3. Financial accounting (A Level)
A section of Accounting, 9706
Listing 10 of 734 questions
At 31 December 2019 X, Y and Z were in partnership sharing profits and losses equally. At that date the net assets of the partnership were valued at $300 000 and X’s capital account balance was $70 000. On 1 January 2020 X retired. The net assets were then revalued upwards by $90 000. X left half of the amount due to him on retirement as a loan to the partnership. What was the value of the partnership’s net assets remaining after X’s retirement?
9706_w20_qp_13
MCQ
2020
Paper 1, Variant 3
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A business had calculated a draft profit for the year. The following items have been discovered. A customer has been declared bankrupt and is unable to pay the amount they owe. Unsold goods on sale or return basis have been included in inventory. Rent paid in advance has not been included. The owner's cash drawings have been entered into the owner’s capital account. Which of these need to be adjusted to calculate the correct profit for the period?
9706_w21_qp_11
MCQ
2021
Paper 1, Variant 1
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Abbie, Ben and Cain have been in partnership for many years sharing profits and losses in the ratio 3 : 2 : 1. The partnership’s draft statement of financial position at 30 June 2021 is shown below. Abbie, Ben and Cain Statement of financial position at 30 June 2021 $ Non-current assets Property 65 000 Motor vehicles 52 000 117 000 Current assets Inventory 18 200 Trade receivables 13 700 Bank 32 700 Total assets 149 700 Capital and liabilities Capital accounts Abbie 60 000 Ben 40 000 Cain 20 000 120 000 Current accounts Abbie 18 520 Ben (3 250) Cain 6 230 21 500 Current liabilities Trade payables 8 200 Total capital and liabilities 149 700 Ben retired from the partnership on 30 June 2021 and the following was agreed. Ben should retain one of the motor vehicles at the net book value $14 500. The remaining motor vehicles should be revalued at $33 000. Property should be revalued at $77 000. Inventory should be revalued at $17 000. The value of goodwill was $39 000 and it was not to be retained in the books of account. Any amounts due to Ben were to be transferred to a short-term loan to be repaid from the partnership bank account within one month. Abbie and Cain decided to continue in partnership sharing profits and losses in the ratio 3 : 2. Cain agreed to pay sufficient funds into the partnership bank account so that the partners’ capital account balances reflected the new profit-sharing ratio. REQUIRED State one reason why a partnership may revalue assets on the retirement of a partner. Prepare the revaluation account at 30 June 2021. Revaluation Account $ $ Prepare the partners’ capital accounts at 30 June 2021 on the next page. Additional information Ben has indicated that he may be willing to leave $10 000 as an interest-free loan, but he requires any other amount due to be paid within one month. In order to maintain sufficient working capital, Abbie and Cain are considering two options to finance the settlement due to Ben. Option 1: Request an overdraft facility from the bank. Option 2: Ask Ben to consider leaving the whole amount due as a 5% loan repayable over ten years in equal annual instalments. REQUIRED Advise Abbie and Cain which option they should choose to finance the amount due to Ben.
9706_w21_qp_23
THEORY
2021
Paper 2, Variant 3
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Questions Discovered
734