011 – L1 – SA – Q6 – Partnership Law

Identify which aspect is not required in partnership agreements.

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BL – Nov 2011 – L1 – SA – Q4 – Partnership Law

Identify the minimum number of general partners required in a valid limited partnership.

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FA – Nov 2020 – L1 – SB – Q6b – Partnership Accounts

Prepare the revaluation account, partners' capital accounts, and the statement of financial position.

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FA – May 2017 – L1 – SB – Q4a – Partnership Accounts

Define goodwill, its recognition, and circumstances leading to its creation in partnership accounts.

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BL – MarJul 2020 – L1 – SA – Q3 – Partnership Law

Question assessing understanding of partnership liability and the implications for legal action against partners.

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FA – May 2017 – L1 – SA – Q17 – Partnership Accounts

Identifies the process when two partnerships combine into a new one.

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BL – May 2024 – L1 – SB – Q2b – Partnership Law

Explain three rules that determine the existence of a partnership under Nigerian law.

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FA – May 2016 – L1 – SA – Q19 – Partnership Accounts

Identifying the journal entries required to remove goodwill upon the admission of a new partner.

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BL – May 2015 – L1 – SB – Q3a – Partnership Law

Explain the positions of law in relation to partner contributions and the introduction of a new partner.

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BL – May 2015 – L1 – SB – Q2a – Company Law | Partnership Law

Explain three key differences between a partnership and a company.

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FA – May 2024 – L1 – SB – Q6 – Partnership Accounts

Admission of a new partner, accounting for goodwill and the partnership's capital accounts.

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FA – MAY 2015 – L1 – SA – Q17 – Partnership Accounts

Identify the interest rate applied to excess capital contributions in the absence of a partnership agreement.

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FA – Mar/July 2020 – L1 – SA – Q17 – Users of Accounting Information and Their Needs

Identifying users not interested in the financial statements of sole traders and partnerships

You're reporting an error for "FA – Mar/July 2020 – L1 – SA – Q17 – Users of Accounting Information and Their Needs"

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