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  • 15 Marks

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.

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:

  1. Inventory remains at GH¢6,000.
  2. Full provision is required for an irrecoverable debt of GH¢3,450.
  3. 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.
  4. 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.
  5. 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)

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  • 15 Marks

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

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

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and beverage company in Abia State, faced difficulties in securing long-term loans, preventing the replacement of its outdated equipment and leading to losses.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)

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  • 5 Marks

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

Assess the legality of different partnership arrangements.

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.

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  • 1 Marks

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

Identify what a partner must do to dissolve a partnership.

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

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  • 1 Marks

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

Identify the usual range of membership in a general partnership.

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

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  • 1 Marks

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

Identifying actions taken during the admission of a partner.

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.

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  • 1 Marks

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

Identify which aspect is not required in partnership agreements.

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

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  • 1 Marks

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

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

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

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  • 15 Marks

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

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

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:

  1. Bode is to contribute capital of N1,250,000 for an equal share of profits.
  2. The firm will take over the assets and liabilities of Emeka at their book values, except for:
    • PPE: N1,250,000
    • Inventories: N175,000
  3. 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)

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  • 7 Marks

PT – May 2020 – L2 – Q3a – Income Tax Liabilities

This question involves computing the assessable income for each partner in a partnership based on profit-sharing ratios and additional benefits.

During the year ended 31 December 2018, the partnership of David, Stella, and Percy reported an adjusted profit of GH¢951,000 before charging partners’ salaries, interest on capital, and costs of traveling for leave.

Partner Profit/Loss Sharing Ratio Salaries (GH¢) Interest on Capital (GH¢) Cost of Traveling for Leave (GH¢)
David 3 48,000 30,000 20,000
Stella 2 72,000 20,000 30,000
Percy 1 96,000 10,000 25,000
Required:
Compute the assessable income for each partner.
(7 marks)

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  • 15 Marks

FR – Nov 2018 – L2 – Q5a – Preparation of Financial Statements

Preparation of partners' capital accounts and statement of financial position after changes in a partnership.

Alex, Dennis, and Francis have been in partnership business for several years, sharing profits in the ratio 6:5:3, respectively. The statement of financial position of the partnership as at 31 March 2018 showed the following position:

Statement of Financial Position as at 31 March 2018 GH¢ GH¢
Capital Accounts:
Alex 50,000
Dennis 36,000
Francis 17,400
Sundry Payables 135,200
Total 238,600
Tangible Non-current Assets 44,800
Goodwill 25,900
Sundry Receivables 147,000
Bank Balance 20,900
Total 238,600

Additional Information:
On 31 March 2018, Alex retired from the partnership, and the remaining partners agreed to admit George as a partner under the following terms:

  • Goodwill in the old partnership was to be revalued to two years’ purchase of the average profits over the last three years. The profits for the last three years were GH¢24,800, GH¢27,200, and GH¢28,010. Goodwill was to be written off in the new partnership.
  • Alex was to take his car out of the partnership assets at an agreed value of GH¢2,000. The car had been included in the accounts as of 31 March 2018 at a written-down value of GH¢1,188.
  • The new partnership, comprising Dennis, Francis, and George, was to share profits in the ratio 5:3:2, respectively, with an initial capital of GH¢50,000 subscribed in the profit-sharing ratio.
  • Dennis, Francis, and George were each to pay Alex GH¢10,000 out of their personal resources in part repayment of his share of the partnership.
  • Alex was to lend George any amount required to make up his capital in the firm from the monies due to him, and any further balance due to Alex was to be left in the new partnership as a loan, bearing interest at 20% per annum. Any adjustments required to the capital accounts of Dennis and Francis were to be paid into or withdrawn from the partnership bank account.

Required:
i. Prepare the partners’ capital accounts, in columnar form, reflecting the adjustments required on the change in partnership.
(5 marks)

ii. Prepare the statement of financial position on completion.
(5 marks)

iii. For registration of partnership to be effected, there shall be sent to the Registrar a copy of the partnership agreement and a statement on a prescribed form signed by all the partners. Outline the main contents of the statement on the prescribed form.
(2 marks)

iv. In accordance with the Incorporated Private Partnership Act 1962 (Act 152), state THREE (3) grounds upon which the Registrar General’s Department may refuse to register a partnership business.
(3 marks)

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  • 6 Marks

PT – Mar 2024 – L2 – Q3b – Income Tax Liabilities

State the basis periods for a sole proprietorship, company, trust, and partner in a partnership.

State the Basis Periods for the following persons as provided in the Income Tax Act, 2015 (Act 896):

i) A sole proprietorship
ii) A company
iii) A trust
iv) A partner of a partnership

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  • 8 Marks

BCL – Apr 2022 – L1 – Q4b – Alternative forms and constitutions of business organisations

Analyze partner and firm liabilities under the Incorporated Private Partnership Act 1962, and advise on a partner's claim for expense reimbursement.

b) Kojo Mintah is a partner in a firm of surveyors. While travelling in the course of an approved duty in the firm’s car, he bought GH¢500 worth of fuel for the use of the car. He submitted the receipt of purchase to the managing partner for refund. The managing partner has refused to pay.

Required:

i) State TWO (2) liabilities imposed on partners and TWO (2) liabilities imposed on the firm by the Incorporated Private Partnership Act, 1962 (Act 152).

(4 marks)

ii) Advice Kojo Mintah on his claim. (4 marks)

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  • 5 Marks

BCL – Nov 2016 – L1 – Q4b – Alternative Forms and Constitutions of Business Organisations

List applicable rules in a partnership in the absence of a contrary agreement.

List FIVE applicable rules in a partnership in the absence of a contrary agreement.

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  • 15 Marks

BCL – Nov 2016 – L1 – Q4a – Alternative Forms and Constitutions of Business Organisations

Determine whether partners remained after notice of retirement under the Incorporated Private Partnership Act, 1962 (Act 152).

By a letter dated 18th February 2014, addressed to the Manager of their partnership firm, Kofi Nti informed the Management of his and Mrs. Obeng’s immediate retirement as partners. The Manager replied that their application was under consideration. However, by another letter dated 12th January 2015, Mr. Kofi Nti and Mrs. Obeng withdrew their letter dated 18th February 2014. The conduct of the remaining partners, however, showed that they considered the letter of 18th February 2014 to be of no effect, and continued the partnership accordingly. A dispute later arose and Jeff, one of the partners, obtained an order of the High Court directing Mr. Kofi Nti and Mrs. Obeng to submit themselves to arbitration in accordance with the partnership agreement. The arbitrator submitted to the court that by their letter dated 18th February 2014, Mr. Kofi Nti and Mrs. Obeng ceased as from that date to be partners as the said letter could not be recalled.

Required:
Explain whether by the provisions of the Incorporated Private Partnership Act, 1962 (Act 152), Mr. Kofi Nti and Mrs. Obeng remain partners in the firm after their letters of 18th February 2014 and 12th January 2015.

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  • 10 Marks

BCL – May 2021 – L1 – Q5b – Alternative Forms and Constitutions of Business Organisations

Advising on partnership liabilities and the consequences of breaching a partnership agreement.

Adjato and Hilda are in partnership, providing forensic services to the Ghana Police Service. The partnership agreement states that all scientific equipment is to be supplied by Johnny and that neither partner may incur a liability of more than GH¢3,000 without consulting the other. Although Adjato contributed all the Firm’s initial capital, he does not have any active involvement and rarely visits its premises. Hilda receives a salary and works full-time for the Firm.

Required:
It has come to the notice of Adjato that Hilda has ordered GH¢5,000 worth of equipment from Barclays Ltd without consent by both parties. Advise Adjato. (10 marks)

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  • 20 Marks

BCL – Nov 2017 – L1 – Q7 – Alternative forms and constitutions of business organisations

Analyze the legality of a partnership's formation and the circumstances under which a partner may be expelled.

a) Kwasi Mensa, aged 21 years, Patience Adibu, aged 14 years, and Kojo Ntim, aged 20 years, agreed to form a partnership. Available information, however, showed that Kojo Ntim was admitted to a psychiatric hospital for 2 years and was later discharged. In the case of Kwasi Mensa, he was declared bankrupt after he could not meet his financial obligations to a company in which he had previously invested. The three, however, went ahead and formed a partnership known as KKK firm.

Required:
Explain whether the KKK firm was formed in accordance with law. (5 marks)

b) State the reasons for which the Courts may order the expulsion of a partner. (10 marks)

c) What advantages does a partnership have over a company? (5 marks)

(Total: 20 marks)

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  • 10 Marks

BMIS – Jul 2023 – L1 – Q1b – The business organisation and its stakeholders

Explains five reasons why a partnership may not be a suitable form of business organization.

Your childhood friend who knows nothing about business operations has decided to establish a form of business organization with funds bequeathed to him by his late uncle. While you believe a limited liability company is most suitable, he prefers either a sole proprietorship or partnership.

Required:
Explain to your friend FIVE (5) reasons a Partnership form of business would not be a good idea.

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  • 10 Marks

BMIS – Mar 2023 – L1 – Q1a – The business organisation and its stakeholders

Explains four benefits for a partnership converting to a Public Limited Liability Company.

Asante, Oforiwaa, and Obrafour, who are well known to you and have been operating a Partnership for many years, have approached you for advice regarding their decision to convert it into a Public Limited Liability Company.

Required:
Explain FOUR (4) benefits that will be enjoyed by members of the Partnership should they convert it into a Public Limited Liability Company.

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