Partnerships: Operations and Financial Reporting

50問 • 1年前

問題一覧

The amount of capital invested by each partner, the amount of time each partner devotes to the business and other contributions are the factors being considered in the formulation of an equitable ______.

profit and loss ratio

The allocation of profits to a partner on the basis of performance is frequently referred to as ______.

bonus

What are the different performance methods or performance criteria for arriving at a plan for dividing profits or losses:

chargeable hours total billings write-offs promotional and civic activities profits in excess of specified levels

These are total numbers of hours that a partner incurred on client-related assignments. Wait may be given to hours in excess of a standard.

chargeable hours

The total amount build to clients for work performed and supervised by a partner constitutes ______. Weight may be given to billings in excess of norm.

total billings

Consist of uncollectible billings.

write-offs

Wait may be given to a write-off percentage below a norm.

write-offs

Time devoted to developing future business and enhancing the partnership name in the community.

promotional and civic activities

Weight may be given to time spent in excess of a norm or to specific accomplishments resulting in new clients.

promotional and civic activities

Designated partners commonly receive a certain percentage of profits in excess of a specified level of earnings.

profits in excess of specified levels

The prophets or losses shall be distributed in _____.

conformity with the agreement

If a side from his services he has contributed capital, he shall also receive a share in the profits in proportion to his capital. (______)

civil code of the philippines, article 1797

A stipulation which excludes one or more partners from any share and the profits or losses is ____ (Article 1799).

void

A stipulation which excludes one or more partners from any share and the profits or losses is void (_______).

Article 1799

The _____ will be divided according to partners' agreement.

profits

As to _____, the profits shall be divided according to their CAPITAL CONTRIBUTIONS (according to the ratio of original capital investments or in its absence, the ratio of capital balances at the beginning of the year)

CAPITALIST PARTNERS

As to CAPITALIST PARTNERS, the profits shall be divided according to their ______ (according to the ratio of original capital investments or in its absence, the ratio of capital balances at the beginning of the year)

CAPITAL CONTRIBUTIONS

As to ______, such share as may be just and equitable under the circumstances, provided, that the _______ shall receive such share before the capitalist partners shall divide the profits.

industrial partners

If there is no agreement as to distribution of losses but there is an agreement as to profits, the losses shall be distributed according to the _____

profit sharing ratio

As to _____, the losses shall be divided according to their capital contributions (according to the ratio of original capital investments or in its absence, the ratio of capital balances at the beginning of the year)

capitalist partners

As to purely _______, shall not be liable for any losses.

industrial partners

Is not liable for losses because he cannot withdraw the work or labor already done by him

industrial partner

Per _______, PRIOR PERIOD ERRORS are omissions from and other mistatements of the entity's financial statements for one or more prior periods that are discovered in the current period.

International Accounting Standards (IAS) No. 8, Accounting Policies, Changes In Accounting Estimates And Errors

______ are omissions from and other mistatements of the entity's financial statements for one or more prior periods that are discovered in the current period.

PRIOR PERIOD ERRORS

The correction of a _____ is excluded from profit or loss for the period in which the error is discovered.

prior period error

If an error resulted in an understatement of profit in previous periods, a correcting entry would be needed to ______.

increase capital

If an error overstated profit in prior periods, then a correcting entry would be needed to _____.

decrease capital

The ratio in which profits or losses from partnership operations are distributed is recognized as the ______.

profit and loss ratio

The partners may agree on any of the following scheme in distributing profits or losses:

1. equally or in other agreed ratio 2. based on partners' capital contributions 3. by allowing interest on partners' capital and the balance in an agreed ratio 4. by allowing salaries to partners and the balance in an agreed ratio 5. by allowing bonus to the managing partner based on profit and the balance in an agreed ratio 6. by allowing salaries, interest on partners' capital, bonus to the managing partner and the balance in an agreed ratio (combination of 3 to 5)

Drawings within the allowable amount will not affect the computation of the average capital balance. On the contrary, drawings in excess of the allowable amount are considered ______ in capital.

permanent reductions

Distribution of profits or losses based on partners agreement

equally or in other agreed ratio based on partners capital contributions - ratio of original capital investments - a ratio of capital balances at the beginning of the year ratio of capital balances at the end of the year - ratio of average capital balances by allowing interest on capital and the balance in an agreed ratio by allowing salaries to partners and the balance in an agreed ratio by allowing bonus to the managing partner based on profit and the balance in an agreed ratio by allowing salaries, interest on capital, bonus to the managing partner and the balance in an agreed ratio

Along with the other profit sharing plans to be discussed in the remainder of the chapter, are to be considered as mere techniques to share partnership profits or losses equitably and NOT AS EXPENSES of the partnership.

interest on partners capital

Is recognized as EXPENSE and a factor in the measurement of profit or loss of the partnership

interest on loans from partners

Interest earned on loans to partners.

partnership income

Under the _____ plan, the partner who invested more capital will ultimately shoulder a bigger share of the loss.

capital ratio

Under the _____ plan, the partner who invested more capital is credited (increased) for an interest on his capital and is ultimately debited (decreased) with a laser share of the loss; in some cases, the result may even be a net credit (increase).

interest

Note that the provisions for salaries and interest in the partnership agreement are called ______.

allowances

Are a structured representation with the objective of providing information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.

financial statements

Provide information about an entity's assets, liabilities, equity, income and expenses, and other changes in equity and cash flows.

financial statements

Overall considerations for financial statements

1. fair presentation and compliance with international financial reporting standards (IFRSs) 2. going concern 3. accrual basis of accounting 4. materiality and aggregation 5. offsetting 6. frequency of reporting and comparative information 7. consistency of presentation 8. identification of the financial statements

Requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the IASB's new conceptual framework

fair presentation

Under ______ (_____), entities are required to make an explicit and unreserve statement of compliance with ifrs in the notes.

IAS No. 1 (revised 2007)

Financial statements should be prepared on a _____ basis unless management intends to liquidate the entity or cease trading or has no realistic option but to do so.

going concern

An entity shall prepare its financial statements, except for cash flow information, using _____.

accrual basis of accounting

An entity shall present separately each material class of similar items. Material items that are dissimilar in nature or function should be separately disclosed.

materiality and aggregation

An entity shall not offset assets and liabilities, income and expenses unless required or permitted by an IFRS.

offsetting

At least annually, an entity shall present with equal prominence each financial statement in a complete set of financial statements including comparative information in respect of the previous period for all amounts reported in the current period's financial statements.

frequency of reporting and comparative information

An entity shall retain the presentation and classification of items in the financial statements in successive periods unless an alternative would be more appropriate or an IFRS requires a change in presentation.

consistency of presentation

An entity shall clearly identify the financial statements and distinguish them from other information in the same published document.

identification of the financial statements

Per revised INTERNATIONAL ACCOUNTING STANDARDS (IAS) No. 1, Presentation of Financial Statements, a complete set of financial statements comprises:

a. state ng the financial position as at the end of the period b. statement of financial performance for the period c. a statement of changes in equity for the period d. a statement of cash flows for the period e. notes, comprising a summary significant accounting policies and other explanatory information f. a statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively

Business Finance

Sab Sescon · 46問 · 2年前

Business Finance