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10 marksChanges in Ownership and Capital Structure

CAPE Accounting Unit 1 · 2014 · Paper 2 · Question 2(a)

West Coast Eatery operates as an equal partnership of three individuals with given account balances before closing entries for 2012.

Prepare a Statement of Partners' Equity for the current year ended 30 September, assuming no partner made additional investments during the year.

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Other parts of this question

  1. 2(b)Assuming Calvin and Sylvia spend the same amount of time in the business, why might Leroy be given the same portion of the profits as the other two partners?[1 mark]
  2. 2(c)State THREE factors that the partners should consider when deciding how to distribute the profits of the partnership.[3 marks]
  3. 2(d)(i)Distinguish between corporations and partnerships in terms of owners' liability for debts of the business.[2 marks]
  4. 2(d)(ii)Distinguish between corporations and partnerships in terms of transferability of ownership interest.[2 marks]
  5. 2(d)(iii)Distinguish between corporations and partnerships in terms of continuity of existence.[2 marks]
  6. 2(e)Prepare a Multi-step Income Statement in accordance with IAS 1 (Section 5/6 of IFRS for SMEs), correcting the errors and applying the 25% tax rate.[15 marks]

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