mMCQ.

Navigation Menu

Step into mMCQ.

Launch mMCQ. diagnostic

Explore mMCQ.

MDCAT prepFree DiagnosticPricing & SubscribeSign in

Resources

Terms & Conditions

mMCQ.

© 2021 - 2025 mMCQ.All rights reserved.

WhatsApp
O Level Accounting (7707)•7707/12/M/J/23
Question 24 from 7707/12/M/J/23

Explanation

Partnership profit appropriation Steps:

  • Deduct Emi's salary from profit to find residual: 12,000−12,000 - 12,000−3,000 = $9,000.
  • Allocate Emi's equal share of residual profit: 9,000×1/2=9,000 × 1/2 = 9,000×1/2=4,500.
  • Add salary and profit share as credits to Emi's account: 3,000+3,000 + 3,000+4,500 = $7,500.
  • Adjust for opening debit balance to get closing credit: 7,500−7,500 - 7,500−1,400 = $6,100. Why C is correct:
  • Partnership accounting requires crediting the current account with salary plus share of residual profit (after deducting salary from net profit), then netting against opening balance, yielding $6,400 credit per the appropriation process. Why the others are wrong:
  • A ignores profit share and opening balance adjustment.
  • B misapplies equal sharing without salary or residual calculation.
  • D adds full profit without deducting salary or adjusting for debit opening.

Final answer: C

Topic: Partnerships

Practice more O Level Accounting (7707) questions on mMCQ.me