CBSE Class 12 Accountancy Accounting For Partnership Firms MCQs Set 11

Practice MCQs for Class 12 Accountancy Chapter 01 Accounting For Partnership Firms

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Access Chapter 01 Accounting For Partnership Firms Questions and Solutions

Access the complete set of multiple-choice questions for Chapter 01 Accounting For Partnership Firms below. This focused format allows students to isolate specific topics for thorough review and uninterrupted practice alongside official CBSE textbooks.

Multiple Choice Questions

Question 1: The maximum number of persons in case of a partnership firm as specified by the Companies Act, 2013 is:
(a) 20
(b) 30
(c) 100
(d) 50
Show Answer & Explanation

Answer: (d) 50

Explanation:
1. Section 464 of the Companies Act, 2013 read with Rule 10 of the Companies (Miscellaneous) Rules, 2014 limits the number of partners in a firm to 50.

Teacher's Note:
1. The Act allows the government to prescribe up to 100, but the limit actually prescribed by the Rules is 50.

Question 2: In the absence of partnership deed, the profits of a firm are divided among the partners: [CBSE Delhi 2015]
(a) In the ratio of capital
(b) Equally
(c) In the ratio of time devoted for the firm's business
(d) According to the managerial abilities of the partners
Show Answer & Explanation

Answer: (b) Equally

Explanation:
1. When there is no deed, the Indian Partnership Act, 1932 provides that profits and losses are shared equally.

Teacher's Note:
1. Capital contributed or time devoted does not matter when the deed is silent.

Question 3: Under which of the following circumstances, the balance of the 'Fixed Capital Accounts' will change?
(a) Additional capital is introduced
(b) Interest on capital is provided
(c) Interest on drawings is charged
(d) None of the above.
Show Answer & Explanation

Answer: (a) Additional capital is introduced

Explanation:
1. Under the fixed capital method, interest, drawings, salary and profit go to Current Accounts; only additional capital introduced (or capital withdrawn permanently) changes the Capital Account.

Teacher's Note:
1. Remember: fixed capital changes only through permanent addition or withdrawal of capital.

Question 4: Which of the following items, does not appear in the Profit and Loss Appropriation Account?
(a) Salaries to partners
(b) Interest on capital
(c) Interest on drawings
(d) Drawings
Show Answer & Explanation

Answer: (d) Drawings

Explanation:
1. Drawings are debited to Partners' Capital/Current Accounts; only interest on drawings is credited to the P&L Appropriation Account.

Teacher's Note:
1. Do not confuse drawings with interest on drawings.

Question 5: In the absence of Partnership deed, interest on loan of a partner is allowed: [CBSE (AI) 2015]
(a) at 8% p.a.
(b) at 6% p.a.
(c) no interest is allowed
(d) at 12% p.a.
Show Answer & Explanation

Answer: (b) at 6% p.a.

Explanation:
1. Section 13(d) of the Indian Partnership Act, 1932 allows interest @ 6% p.a. on a partner's loan when the deed is silent.

Teacher's Note:
1. Interest on a partner's loan is allowed even if the firm has a loss, because it is a charge.

Question 6: The written document containing terms and conditions of partnership is known as:
(a) Partnership Contract
(b) Agreement
(c) Partnership Deed
(d) None of the above
Show Answer & Explanation

Answer: (c) Partnership Deed

Explanation:
1. The written agreement among partners stating the terms of partnership is called the Partnership Deed.

Teacher's Note:
1. The deed overrides the provisions of the Act on matters it covers.

Question 7: When equal amounts are withdrawn in the beginning of each quarter during the year, the interest on drawings will be calculated as:
(a) Total Drawings × Rate/100 × 7.5/12
(b) Total Drawings × Rate/100 × 8/12
(c) Total Drawings × Rate/100 × 4.5/12
(d) Total Drawings × Rate/100 × 6/12
Show Answer & Explanation

Answer: (a) Total Drawings × Rate/100 × 7.5/12

Explanation:
1. Average period = (12 + 3)/2 = 7.5 months, since the first withdrawal is for 12 months and the last for 3 months.

Teacher's Note:
1. Beginning of quarter = 7.5 months, middle = 6 months, end = 4.5 months.

Question 8: When equal amounts are withdrawn at the end of each month throughout the year, the interest on drawings will be calculated as:
(a) Total Drawings × Rate/100 × 1/12
(b) Total Drawings × Rate/100 × 6.5/12
(c) Total Drawings × Rate/100 × 6/12
(d) Total Drawings × Rate/100 × 5.5/12
Show Answer & Explanation

Answer: (d) Total Drawings × Rate/100 × 5.5/12

Explanation:
1. Average period = (11 + 0)/2 = 5.5 months.

Teacher's Note:
1. Monthly drawings: beginning 6.5, middle 6, end 5.5 months.

Question 9: Interest on partners' loan is to be treated as:
(a) an appropriation out of profits
(b) a charge against profit
(c) Both (a) or (b)
(d) None of the above
Show Answer & Explanation

Answer: (b) a charge against profit

Explanation:
1. Interest on a partner's loan is debited to the Profit and Loss Account, i.e., it is a charge against profit.

Teacher's Note:
1. It is payable even when there is a loss, so it never goes to the P&L Appropriation Account.

Question 10: Calculate manager's commission if profit is ₹66,000 and commission is allowed at 10% after charging such commission.
(a) ₹6,600
(b) ₹5,500
(c) ₹6,000
(d) ₹5,000
Show Answer & Explanation

Answer: (c) ₹6,000

Explanation:
1. Commission = 66,000 × 10/110 = ₹6,000.

Teacher's Note:
1. 'After charging such commission' means divide by (100 + rate), not by 100.

Question 11: Current account of a partner
(a) will always have a credit balance
(b) will always have a debit balance
(c) can never have a debit balance
(d) may have a debit or credit balance
Show Answer & Explanation

Answer: (d) may have a debit or credit balance

Explanation:
1. If drawings and losses exceed the partner's credits, the Current Account shows a debit balance; otherwise a credit balance.

Teacher's Note:
1. A debit balance of a Current Account appears on the assets side of the Balance Sheet.

Question 12: Anil and Vijay are partners in a firm. Anil is entitled to get a commission of 25% of net profit after charging such commission. Net profit before charging such commission is ₹60,000. Calculate Anil's commission.
(a) ₹12,500
(b) ₹15,000
(c) ₹12,000
(d) ₹20,000
Show Answer & Explanation

Answer: (c) ₹12,000

Explanation:
1. Commission = 60,000 × 25/125 = ₹12,000.

Teacher's Note:
1. Check: 25% of (60,000 − 12,000) = 12,000.

Question 13: In the absence of partnership deed, partners are entitled to receive interest on drawings at the rate of:
(a) No interest
(b) 4% p.a.
(c) 6% p.a.
(d) 10% p.a.
Show Answer & Explanation

Answer: (a) No interest

Explanation:
1. The Act does not provide for charging interest on drawings; it is charged only if the deed provides.

Teacher's Note:
1. 6% applies to a partner's loan, not to drawings.

Question 14: Rent given to a partner:
(a) is a charge on profit
(b) is a share of partner's profit
(c) is an appropriation of profit
(d) all of the above
Show Answer & Explanation

Answer: (a) is a charge on profit

Explanation:
1. Rent paid to a partner for use of his property is an expense debited to the Profit and Loss Account.

Teacher's Note:
1. Rent to a partner is paid even if there is a loss.

Question 15: Interest on capital is provided to partners, when:
(a) Capitals are more than ₹5,00,000
(b) A loan is provided by partner
(c) Drawings are not made by partners
(d) It is provided in the partnership deed
Show Answer & Explanation

Answer: (d) It is provided in the partnership deed

Explanation:
1. Interest on capital is allowed only if the partnership deed provides for it.

Teacher's Note:
1. If the deed is silent, no interest on capital is allowed.

Question 16: P and Q are partners in a firm. They are entitled to interest on their capitals but the net profit was not sufficient for this interest. The net profit will be distributed between partners in:
(a) Agreed Ratio
(b) Profit sharing Ratio
(c) Capital Ratio
(d) Equal Ratio
Show Answer & Explanation

Answer: (c) Capital Ratio

Explanation:
1. When profit is less than interest on capital, the profit is distributed in the ratio of interest on capital, which is the same as the capital ratio when the rate is the same.

Teacher's Note:
1. Interest on capital being an appropriation, it cannot exceed the available profit.

Question 17: Amit and Rohit are partners sharing profit in the ratio of 1:2. Kaveri was the manager who received the salary of ₹12,000 p.m. in addition to commission of 10% on net profit after charging such commission. Total remuneration to Kaveri amounted to ₹2,04,000. Profit for the year before charging salary and commission was:
(a) ₹8,20,000
(b) ₹7,80,000
(c) ₹6,60,000
(d) ₹8,04,000
Show Answer & Explanation

Answer: (d) ₹8,04,000

Explanation:
1. Salary = 12,000 × 12 = ₹1,44,000; Commission = 2,04,000 − 1,44,000 = ₹60,000.
2. Profit after salary but before commission = 60,000 × 110/10 = ₹6,60,000; Profit before salary = 6,60,000 + 1,44,000 = ₹8,04,000.

Teacher's Note:
1. Work backwards: first separate salary from total remuneration, then gross up the commission.

Question 18: B drew ₹8,000 at the end of every month for 9 months ending 31st March 2019. Calculate interest on drawings if rate of interest is @ 10% p.a.:
(a) ₹3,000
(b) ₹3,500
(c) ₹2,400
(d) ₹2,700
Show Answer & Explanation

Answer: (c) ₹2,400

Explanation:
1. Total drawings = 8,000 × 9 = ₹72,000; Average period = (8 + 0)/2 = 4 months.
2. Interest = 72,000 × 10/100 × 4/12 = ₹2,400.

Teacher's Note:
1. Count the months correctly: drawings for 9 months, not 12.

Question 19: For a partnership firm, interest on capital is:
(a) An expense
(b) An income
(c) A loss
(d) None of these
Show Answer & Explanation

Answer: (a) An expense

Explanation:
1. From the firm's point of view interest on capital is an amount paid (credited) to the partners for the use of their capital, so it is treated as an expense of the firm; for the partner it is an income.

Teacher's Note:
1. Note that it is still shown in the P&L Appropriation Account, so it is allowed only out of profits.

Question 20: Interest on advance given to the firm by a partner, is:
(a) An appropriation of profit
(b) A gain
(c) A charge
(d) None of these
Show Answer & Explanation

Answer: (c) A charge

Explanation:
1. Interest on a partner's loan/advance is a charge against profit, debited to the Profit and Loss Account.

Teacher's Note:
1. Charges go to P&L Account; appropriations go to P&L Appropriation Account.

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Chapter 01 Accounting For Partnership Firms Objective Questions & Solutions for Class 12 Accountancy

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