IGCSE Accounting Paper-2: Specimen Questions with Answers 189 - 189 of 189


Harry and Hermione are in partnership. Their partnership agreement provides that:

1. Partners are entitled to interest on their fixed capitals at 12 % per annum.

2. Partners loans carry interest at 10 % per annum.

3. Hermoine is to receive a salary of $ 6000 a year.

4. Profits and losses are to be shared in the ratio of 5: 3.

For the financial year ended 31 March 2020, balances in the partnership՚s books included the following-

The Financial Year Ended 31 March 2020, Balances in the Partnership՚S Books
Dr. $Cr. $
Capital A/cs on 1st April 2019 Harry35000
Fixed Assets at Cost60000
Gross Profit for the year32000
Office Expenses1200
Discount Allowed & Received600800
Commission Paid300

The following additional information is also given.

(1) At 31 March 2020:

Advance Salary paid was $ 1000,

Office expenses accrued were $ 600.

(2) Depreciation on fixed assets is to be provided at 10 % on cost. Fixed Assets were purchased on 1st July 2019.

(3) On 1st October 2019 Harry made a loan of $ 8000 to the partnership. No loan interest was paid to Harry in the year ended 31 March 2020.

Question 189 (2 of 2 Based on Passage)


Write in Brief

One Liner▾

State and explain one possible reason why Hermione receives a salary in addition to her share of partnership profits. (Marks 1)


Hermoine may have more active participation in the management of the business. So, she is receiving salary for her additional responsibilities and devotion of time to business which Harry might not be performing.

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