Partnership
What is the main financial risk associated with a General Partnership regarding business debts?
Unlimited Liability
Due to this principle, assets are initially recorded at their original purchase price rather than their current market value.
Historical Cost
In the Accounts Payable Control Account, which journal's total must be credited to this account?
Purchasing Journal
What is the term for an expense that has been paid for but not yet consumed or used up by the end of the accounting period?
Prepaid Expense
When the Partnership Agreement is silent (no agreement ), how is interest on a partner's loan typically treated?
6% per annum
this concept encourages the accountant to be cautious by providing for possible losses but anticipating no future profits.
prudence
What is the term for the entire annual profit before any partner's salary or interest on capital is deducted?
net profit for the year
If a trial balance does not balance, the resulting difference is temporarily placed in which specific account?
suspense account
In a partnership where capital is fixed, where are a partner's salary and share of profit recorded?
Current Account
What concept allows the cost of low-value, long-lasting items (like a pencil box) to be recorded immediately as an expense rather than being depreciated?
materiality
A business issues a Bill of Exchange (a negotiable instrument) to settle a debt owed to a supplier. Which specific control account is debited to record this payment?
If a company sells goods for cash, which two specific ledger accounts are affected in the double entry?
Cash/Bank and Sales account
This is the name given to the share of profit that a partner receives as compensation for the time and effort they spend managing the business
An asset's market value rises significantly, but the business continues to show it at its original purchase price less depreciation. Which two main concepts justify not recording the increase in value?
money measurement and historical cost
Name one specific type of error that a Control Account check cannot reveal.
any one from Omission/comission/principal/compensating
list any 2 types of errors
error of omission and error of principal etc
A partner withdraws goods from the business for personal use. What two accounts are debited and credited to record this drawing?
debit drawings and credit purchases
When preparing a Balance Sheet, this concept directly governs why Non-Current Assets are classified separately from Current Assets.
going concern
A business receives a refund of cash from a supplier because of overpayment. Explain where this cash receipt must be recorded before posting it to the Accounts Payable Control Account.
Cashbook
Why should an asset be depreciated
An asset should be depreciated to accurately reflect its cost over its useful life