11

3 Paul and Angela are in partnership sharing profits and losses in the ratio of 3:2 respectively. No
separate current accounts are maintained.

On 1 May 2017, Rachael was admitted into the partnership.

(a) (i) State two advantages to existing partners of introducing a new partner.

[2]

(ii) State two disadvantages to existing partners of introducing a new partner.

[2]

© UCLES 2018 9706/22/F/M/18 [Turn over

 12

A summarised statement of financial position at 30 April 2017 before the admission of Rachael is
as follows:
$
Non-current assets 225 000
Cash and cash equivalents 7 450
Other current assets 61 500
293 950
Capital accounts:
Paul 145 000
Angela 95 000
Current liabilities 53 950
293 950

The following information is available:

1 Rachael paid $75 000 as capital into the partnership bank account.
2 Goodwill was valued at $50 000. No goodwill account was to be maintained in the books of
account.
3 Non-current assets were revalued at $270 000.
4 Current assets (excluding cash and cash equivalents) were revalued at $40 500.
5 Current liabilities were revalued at $45 950.
6 Paul, Angela and Rachael will share profits and losses in the ratio 5:3:2 respectively.

REQUIRED

(b) Calculate the profit or loss from revaluation on 1 May 2017 when Rachael was admitted.
Show how this is divided between the partners.

Profit or loss from revaluation

Division between partners

[2]

(c) Prepare, on the next page, the partners’ capital accounts on 1 May 2017 after the admission
of Rachael.

© UCLES 2018 9706/22/F/M/18

 Capital Accounts

© UCLES 2018
Paul Angela Rachael Paul Angela Rachael
$ $ $ $ $ $
13

9706/22/F/M/18
[5]

[Turn over
 14

(d) Explain why an adjustment for goodwill may be made when a new partner joins a business.

[2]

(e) State two factors that may result in the creation of goodwill for a business.

[2]

[Total: 15]

© UCLES 2018 9706/22/F/M/18

 9

2 Mira, Sasha and Peta have been trading as a partnership.

They share profits and losses in the ratio of 2 : 2 : 1 respectively. The partnership ceased trading
on 31 January 2019.

REQUIRED

(a) State four reasons why a partnership may be dissolved.

[4]

© UCLES 2019 9706/22/F/M/19 [Turn over

 10

Additional information

The following information is available on dissolution of partnership.

1 Mira, Sasha and Peta

Statement of financial position at 31 January 2019

$
Assets
Non-current assets
Fixtures and fittings 45 200
Motor vehicles 22 000
67 200
Current assets
Inventory 20 600
Trade receivables 42 800
63 400

Total assets 130 600

Capital and liabilities

Capital accounts
Mira 45 500
Sasha 42 800
Peta 14 000
102 300
Current liabilities
Trade payables 26 400
Bank overdraft 1 900
28 300

Total capital and liabilities 130 600

2 Sasha took a motor vehicle at an agreed valuation of $4500. The remaining non-current
assets were sold for $64 300.

3 Inventory was sold for $19 800.

4 Received $40 500 from trade receivables.

5 Trade payables were paid $26 000.

6 The costs of dissolution were $3700.

© UCLES 2019 9706/22/F/M/19

 11

REQUIRED

(b) Prepare the partnership realisation account.

[5]

(c) Prepare, on the next page, the partners’ capital accounts on dissolution. [2]

© UCLES 2019 9706/22/F/M/19 [Turn over

 Mira, Sasha and Peta

Capital accounts

© UCLES 2019
Mira Sasha Peta Mira Sasha Peta
Details Details
$ $ $ $ $ $
12

9706/22/F/M/19
 13

(d) Prepare the final bank account to show the closure of the partnership.

[2]

(e) Suggest two reasons why the trade receivables did not pay the full amount they owed.

[2]

[Total: 15]

© UCLES 2019 9706/22/F/M/19 [Turn over

 2

1 Faraz, Javed and Leah were in partnership. Their agreement included the following terms:

1 Interest on drawings to be charged at 5% on total drawings for the year.

2 Interest at 12% per annum to be provided on fixed capitals.

3 Javed to receive a salary of $9000 per annum.

4 Remaining profits and losses to be shared in the ratio Faraz, Javed and Leah, 4 : 3 : 3
respectively.

The following information was available for the year ended 31 December 2020.

Faraz Javed Leah

$ $ $
Balances at 1 January 2020
Capital accounts 80 000 60 000 50 000
Current accounts 3 400 credit 2 900 debit 1 700 debit
For the year ended 31 December 2020
Drawings 22 400 17 200 20 200

The profit for the year ended 31 December 2020, before appropriation, was $31 500.

REQUIRED

(a) State two reasons why partnership agreements sometimes include a provision to charge
interest on drawings.

1 ................................................................................................................................................

...................................................................................................................................................

2 ................................................................................................................................................

...................................................................................................................................................
[2]

© UCLES 2021 9706/22/F/M/21

 3

(b) Prepare the appropriation account for the year ended 31 December 2020.

Faraz, Javed and Leah

Appropriation account for the year ended 31 December 2020
$ $

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

........................................................................................... ..................... .....................

[5]

© UCLES 2021 9706/22/F/M/21 [Turn over

 4

(c) Prepare Javed’s current account for the year ended 31 December 2020.

Javed
Current account

$ $

[6]

© UCLES 2021 9706/22/F/M/21

 5

Additional information

On 1 January 2021, Javed retired from the partnership. It was agreed that on this date:

1 Javed would keep some equipment for personal use. The equipment had a net book value of
$15 400 and was to be transferred to Javed at a value of $13 000.

2 Other non-current assets were to be revalued upwards by $24 000.

3 Goodwill was valued at $50 000. A goodwill account was not to be maintained in the
partnership’s books.

REQUIRED

(d) Explain the meaning of goodwill.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................
[2]

(e) Explain why a valuation of goodwill could be made when a partner retires.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................
[2]

© UCLES 2021 9706/22/F/M/21 [Turn over

 6

(f) Prepare a statement to show the amount due to Javed on his retirement from the partnership.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................
[6]

© UCLES 2021 9706/22/F/M/21

 7

Additional information

Faraz and Leah continued in partnership sharing profits and losses equally. They discussed
how best to finance the amount due to Javed on his retirement from the partnership. They are
considering two options.

Option 1: Take out a bank loan to cover the amount due.

Option 2: Admit a new partner whose capital contribution would cover the amount due.

REQUIRED

(g) Advise the partners which option they should choose. Justify your answer by discussing both
options.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................
[7]

[Total: 30]

© UCLES 2021 9706/22/F/M/21 [Turn over

 2

1 Nibras and Raif are in partnership. They own a car hire business.

The following balances were available at 31 December 2022.

Debit Credit
$ $
Allowance for irrecoverable debts 380
Cash at bank 7 370
Capital accounts
Nibras 180 000
Raif 120 000
Current accounts
Nibras 5 950
Raif 4 760
Drawings
Nibras 19 200
Raif 12 140
Insurance 15 400
Interest on loan from Raif 750
Loan from Raif 9 000
Motor vehicle expenses 12 420
Motor vehicles
Cost 144 000
Provision for depreciation 1 January 2022 33 200
Premises
Cost 220 000
Provision for depreciation 1 January 2022 44 000
Rent receivable 6 050
Repairs and maintenance 8 270
Revenue from car hire 88 300
Trade receivables 21 730
Wages and salaries 18 460
Totals 485 690 485 690

The following additional information is available.

1 Interest at 10% per annum on the loan from Raif is accrued for the last two months of the
year.

2 Insurance payments covered the period 1 January 2022 to 28 February 2023. Monthly
insurance costs have remained unchanged during this period.

3 The partners have agreed that the allowance for irrecoverable debts is no longer required.

4 Rent receivable by the partnership is $550 per month. Part of the premises have been rented
for the full year.

5 Motor vehicles are to be depreciated at 25% per annum using the reducing balance method.

6 Premises are to be depreciated by 2% per annum using the straight-line method.

© UCLES 2023 9706/22/F/M/23
 3

REQUIRED

(a) Prepare the statement of profit or loss for the year ended 31 December 2022. Use the space
on page 4 to show your workings.

Nibras and Raif

Statement of profit or loss for the year ended 31 December 2022

$ $

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

© UCLES 2023 9706/22/F/M/23 [Turn over

 4

Workings:

[9]

© UCLES 2023 9706/22/F/M/23

 5

Additional information

Nibras and Raif agreed the following terms for the appropriation of profits and losses.

1 Interest on capital to be 10% per annum.

2 Nibras to receive a partnership salary of $6000 per annum.

3 Remaining profits and losses to be shared in the ratio Nibras:Raif, 3:2.

REQUIRED

(b) Prepare the appropriation account for the year ended 31 December 2022.

Nibras and Raif

Appropriation account for the year ended 31 December 2022

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [3]

© UCLES 2023 9706/22/F/M/23 [Turn over

 6

Additional information

The partners would like to know what difference it would have made if they had operated without a
partnership agreement during the year ended 31 December 2022.

REQUIRED

(c) Calculate by how much Nibras’ current account balance at 31 December 2022 would
have been different if there had been no partnership agreement during the year ended
31 December 2022.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [8]

© UCLES 2023 9706/22/F/M/23

 7

Additional information

The partners had considered charging interest on drawings as part of their agreement.

REQUIRED

(d) State one reason for including interest on drawings in a partnership agreement.

...................................................................................................................................................

............................................................................................................................................. [1]

(e) State the double entry for recording interest on drawings.

Debit .........................................................................................................................................

Credit ........................................................................................................................................
[2]

© UCLES 2023 9706/22/F/M/23 [Turn over

 8

Additional information

Nibras and Raif would like to expand their business but they require additional finance. They have
considered two options:

Option 1: Nibras to introduce additional capital by selling some personal investments

Option 2: Arrange a bank loan

REQUIRED

(f) Advise the partners which option they should choose. Justify your answer by discussing both
options.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [7]

[Total: 30]

© UCLES 2023 9706/22/F/M/23

 12

3 Xu and Zoe have been in partnership for a number of years. They decided to dissolve their
partnership on 1 October 2019.

REQUIRED

(a) State three reasons why a partnership might be dissolved.

1 ................................................................................................................................................

...................................................................................................................................................

2 ................................................................................................................................................

...................................................................................................................................................

3 ................................................................................................................................................

...................................................................................................................................................
[3]

Additional information

The partners did not have a formal agreement on sharing of profits and losses.
At the date of the dissolution the partnership’s statement of financial position was as follows.

Statement of financial position at 1 October 2019

Assets $ $
Non-current assets at net book value
Motor vehicle 19 400
Furniture and equipment 11 900
31 300
Current assets
Inventory 7 480
Trade receivables 11 200
18 680
Total assets 49 980

Capital and liabilities

Capital accounts
Xu 18 000
Zoe 22 000
40 000

Current accounts
Xu (2 480)
Zoe 430
(2 050)
Total capital and current accounts 37 950

Loan account: Xu 4 300

Current liabilities
Trade payables 5 400
Bank overdraft 2 330
7 730
Total capital and liabilities 49 980
© UCLES 2020 9706/22/M/J/20
 13

The following information is also available.

1 Xu took the motor vehicle at an agreed value of $15 100.

2 The account of a credit customer, $800, had to be written off as irrecoverable. The accounts
of remaining trade receivables were settled in full less a 5% cash discount.

3 Other assets were sold for cash.

$
Furniture and equipment 7300
Inventory 6530

4 The accounts of trade payables were settled in full less a 5% cash discount.

5 The costs of dissolution, $620,were paid by cheque.

REQUIRED

(b) Prepare the realisation account.

Realisation account

$ $

[7]
© UCLES 2020 9706/22/M/J/20 [Turn over
 14

(c) Calculate the amount due to, or from, Xu as a result of the dissolution.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [5]

[Total: 15]

© UCLES 2020 9706/22/M/J/20

 8

2 Karis and Lara are in partnership.

(a) State two reasons why partners may each have a separate capital account and current
account.

1 ................................................................................................................................................

...................................................................................................................................................

2 ................................................................................................................................................

...................................................................................................................................................
[2]

Additional information

Karis and Lara share profits and losses in the ratio 3:2 respectively.

They decided to admit Megan as a partner on 1 February 2021.

On that date the statement of financial position was as follows.

Assets $ $
Non-current assets at net book value
Motor vehicles 43 500
Furniture and equipment 16 200
59 700
Current assets
Trade receivables 18 410
Total assets 78 110

Capital and liabilities

Capital accounts
Karis 35 700
Lara 24 500
60 200
Current accounts
Karis 3 110
Lara (540)
2 570
Current liabilities
Trade payables 11 230
Bank overdraft 4 110
15 340
Total capital and liabilities 78 110

© UCLES 2021 9706/21/M/J/21

 9

The partners agreed the following on Megan’s admission.

1 Current accounts would no longer be used.

2 Karis took over a motor vehicle for private use with a net book value of $18 400 at an agreed
value of $15 000.

3 Goodwill was valued at $48 000. No goodwill account was to be maintained in the partnership’s
books of account.

4 Profits and losses are to be shared in the ratio Karis : Lara : Megan 7 : 5 : 3 respectively.

5 Megan introduced a motor vehicle valued at $23 000 as part of her capital contribution.

After making the adjustments, it was agreed that Megan should pay sufficient cash into the
business bank account to make her total capital equal to that of Lara.

REQUIRED

(b) Prepare, on the next page, the capital accounts of the partners to record the admission of
Megan as a partner.

© UCLES 2021 9706/21/M/J/21 [Turn over

 Capital accounts

Karis Lara Megan Karis Lara Megan

© UCLES 2021
$ $ $ $ $ $
10

9706/21/M/J/21
[8]
 11

Additional information

In the new partnership agreement Lara is to receive a salary of $12 000 per annum.

Megan is hoping to achieve a 25% return on her capital employed (ROCE).

REQUIRED

(c) Calculate the minimum profit the partnership must make in order for Megan to achieve this
ROCE.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [3]

(d) State two possible disadvantages to existing partners of admitting a new partner.

1 ................................................................................................................................................

...................................................................................................................................................

2 ................................................................................................................................................

...................................................................................................................................................
[2]

[Total: 15]

© UCLES 2021 9706/21/M/J/21 [Turn over

 11

3 Cherry, Winston and Yupar were in partnership sharing profits and losses in the ratio 3 : 5 : 2. The
partners decided to dissolve their partnership on 1 December 2020. On this date the partnership’s
statement of financial position was as follows.

Assets $ $
Non-current assets at net book value
Premises 97 000
Furniture and equipment 22 000
119 000
Current assets
Inventory 17 400
Total assets 136 400
Capital and liabilities
Capital accounts
Cherry 18 300
Winston 54 900
Yupar 26 700
99 900
Current accounts
Cherry (5 740)
Winston 2 290
Yupar 820
(2 630)
Non-current liability
Loan from Yupar 18 000

Current liabilities
Trade payables 14 800
Bank overdraft 6 330
21 130
Total capital and liabilities 136 400

The following information is also available.

1 Winston took over the equipment at a valuation of $7200.

2 Premises and furniture were sold for $61 100 and a cheque for this amount was received.

3 Inventory was sold at a loss of $5200. A cheque was received for the amount.

4 Trade payables were settled in full by cheque after deducting a 5% cash discount.

5 The expenses of dissolution were paid by cheque, $2140.

6 The amounts owed by, or to, the partners were settled by cheque.

© UCLES 2021 9706/23/M/J/21 [Turn over

 12

REQUIRED

(a) Prepare the realisation account to show the profit or loss made on the dissolution of the
partnership.

Realisation account

$ $

[7]

(b) Prepare, on the next page, the capital accounts of the partners recording the dissolution and
final settlement of the amounts owed to, or by, each partner.

© UCLES 2021 9706/23/M/J/21

 Capital accounts

Cherry Winston Yupar Cherry Winston Yupar

© UCLES 2021
$ $ $ $ $ $
13

[5]

9706/23/M/J/21
[Turn over
 14

Additional information

The partners had decided to dissolve their partnership because of disagreements on important
decisions.

REQUIRED

(c) State three other reasons why a partnership might be dissolved.

1 ................................................................................................................................................

...................................................................................................................................................

2 ................................................................................................................................................

...................................................................................................................................................

3 ................................................................................................................................................

...................................................................................................................................................
[3]

[Total: 15]

© UCLES 2021 9706/23/M/J/21

 10

3 Maria and Rio have been in partnership for a number of years. They are considering admitting a
new partner.

REQUIRED

(a) State three disadvantages to the existing partners when a new partner is admitted.

1 ................................................................................................................................................

...................................................................................................................................................

2 ................................................................................................................................................

...................................................................................................................................................

3 ................................................................................................................................................

...................................................................................................................................................
[3]

Additional information

The partnership year end is 31 December. For the period 1 January to 30 September 2021, Maria
and Rio did not have a partnership agreement.

The following information is available for the year ended 31 December 2021.

The balances on the partners’ accounts on 1 January 2021 were:

$
Capital accounts
Maria 52 000
Rio 38 000
Loan account: Rio 6 000

On 1 October 2021 they admitted Sarah as a partner. Sarah introduced capital of $45 000 from
her personal savings. The partners agreed to make no adjustments for goodwill or the revaluation
of the partnership assets.

From 1 October 2021 a formal partnership agreement was prepared as follows:

1 Rio to be given interest on his loan at 8% per annum.

2 Interest to be given at 6% per annum on fixed capitals.

3 Rio to be given a partnership salary of $15 000 per annum.

4 Profits to be shared in the ratio Maria : Rio : Sarah, 2 : 1 : 2 respectively.

© UCLES 2022 9706/21/M/J/22

 11

During the year ended 31 December 2021, the partnership made a profit of $82 500 before taking
into account interest on Rio’s loan. It was assumed that the profit before interest on Rio’s loan had
accrued evenly throughout the year.

REQUIRED

(b) Prepare the appropriation account for the year ended 31 December 2021.

Maria, Rio and Sarah

Appropriation account for the year ended 31 December 2021

Maria and Rio Maria, Rio and Sarah

1 Jan–30 Sept 1 Oct–31 Dec
$ $

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [7]

© UCLES 2022 9706/21/M/J/22 [Turn over

 12

Additional information

Before Sarah had been admitted as a partner, she had been earning a salary of $18 000 per
annum. She had also received interest of 8% per annum on her personal savings.

REQUIRED

(c) Compare Sarah’s income as a partner with the total income she would have otherwise received
in the three months ended 31 December 2021. Support your answer with calculations.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [5]

[Total: 15]

© UCLES 2022 9706/21/M/J/22

 8

2 Darius and Ewan are in partnership sharing profits and losses in the ratio 5 : 3.

The following balances were extracted from the partnership books of account at 31 July 2022.

$
Bank overdraft 12 700
Capital accounts
Darius 94 300
Ewan 68 300
Fixtures and fittings 44 000
Inventory 36 200
Property at valuation 127 000
Bank loan (2025) 24 000
Trade payables 14 200
Trade receivables 6 300

On 1 August 2022, the partners agreed to admit Karim into the partnership on the following terms.

1 Karim was to introduce total capital of $48 000. This consisted of fixtures and fittings valued at
$9500 with the balance to be introduced into the partnership bank account.

2 Future profits and losses were to be shared between Darius, Ewan and Karim in the ratio
5 : 3 : 2.

3 Goodwill was to be valued at $36 800. Goodwill was not to be retained in the books of account.

4 Property was to be revalued to $135 000.

5 Obsolete inventory of $2000 was to be written off.

REQUIRED

(a) Prepare, on page 9, the partners’ capital accounts on 1 August 2022 following the admission
of Karim.

© UCLES 2022 9706/23/O/N/22

 Capital accounts

Darius Ewan Karim Darius Ewan Karim

© UCLES 2022
$ $ $ $ $ $
9

9706/23/O/N/22
Workings:

[5]

[Turn over
 10

(b) Prepare the partnership statement of financial position at 1 August 2022 following the
admission of Karim. Use the space provided on page 11 for your workings.

Darius, Ewan and Karim

Statement of financial position at 1 August 2022

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

© UCLES 2022 9706/23/O/N/22

 11

Workings:

[6]

Additional information

Partners may allow interest on capital and charge interest on drawings.

REQUIRED

(c) State one advantage of allowing interest on capital to a:

partner ......................................................................................................................................

...................................................................................................................................................

partnership ................................................................................................................................

...................................................................................................................................................
[2]

(d) Explain one reason why a partnership may charge interest on drawings.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [2]

[Total: 15]

© UCLES 2022 9706/23/O/N/22 [Turn over