2016 - WAEC Accounting Past Questions and Answers - page 4

In the Absent of  an agreement, the partners will share profits and losses equally. If an agreement exists, partners divide profits based on the terms specified. Any reason can be used as the basis for establishing a profit-sharing ratio, but the two main factors are responsibility and capital contributions. Additional capital contributed attracts a 5% interest in the absence of a partnership agreement

Interest on drawings is an income to the firm, and hence it is credited to the profit and loss appropriation account. On the other hand, interest on drawings is an expense to the partners, and hence it is debited to their capital accounts and credited to appropriation.

The accounting entry for credit sales at the branch would be to debit branch debtors accounts  and credit stock account. To understand this better, remember we debit all receipts whether cash or stock (money or goods that come into the business) and credit all payments (money or goods that goes out of the business). People who buy our goods on credits are our debtors and recorded as current assets in the balance sheet, because in future, we expect to collect are payments for the goods.

Branch current account; This account is maintained in the head office books to record all transactions between head office and branch. This account is debited with the following

• Goods sent to branch
• Expenses of the branch paid by the head office
• Profit of the branch

This account is credited with the following

• Cash received from the branch
• Goods returned by the branch

Local government revenue comes from property, sales, and other taxes; levies, dues, charges and fees; and transfers from federal and state governments.