When a Partner Makes an Advance or Loan to the Partnership

question 31

Multiple Choice

When a partner makes an advance or loan to the partnership how many of these statements are true?
.He/she is entitled to interest at the rate of 7% p.a.unless there is an agreement to the contrary
.The loan is treated as a liability
.Interest on the loan is regarded as an expense of the partnership and appears in the income statement

• A)0
• B)1
• C)2
• D)3

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Definitions:

Physical Inventory

A detailed listing of merchandise on hand.

Perpetual Inventory System

A method that continuously updates inventory records to reflect sales, returns, and additions in real time.

Perpetual Inventory System

An inventory management system where stock levels are updated in real-time following each purchase or sale.

Inventory Account

An account used to record the value of inventory held by a business, including goods ready for sale and those in the process of being produced.