IGCSE Accounting Paper-1: Specimen Questions with Answers 314 - 315 of 338

Passage

Sara and Zara are in partnership. The partnership agreement states the following-

That

  • The interest on capital is paid at the rate of 12 % per annum.
  • The profits and losses are to be shared in the ratio of 7: 3 respectively
  • Zara is to receive salary of $ 400 pm

The following information is available

Sara and Zara Are in Partnership
On 1 April 2018Dollar $
Capital Accounts-

Sara

Zara

40000

15000

Current Accounts-

Sara

Zara

4500 Credit

3000 Debit

For the year ended 31 March 2019

Profit for the year

Drawings-

Sara

Zara

25000

5000

3500

On 1 April 2018 $

Capital Accounts

Sara 40000

Zara 15000

Current Accounts

Sara 4500 Credit

Zara 3000 Debit

For the year ended 31 March 2019

Profit for the year 25000

Drawings-

Sara 5000

Zara 3500

On 1 January 2019 Sara introduced additional capital of $ 8000 into the partnership in the form of cash.

Question 314 (2 of 4 Based on Passage)

Describe in Detail

Essay▾

Prepare the following capital accounts and current accounts of Sara and Zara for the year ended 31 March 2019. Balance the accounts and bring down the balances on 1 April 2019. (Marks 8)

Sara and Zara

Capital Accounts

Capital Accounts
DateDetailsSara $Zara $DateDetailsSara $Zara $

Sara and Zara

Current Accounts

Current Accounts
DateDetailsSara $Zara $DateDetailsSara $Zara $

Explanation

Sara and Zara

Capital Accounts

Sara and Zara Capital Accounts
DateDetailsSara $Zara $DateDetailsSara $Zara $
2019

March

31

Balance c/d48000150002018

April 1

Balance b/d4000015000
2019

Jan 1

Cash8000
48000150004800015000
2019

April 1

Balance b/d4800015000

Sara and Zara

Current Accounts

Sara and Zara Current Accounts
DateDetailsSara $Zara $DateDetailsSara $Zara $
2018

April 1

Balance b/d30002018

April 1

Balance b/d4500
2019

March 31

Drawings500035002019

March 31

Interest on Capital50401800
Balance c/d138924108Salary4800
Share of Profit93524008
18892106081889210608
2019

April 1

Balance b/d138924108

Question 315 (3 of 4 Based on Passage)

Edit

Write in Short

Short Answer▾

What is partnership? Explain briefly any two characteristics of Partnership form of business. (Marks 3)

Explanation

  • Partnership is an agreement between two or more persons come together to run a business jointly by all or any one of them acting for all and agreed to share the profits or losses of the same.
  • The two characteristics of partnership are-
    • Two or More Persons- To form a partnership, there must be atleast two persons coming together for a common goal.
    • Unlimited Liability- In partnership business, the liability of partner is unlimited. That is if there is any obligation of the firm to a third party, the personal assets of the partners may also be utilized towards the payment of the same.

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