IGCSE Accounting: Financial statements of partnerships (Cambridge 0452) – Practice Questions

Syllabus edition note. This resource follows the Cambridge IGCSE Accounting 0452 syllabus (and Cambridge O Level Accounting 7707, which has the same subject content for the same series) for exams in 2027, 2028 and 2029 (version 1), first examined in the March 2027 series in India and the June 2027 series elsewhere. If you sit 0452 in November 2026, you sit the 2026 syllabus (version 2), which differs: Paper 1 has 35 multiple-choice marks in 1 hour 15 minutes, not 40 marks in 1 hour 30 minutes; Topic 7 is “Accounting principles and policies”, without 7.2 Ethical considerations or 7.3 Technology and sustainability; 4.4 is “Irrecoverable debts and provision for doubtful debts”; income statements are named instead of statements of profit or loss; three-column running balance accounts are not required; Clubs and societies is 5.4 and Manufacturing accounts 5.5; and 6.3 is “Inter-firm comparison”. For this topic, the 2026 syllabus covers only trading and service businesses in 5.1 and limits drawings adjustments to goods taken by the owner for own use; for limited companies it excludes cumulative and non-cumulative preference shares, rights issues, share premium and capital redemption reserve but requires the difference between redeemable and non-redeemable preference shares (the 2027-2029 syllabus lists none of these); and for incomplete records it does not ask why businesses keep them or what their advantages are. If you sit in November 2026, work from the 2026 syllabus on the Cambridge International website.

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

Practice questions on syllabus section 5.2 Partnerships, Cambridge IGCSE Accounting 0452, syllabus for exams in 2027, 2028 and 2029 (version 1). All amounts are in dollars. Revise first from the study guide or revision notes.

Questions

1. (a) State two items that a partnership agreement may contain. [2] (b) Explain why a partnership agreement is important. [2]

2. Ulla runs a bicycle repair shop on her own and is short of cash. Kasimir, a skilled mechanic, offers to join her as a partner. Explain one advantage and one disadvantage to Ulla of forming a partnership. [4]

3. (a) State the purpose of an appropriation account. [2] (b) For each item, state whether it is a business expense charged before profit for the year, added in the appropriation account, deducted in the appropriation account, or in neither (a debit in the current account only): interest on a partner’s loan; interest on drawings; a partner’s salary; interest on capital; drawings. [5]

4. Bramley and Sethi share profits and losses 2 : 1. Capital accounts (fixed): Bramley $50,000, Sethi $30,000. Interest on capital is 6% a year. Sethi receives a salary of $5,000. Interest on drawings is Bramley $450, Sethi $250. Profit for the year was $36,400. Prepare the appropriation account. [6]

5. Bramley’s current account had a debit balance of $1,200 on 1 January. His drawings were $21,000. Using the figures in question 4, prepare Bramley’s current account for the year. [5]

6. A new partner asks how the capital and current accounts that the firm keeps for each partner differ. Give two differences, each explained. [4]

7. Winslow and Odell run a service business and share the balance of profit 3 : 2. Capital accounts: Winslow $40,000, Odell $24,000, with interest at 5%. Odell’s salary is $6,000. Interest on drawings is Winslow $150, Odell $100. Profit for the year was $7,800. (a) Prepare the appropriation account. [5] (b) State where Odell’s share of the result is recorded in the books. [1]

8. A partnership has a gross profit of $58,900. Wages were $21,300. Rent paid was $9,600, of which $800 is for next year. Electricity paid was $3,150 and $450 is owing. Machinery cost $52,000 and is depreciated at 10% a year on cost. Irrecoverable debts of $380 are to be written off, and the allowance for irrecoverable debts is to rise from $600 to $750. A partner lent $12,000 at 7% a year. Calculate the profit for the year. [6]

9. A trainee prepared this appropriation account from a profit of $24,000 that was before loan interest:

Profit                         24,000
Less loan interest                600
Less interest on capital        3,000
Less salary                     4,000
Less interest on drawings         500
Balance to share               15,900

(a) Identify two errors. [2] (b) Calculate the correct balance to share. [3]

10. Rendle and Brisco Cabinet Makers is a manufacturing partnership. The year’s cost of production from the manufacturing account was $84,000. Revenue was $160,000. Finished goods inventory was $9,000 at the start and $12,000 at the end. Administration expenses were $21,000 and selling expenses $14,500. Brisco lent the firm $10,000 at 5% a year, the interest being credited to his current account. Capital accounts: Rendle $50,000, Brisco $30,000, with interest at 5%. Brisco’s salary is $8,000. Interest on drawings: Rendle $400, Brisco $300. The balance is shared equally. Opening current accounts were both credit balances: Rendle $1,000, Brisco $2,000. Drawings: Rendle $20,000, Brisco $22,000. (a) Prepare the statement of profit or loss for this partnership. [4] (b) Prepare the appropriation account. [4] (c) Calculate the closing balance on each current account and the total of capital and current accounts in the statement of financial position. [2]

Answers

1. (a) Any two, for example profit-sharing ratio [1] and salaries [1]. (b) It sets out in advance how profit and losses are shared and what each partner is entitled to [1], so the accounts can be prepared correctly and disputes are less likely [1]. Examiner insight: “Why important” needs a reason with a consequence for the partners, not just a description of what the agreement is.

2. Advantage: Kasimir would bring mechanical skill, which Ulla lacks or has little time for [1]; she can also share the workload and run the shop while one is away [1]. Disadvantage: Ulla would have to share the profit with Kasimir [1], so she may earn less than as a sole trader, or she may be liable for debts caused by his decisions [1]. Examiner insight: Use the facts given (short of cash, a skilled mechanic). A point tied to Ulla is stronger than one that fits any business.

3. (a) It shows how the profit for the year is divided [1] between the partners, as set out in the agreement [1]. (b) Loan interest: a business expense before profit [1]; interest on drawings: added [1]; salary: deducted [1]; interest on capital: deducted [1]; drawings: neither, a debit in the current account only [1]. Examiner insight: Loan interest comes off before the profit for the year figure is reached. Putting it in the appropriation account is a common slip.

4.

Bramley and Sethi
Appropriation account for the year
Profit for the year                       36,400
Add interest on drawings (450 + 250)         700
                                          37,100
Less interest on capital
  Bramley (6% x 50,000)        3,000
  Sethi (6% x 30,000)          1,800
                               4,800
Less salary: Sethi             5,000       9,800
Balance of profit                         27,300
  Bramley (2/3)               18,200
  Sethi (1/3)                  9,100       27,300

Interest on drawings added [1]; interest on capital $3,000 and $1,800 [1]; salary [1]; balance $27,300 [1]; Bramley $18,200 [1]; Sethi $9,100 [1]. Examiner insight: Show the balance before sharing it. Clear working lets later correct steps be seen even if an early figure is wrong.

5.

Bramley current account
Balance b/d        1,200    Interest on capital     3,000
Drawings          21,000    Share of profit        18,200
Interest on                 Balance c/d             1,450
  drawings           450
                  22,650                           22,650
Balance b/d        1,450

Credits $3,000 and $18,200 [1]; debits drawings and interest on drawings [1]; opening debit $1,200 on the debit side [1]; balance $1,450 (total $22,650) [1]; brought down on the debit side [1]. Examiner insight: With a debit balance, the carried-down figure sits on the credit side and the brought-down figure on the debit side. Check both.

6. Capital holds the long-term investment [1]; the current account holds yearly items such as drawings, interest and profit share [1]. Capital normally stays fixed, while the current account moves every year [1], so it can end as a credit or a debit balance [1]. (Any two differences, each developed.) Examiner insight: A difference needs both accounts. Describing only the capital account does not show a contrast.

7. (a)

Appropriation account
Profit for the year                        7,800
Add interest on drawings (150 + 100)         250
                                           8,050
Less interest on capital
  Winslow 2,000, Odell 1,200               3,200
Less salary: Odell                         6,000
Balance of loss                           (1,150)
  Winslow (3/5)                (690)
  Odell (2/5)                  (460)

Interest on drawings added [1]; capital interest 2,000 and 1,200 [1]; salary $6,000 [1]; loss $1,150 [1]; shares $690 and $460 [1]. (b) Debited to Odell’s current account [1]. Examiner insight: A negative balance is a loss to be shared in the ratio, not a reason to leave interest and salary out.

8. Rent $9,600 - $800 = $8,800 [1]; electricity $3,150 + $450 = $3,600 [1]; depreciation $5,200 [1]; irrecoverable debts $380 plus increase in allowance $150 [1]; loan interest $840 [1]; expenses $40,270, profit $58,900 - $40,270 = ** $18,630** [1]. Examiner insight: Only the increase in the allowance is an expense. Using the new allowance of $750 would overstate expenses.

9. (a) Interest on the partner’s loan should be an expense deducted before profit for the year, not in the appropriation account [1]; interest on drawings should be added, not deducted [1]. (b) Profit for the year after loan interest $24,000 - $600 = $23,400 [1]; add interest on drawings $500 = $23,900 [1]; less $3,000 and $4,000 = ** $16,900** [1]. Examiner insight: Say what the correct treatment is, not only that something is wrong, and start from profit after loan interest.

10. (a)

Revenue                                  160,000
Opening inventory (finished goods)  9,000
Cost of production                 84,000
                                   93,000
Less closing inventory             12,000
Cost of sales                             81,000
Gross profit                              79,000
Administration              21,000
Selling                     14,500
Loan interest (5% x 10,000)    500        36,000
Profit for the year                       43,000

Cost of sales $81,000 [1]; gross profit $79,000 [1]; loan interest $500 [1]; profit $43,000 [1]. (b) Profit $43,000 plus interest on drawings $700 [1]; less interest on capital $2,500 and $1,500 [1]; less salary $8,000 [1]; balance $31,700, $15,850 each [1]. (c) Rendle: $1,000 + $2,500 + $15,850 - $20,000 - $400 = debit $1,050. Brisco: $2,000 + $1,500 + $8,000 + $500 + $15,850 - $22,000 - $300 = credit $5,550 [1]. Total: $80,000 + $5,550 - $1,050 = ** $84,500** [1]. Examiner insight: Cost of production replaces purchases. The loan interest is credited to Brisco’s current account because the question says so; if a question says it was paid in cash, nothing is credited.

Where marks are usually lost

• Putting loan interest into the appropriation account rather than with the expenses.
• Deducting interest on drawings, which is added.
• Starting the appropriation account from profit before adjustments.
• Posting drawings or profit shares to a fixed capital account.
• Sharing the balance equally by habit.
• Charging the full allowance for irrecoverable debts rather than only its increase.
• Carrying a debit balance down on the wrong side of a ledger account.
• Giving advantages and disadvantages that ignore the business described.

Next steps

• Revisit the study guide and revision notes.
• More Topic 5 practice: practice questions.
• Course home and printable checklist.
• All free 10-minute diagnostics.
• Book a free trial class.

Frequently asked questions

What happens when partners’ salaries and interest exceed the profit? Interest on capital and salaries are still credited, because the agreement entitles the partners to them. The shortfall is a loss shared in the agreed ratio and debited to the current accounts.

Are drawings posted to a fixed capital account? No. When capital accounts are fixed, drawings, interest on drawings and profit shares go to the current accounts. Posting them to a fixed capital account is a common error in Cambridge IGCSE Accounting (0452) questions.

Which profit figure does the appropriation account start from? Start from profit for the year after all year-end adjustments and after deducting loan interest. Starting from profit before the adjustments is a common mistake.

How should you answer an advantages and disadvantages question on partnerships? Link each point to the facts given, for example extra capital for an owner who is short of money, or unlimited liability for one whose house could be at risk. Points that ignore the business described earn little credit.

Official syllabus

Cambridge IGCSE Accounting 0452 syllabus for exams in 2027, 2028 and 2029 (version 1), Cambridge University Press & Assessment, section 5.2 Partnerships.