4.1 The balances of the following account(s) in the general ledger of a partnership will contribute to the balance of the total equity section of the statement of financial position. A Capital accounts B Current accounts C Reserve accounts D All of the above 4.2 An accrued expense of R500 was recorded as a prepaid expense during the adjustment process. The effect of the error would have caused the________. A Gross profit to be understated by R500 B Gross profit to be overstated by R500 C Net profit to be understated by R1000 D Net profit to be overstated by R1000 4.3 Which of the following will constitute a line item in a close corporation’s statement of members’ net investment? A Member’s contributions B Revaluation surplus / reserve C Loans from members D Current accounts 4.4 Which of the following accounts will never be listed in the post-closing trial balance of a close corporation? A SARS (Income Tax) B Accrued expenses C Sales D Distributions paid to members 4.5 Examples of businesses that trade in the informal sector in South Africa include_______. A street vendors B car guards C flea markets. D All of the above. 4.6 Which of the following equations is true? A Owner’s equity = current assets – current liabilities B Gross profit = total income – total expenses C Capital + Net profit – drawings = total assets – total liabilities D Sales – cost of sales = net profit
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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ICE ACTIVITY 4
Choose the most appropriate alternative from the options provided for each of the following questions.
Write down ONLY the letter of your choice next to the corresponding number
(e.g. 4.27 = B).
Note: where applicable, assume a VAT rate of 15%.
4.1 The balances of the following account(s) in the general ledger of a
A Capital accounts
B Current accounts
C Reserve accounts
D All of the above
4.2 An accrued expense of R500 was recorded as a prepaid expense during the adjustment process. The effect of the error would have caused the________.
A Gross profit to be understated by R500
B Gross profit to be overstated by R500
C Net profit to be understated by R1000
D Net profit to be overstated by R1000
4.3 Which of the following will constitute a line item in a close corporation’s statement of members’ net investment?
A Member’s contributions
B Revaluation surplus / reserve
C Loans from members
D Current accounts
4.4 Which of the following accounts will never be listed in the post-closing
A SARS (Income Tax)
B Accrued expenses
C Sales
D Distributions paid to members
4.5 Examples of businesses that trade in the informal sector in South Africa include_______.
A street vendors
B car guards
C flea markets.
D All of the above.
4.6 Which of the following equations is true?
A Owner’s equity = current assets – current liabilities
B Gross profit = total income – total expenses
C Capital + Net profit – drawings = total assets – total liabilities
D Sales – cost of sales = net profit
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