Partners’ Capital Account - SS2 Accounting Past Questions and Answers - page 1
1
What does a partner's capital account in a partnership show?
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A
The partner's share of profits earned by the partnership
B
The partner's withdrawals from the partnership for personal use
C
The partner's investment in the partnership
D
The partner's ownership percentage in the partnership
2
How is a partner's share of profits or losses in a partnership determined?
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A
Based on the amount of interest paid to the partner
B
Based on the partner's initial investment in the partnership
C
Based on the partner's capital account balance
D
Based on the number of years the partner has been in the partnership
3
What happens to a partner's capital account if the partnership incurs a loss?
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A
The account is credited with the partner's share of the loss
B
The account is debited with the partner's share of the loss
C
The account remains unchanged
D
The partner must make an additional investment to cover the loss
4
What is the purpose of calculating interest on a partner's capital account?
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A
To determine the partner's share of profits earned by the partnership
B
To compensate the partner for the use of their invested capital
C
To reduce the partner's tax liability
D
To increase the partner's ownership percentage in the partnership
5
How is a partner's ownership percentage in a partnership determined?
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A
Based on the partner's initial investment in the partnership
B
Based on the number of years the partner has been in the partnership
C
Based on the amount of interest paid to the partner
D
Based on the partner's share of the total capital of the partnership
6
What is the difference between a partner's capital account and a partner's current account in a partnership?
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7
How does a partner's capital account affect their share of profits in a partnership?
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