CBSE Class 12 Accountancy Accounting For Partnership Firms MCQs

Refer to CBSE Class 12 Accountancy Accounting For Partnership Firms MCQs provided below. CBSE Class 12 Accountancy MCQs with answers available in Pdf for free download. The MCQ Questions for Class 12 Accountancy with answers have been prepared as per the latest syllabus, CBSE books and examination pattern suggested in Class 12 by CBSE, NCERT and KVS. Multiple Choice Questions for Chapter 2 Accounting For Partnership Firms are an important part of exams for Class 12 Accountancy and if practiced properly can help you to get higher marks. Refer to more Chapter-wise MCQs for CBSE Class 12 Accountancy and also download more latest study material for all subjects

MCQ for Class 12 Accountancy Chapter 2 Accounting For Partnership Firms

Class 12 Accountancy students should refer to the following multiple-choice questions with answers for Chapter 2 Accounting For Partnership Firms in Class 12. These MCQ questions with answers for Class 12 Accountancy will come in exams and help you to score good marks

Chapter 2 Accounting For Partnership Firms MCQ Questions Class 12 Accountancy with Answers

Question: For transfer of Profit from Profit and Loss Appropriation account to Reserve account, which account to be credited

(a) Reserve Account

(b) Profit and Loss Appropriation account

(c) Profit and Loss Adjustment Account

(d) Profit and Loss account

Answer: Reserve Account

 

Question: What is Goodwill

(a) Intangible fixed asset

(b) Fixed Assets

(c) Current Assets

(d) None of the options

Answer: intangible fixed asset

 

Question: formula for calculation of Goodwill by Capitalisation of Super Profit Method.

(a) Goodwill = Super Profit x 100/Normal rate of return

(b) Goodwill = Capitalised value of Average Profits - Net Assets

(c) Goodwill = Capitalised value of Average Profits - Net Liabilities

(d) None of the options

Answer: Goodwill = Super Profit x 100/Normal rate of return

 

Question: Formula of Goodwill by Capitalisation of Average Profits Method.

(a) Goodwill = Capitalised value of Average Profits - Net Assets

(b) Goodwill = Super Profit x 100/Normal rate of return

(c) Goodwill = Capitalised value of Average Profits - Net Liabilities

(d) None of the options

Answer: Goodwill = Capitalised value of Average Profits - Net Assets

 

Question: Where would you record the interest on capital when capitals are fixed?

(a) Partners current account

(b) Partners Capital account

(c) Partners Salary account

(d) None of the options

Answer: Partners current account

 

Question: Under capitalization method of goodwill valuation, which of the following formulas is used to calculate the value of whole business?

(a) Value of whole business=Profit / Reasonable rate of return X 100

(b) Value of whole business= Total assets / Reasonable rate of return X 100

(c) Value of whole business= Equity-Net assets

(d) None of the options

Answer: Value of whole business=Profit / Reasonable rate of return X 100

 

Question: New investment by any partner in the partnership type of business is _______ to the partners capital account

(a) Credited

(b) Debited

(c) Credit and Debit Both

(d) None of the options

Answer: credited

 

Question: In the general form of partnership, liabilities of partners are

(a) Unlimited

(b) Limited

(c) Limited to the Business capital

(d) None of the options

Answer: Unlimited

 

Question: The decision is Garner Vs Murray was given in

(a) 1904

(b) 1905

(c) 1933

(d) 1804

Answer: 1904

 

Question: Balance of realization Account is transferred to the capital Account of the partners in

(a) Profit sharing ratio

(b) Interest ratio

(c) Capital ratio

(d) Equally

Answer: Profit sharing ratio

 

Question: At the time of dissolution all the assets of firm are transferred to the realization Account

(a) Book value

(b) Market value

(c) Cost value

(d) None of the options

Answer: Book value

 

Question: When a partner dies, firm will receive the

(a) Full amount of policy

(b) 1/2 amount of policy

(c) 1/4 amount of policy

(d) 3/4 amount of policy

Answer: Full amount of policy

 

Question: Section 37 of partnership act provided interest on the amount left by retiring or decreased partner at

(a) 6%

(b) bank rate

(c) 0.1

(d) 0.05

Answer: 6%

 

Question: When good will is brought in cash by new partner, method is known as

(a) Premium method

(b) Revolution method

(c) Memorandum revolution method.

(d) None of the options

Answer: Premium method

 

Question: Revolution Account is a

(a) Nominal Account

(b) Personal Account

(c) Real Account

(d) Cash Account

Answer: Nominal Account

  

Question: For any decrease in the value of liability, revolution Account is to be

(a) Credited

(b) Debited

(c) Both (Cr.) & (Dr.)

(d) None of the options

Answer: Credited

 

Question: A is drawing Rs. 500 regularly on the 16thof every month, he will have to pay interest in a year on Rs. 6000 for the total period of @ given rate of interest

(a) 6 months

(b) 5 months

(c) 7 months

(d) 12 months

Answer: 6 months

 

Question: Old profit sharing ratio minus new profit sharing ration is equal to

(a) Sacrificing ratio

(b) Ratio of gain

(c) Capital ratio

(d) None of the options

Answer: Sacrificing ratio

 

Question: Upon the sale of an established business its good will

(a) Marketable value

(b) Not marketable value

(c) Both Marketable value and Not marketable value

(d) None of the options

Answer: Marketable value

 

Question: A credit balance on a partners current Account is.

(a) Part of capital

(b) Fixed capital

(c) A current asset

(d) Long - term liability

Answer: Part of capital

 

Question: For the firm interest on drawing is

(a) Income

(b) Expense

(c) Liability

(d) None of the options

Answer: Income

 

Question: Every partner has a right to be consulted in all matters affecting the business of

(a) Partnership

(b) Sole - tradership

(c) JSC

(d) None of the options

Answer: Partnership

 

Question: The agreement among partners which set out the terms on which they had agreed to form a partnership is called

(a) Partnership deed

(b) Partnership at - will

(c) Arbitration clause

(d) None of the options

Answer: Partnership deed

 

Question: A person who receives a share of profits from one of the regular partner is called

(a) Sub - partner

(b) Secret partner

(c) Quasi

(d) partner in profit only

Answer: Sub - partner

 

Question: A person who declares by word of mouth as partner of the firm is called

(a) Estopple partner

(b) Active partner

(c) Dormant partner

(d) Nominal partner

Answer: Estopple partner

 

Question: If no provision is made in agreement regarding the duration of the partnership

(a) Partnership at - will

(b) Limited partnership

(c) Particular partnership

(d) None of the options

Answer: Partnership at - will

 

Question: The persons who have entered into a partnership business are individually called

(a) Partners

(b) Vender

(c) Agents

(d) A firm

Answer:  Partners

 

Question: Loss on realization is distributed among partners

(a) According to profit and loss ratio

(b) According to capital ratio

(c) As decided among them

(d) None of the options

Answer: According to profit and loss ratio

 

Question: If a partner takes over an asset of the firm, his capital account

(a) Will be debited with the amount as agreed

(b) Will be credited with the market value of the asset

(c) Will be debited with book value of the asset

(d) None of the options

Answer: Will be debited with the amount as agreed

 

Question: At the time of dissolution

(a) Non cash assets are transferred to realization Account

(b) All the assets are transferred to realization

(c) Only current assets are transferred to realization Account

(d) Only liquid and current asset are transferred to realization Account

Answer: Non cash assets are transferred to realization Account

 

Question. ________ capital accounts always show a credit balance.

Answer:  Fixed

 

Question. Give the average period, in months, for charging interest on drawings of a fixed amount, withdrawn at the end of each quarter.

Answer:  4.5 months

 

Question. Give the average period, in months, for charging interest on drawings of a fixed amount withdrawn at the beginning of each quarter.

Answer:  7.5 months

 

Question. Give the average period, in months, for charging interest on drawings of a fixed amount withdrawn at the beginning of each half-year.

Answer: 9 months

 

Question. Which of the following items is not dealt through Profit and Loss Appropriation Account? 

(a) Interest on Partner’s Loan 

(b) Partner’s Salary

(c) Interest on Partner’s Capital 

(d) Partner’s Commission

 

Question. E, F and G are partners sharing profits in the ratio of 3:3:2. As per the partnership agreement, G is to get a minimum amount of ₹80,000 as his share of profits every year and any deficiency on this account is to be personally borne by E. The net profit for the year ended 31st March, 2020 amounted to ₹3,12 ,000. Calculate the amount of deficiency to be borne by E?

(a) ₹1,000 

(b) ₹4,000 

(c) ₹8,000 

(d) ₹2,000

 

Question. Pick the odd one out: 

(a) Rent to partner 

(b) Manager’s Commission

(c) Interest on Partner’s Loan 

(d) Interest on Partner’s capital

 

Question. In case the partners’ capitals are Fixed, in which account will withdrawal of capital be recorded?

Answer:  Partners’ capital accounts

 

Question. Why does the Fixed Capital Account of partners show credit balance even when the firm suffers losses year after year?

Answer:  Because the losses are adjusted through Partners’ current accounts.

 

Question. Give the meaning of ‘Liability of Partnership’ as a feature of partnership.

Answer: The liability of partnership is unlimited – jointly and severally.

 

Question. Vidit and Seema were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their capitals were ₹1,20,000 and ₹2,40,000, respectively. They were entitled to interest on capital @ 10% p.a. The firm earned a profit of `18,000 during the year. The interest on Vidit’s capital will be:

(a) ₹12,000 

(b) ₹10,000 

(c) ₹7,200 

(d) ₹6,000

 

Question. The business of a partnership firm may be carried on by all the partners or any one of them acting for all. One of the important implications of this statement is that every partner is entitled to participate in the conduct of the

affairs of its business. State the second important implication of this statement.

Answer: Second implication of this statement is that there exists a relation of mutual agency among the partners.

 

Question. Asha and Deepti were partners in a firm sharing profits and losses in the ratio of 3 : 1. Their fixed capitals were ₹3,00,000 and ₹2,00,000 respectively. They were entitled to interest on capital @10% p.a. The firm earned a profit of ₹20,000 during the year. The amount of interest on capital credited to Deepti will be:

(a) ₹12,000 

(b) ₹8,000 

(c) ₹20,000 

(d) ₹5,000

 

Question. Manu and Kanu were partners in a firm, sharing profits and losses in the ratio of 2 : 3. Their fixed capitals were ₹10,00,000 and 5,00,000, respectively. They were entitled to an interest on capital @10% p.a. The firm earned a profit of 60,000 during the year. The amount of interest on capital credited to Kanu will be:

(a) ₹20,000 

(b) ₹40,000 

(c) ₹36, 000 

(d) ₹24,000

 

Question. Mohit, Shobhit and Rohit are partners sharing profits and losses in the ratio 2:1:1. Rohit is guaranteed a profit of ₹14,000.

The firm incurred a profit of ₹20,000 during the year. Calculate the amount of deficiency borne by Mohit and Shobhit.

Answer: Mohit ₹6,000 and Shobhit ₹3,000.

 

Question. Mohit and Rohit were partners in a firm with capital of ₹80,000 and ₹40,000 respectively. The firm earned a profit of ₹30,000 during the year Mohit’s share in the profit will be:

(a) ₹2,000 

(b) ₹10,000 

(c) ₹15,000 

((d) ₹18,000

 

Question. X, Y and Z are partners in a firm sharing profits and losses in the ratio of 6:4:1.X guaranteed a profit of ₹15,000 to Z. The net profit for the year ending 31 March, 2020 was `99,000. X’s share in the profit of the firm will be:

(a) ₹30,000 

(b) ₹15,000 

(c) ₹48,000 

(d) ₹45,000

 

Question. Akshat, Bilal and Charu are partners dealing in the sale of sports equipment. Akshat, without the knowledge of Bilal and Charu, is also running the business of supplying sports equipment to a few sports clubs in which his son is a member. He is earning good profits from this business but did not inform Bilal and Charu about this. Was Akshat correct in doing so? 

Answer: No, Akshat was not correct in doing so. Reason: If a partner carries on any business of the same nature as and competing with that of the firm, he shall account for and pay to the firm, all profit made by him in that business.

 

Question. By virtue of Section 464 of the Companies Act, 2013 the Central Government is empowered to prescribe maximum number of partners in a firm but the number of partners cannot be more than __________ 

(a) 50 

(b) 100 

(c) 20

(d) 10

 

Question. The partnership deed should be properly drafted and prepared as per the provisions of the __________ and preferably registered with the __________. 

Answer: Stamp Act, Registrar of firms. 

 

Question. Can a partner be exempted from sharing the losses in a firm? If yes, under what circumstances? 

Answer: Yes, if partnership deed so provides. For example, in case of guarantee of minimum profit to a partner.

 

Question. Ritesh and Hitesh are childhood friends. Ritesh is a consultant whereas Hitesh is an architect. They contributed equal amounts and purchased a building for ₹2 crores. After a year, they sold it for ₹3 crores and shared the profits equally. Are they doing the business in partnership ? Give reason in support of your answer. 

Answer: No, they are not doing business in partnership because they are not involved in doing sale and purchase of land/plot on a regular basis/Mere co-ownership of a property does not amount to partnership.

 

Question. A partnership firm has 50 members. All the partners have agreed to admit Ram and Mohan as new partners. Can Ram and Mohan be admitted? Give reason in support of your answer. 

Answer: No, Ram and Mohan can’t be admitted as partners.Reason: As per the Companies Miscellaneous Rules, 2014 the Maximum number of partners in a partnership firm can be 50.

 

Question. A, B and C decided that interest on capitals will be provided to each partner @ 5% p.a. But after one year C wants that no interest on capital is to be provided to any partner. State how `C’ can do this? 

Answer: Yes, C can do so by altering the provisions of partnership deed, i.e., redrafting the deed, provided all the partners unanimously agree for it.

 

Question. Ram and Mohan are partners in a firm without any partnership deed. Their capitals are: Ram ₹8,00,000 and Mohan ₹6,00,000. Ram is an active partner and looks after the business. Ram wants that profit should be shared in proportion of capitals. State with reason whether his claim is valid or not. 

Answer: His claim is not valid because in the absence of a partnership deed, profits and losses should be shared equally.

 

Question. A partnership deed provides for the payment of interest on capital but there was a loss instead of profits during the year 2019-20 .At what rate will the interest on capital be allowed?

(a) 9% p.a. 

(b) 6% p.a.

(c) The rate specified in the partnership deed 

(d) No interest on capital will be allowed

 

Question. Kanha, Neeraj and Asha were partners in a firm. They admitted Raghav their Landlord as a partner in the firm.

Raghav brings sufficient amount of capital and goodwill premium for his share in the profits. Raghav had given a loan of ₹1,00,000 @ 10% p.a. interest to the partnership firm before he became the partner. Now the accountant of the firm is emphasizing that the interest on loan should be paid @ 6% p.a. Is he right in doing so ? Give reason in support of your answer.

Answer: No, he is not correct. Reason: He will get interest @10% p.a. because of the agreement between Raghav and the firm.

 

Question. X and Y are equal partners. They had advanced a loan of ₹40,000, contributed equally to the firm on 1st August, 2019. The partnership deed is silent regarding the payment of interest on loan. What amount of interest on loan is payable to X, if the firm closes its books of account on 31st March every year?

(a) Nil 

(b) ₹2,400 

(c) ₹1,600 

(d) ₹800

 

Question. You and your friends Amit and Vinod are partners in a firm sharing profits and losses equally. State, who is correct in the following case? Give reasons also.

Amit has provided a capital of 50,000 whereas Vinod provided 10,000 only as capital. Vinod, however, has provided 20,000 as loan to the firm. There is no partnership agreement. Vinod claims interest of 1,200, whereas you and Amit do not want to give any interest.

Answer: Vinod is correct. Since there is no partnership agreement, interest on Vinod’s loan @ 6% p.a. = 20,000 × 6/100 = ₹1,200.

 

Question. Interest on money advanced by a partner to the firm beyond the amount of his capital for the purpose of business is paid @ 6% p.a. True/False? Give reason.

Answer: False: Interest on partner’s loan is paid at the rate specified in the partnership deed. It is paid @ 6% p.a. if there is no express agreement between the parters regarding the rate of interest on partner’s loan.

 

Question. Partner’s capital account will not show a debit balance in spite of losses year after year when _______ because ______. 

Answer: Partners’ capitals are fixed; because partner’s capital remains fixed unless there is addition or withdrawal of capital. Under this method, the ‘share of loss’ is debited to the partner’s current account.

 

Question. Partner’s capital account always shows a credit balance. True/False? Give reasons. 

Answer: False: Under fluctuating capital method, partner’s capital account may sometimes show a debit balance. It is only under fixed capital method that the partner’s capital account will always show a credit balance.

 

Question. A and B are partners having fixed capitals of 2,00,000 and 1,00,000 respectively. At the end of the year 2019-20, their current accounts showed balances: A ₹1,00,000 (Cr.) B 5,000 (Dr.). Where will B’s current account balance be shown in the books of A and B?

(a) On the liabilities side of the Balance Sheet.

(b) On the assets side of the Balance Sheet.

(c) On the debit side of Profit and Loss Appropriation A/c.

(d) On the credit side of Profit and Loss Appropriation A/c.

 

Question. A and B are partners sharing profits in the ratio of 3 : 2 with capitals of 50,000 and 30,000 respectively. Interest on capital is payable @ 6% p.a. B is to be allowed a salary of ₹1,250 semi-annually. During the year 2019-20, the profits prior to the calculation of interest on capital but after charging B’s salary amounted to ₹12,500. 10% of the Net Profit is to be transferred to the General Reserve.

What Journal entry will be passed for transfer of profit to General Reserve?

Answer: Debit Profit and Loss Appropriation A/c by ₹1,500 and credit General Reserve A/c by ₹1,500.

 

Question. Abha and Bharat were partners. They shared profits and losses equally. On April 1st, 2019 their capital accounts showed balances of 3,00,000 and 2,00,000 respectively. Calculate the share of divisible profit of the partners if the partnership deed provided for interest on capital @10% p.a. and the firm earned a profit of 50,000 for the year ended 31st March, 2020.

(a) Abha ₹30,000; Bharat ₹20,000 

(b) Abha ₹25,000; Bharat ₹25,000

(c) Abha ‘Nil’; Bharat ‘Nil’ 

(d) None of the above

 

Question. A and B are partners. The net divisible profit as per Profit and Loss Appropriation A/c is 2,50,000. The total interest on partner’s drawing is 4,000. A’s salary is 4,000 per quarter and B’s salary is 40,000 per annum. The net profit/loss earned during this year was:

(a) ₹3,02,000 

(b) ₹1,98,000 

(c) ₹3,06,000 

(d) ₹2,50,000

 

Question. A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. During the year the firm incurred a loss of ₹84,000. The amount of loss transferred to the capital accounts of A, B and C will be:

(a) Loss debited to the capital accounts of A, B and C equally.

(b) Nil

(c) Loss debited to the capital accounts of A, B and C will be 42,000, 28,000 and 14,000 respectively.

(d) None of the above

 

Question. Reena and Raman are partners with capitals of ₹3,00,000 and ₹1,00,000 respectively. The profit (as per Profit and Loss Account) for the year ended March 31, 2020 was ₹1,20,000. Interest on capital is to be allowed at 6% p.a.

Raman was entitled to a salary of ₹30,000 p.a. The drawings of partners were ₹30,000 and 20,000. The interest on drawings to be charged to Reena was Rs. 1,000 and to Raman, 500. Their share of profit after necessary

appropriations are:

(a) Reena ₹50,625; Raman ₹16,875 

(b) Reena ₹33,750; Raman ₹33,750

(c) Reena ₹33,000; Raman ₹33,000 

(d) Reena ₹48,750; Raman ₹48,750

 

Question. Aakriti and Bindu entered into partnership for making garments on April 01, 2019 without any partnership agreement. They introduced Capitals of ₹5,00,000 and ₹3,00,000 respectively. On October 01, 2019, Aakriti advanced ₹20,000 by way of loan to the firm without any agreement as to interest. Profit and Loss account for the year ended March 31 2020 showed profit of ₹43,000 before charging interest on Aakriti’s loan. Their share of profit for the year 2019-20 are:

(a) ₹21,200 each 

(b) ₹21,500 each

(c) ₹26,875 and ₹16,125 respectively 

(d) ₹26,500 and ₹15,900 respectively

 

Question. X and Y are partners sharing profits and losses in the ratio of 3 : 2 having fixed capitals of ₹1,50,000 and ₹2,00,000 respectively. The partnership deed provides for interest on capital @ 8% p.a. The Net Profit of the firm during

2019-20 was ₹21,000. In what ratio the appropriation of profit will be made?

(a) 3 : 2 

(b) 1 : 1 

(c) 3 : 4 

(d) 4 : 3

 

Question. Under which of the following situation interest on partners’ capitals shall not be provided?

(a) If the firm has incurred net loss during the year.

(b) If partners’ capitals are equal and their profit sharing ratio is also equal.

(c) Both ((a) and ((b)

(d) If the net profit is less than the total amount payable to partners as interest on capitals.

 

Question. Anna and Bobby were partners sharing profits and losses in the ratio of 5 : 3. On 1st April, 2019 their capital accounts showed balances of ₹3,00,000 and ₹2,00,000 respectively. The partnership deed provided for interest on

capital @10% p.a. and the firm earned a profit of ₹45,000 for the year ended 31st March, 2020. The interest on partners’ capitals will be:

 

((a)  ₹30,000 and  ₹20,000 respectively 

((b)  ₹27,000 and  ₹18,000 respectively

((c)  ₹22,500 and  ₹22,500 respectively 

((d) None of the above

 

Question. M and N are partners having capitals of 50,000 and 1,00,000 respectively. On 1 April 2020, P was admitted with a capital of 2,00,000. At the end of the year 2020, the firm earned a profit of 30,000. How should the profits be distributed among partners, if there is no partnership deed?

(a) Equally 

(b) In the ratio of 1:2:4

(c) In the ratio of 1:2:3 

(d) None of the above

 

Question. A and B are partners in a firm having capitals ₹5,00,000 and ₹10,00,000 respectively. The partnership deed provides

for charging interest on drawings @ 5% p.a. A withdrew `40,000 for his personal use during the year 2019-20. B withdrew ₹2,00,000 from his capital 1.1.2020. The amount of interests that will be charged on partners’ drawings are:

(a) A ₹1,000; B ₹5,000 

(b) A ₹2,000; B ₹10,000

(c) A ₹1,000; B Nil 

(d) A `2,000; B Nil

 

Question. Ram and Shyam are partners sharing profits/losses equally. Ram withdrew ₹1,000 p.m. regularly on the first day of every month during the year 2019-20 for personal expenses. If interest on drawings is charged @ 5% p.a. What will be the interest on the drawings of Ram?

(a) ₹50 

(b) ₹27 

(c) ₹600 

(d) ₹325

 

Question. Verma and Kaul are partners in a firm. The partnership agreement provides that interest on drawings should be charged @ 6% p.a. Kaul withdrew ₹3,000 per quarter, starting from April 01, 2019. What will be the interest on Kaul’s drawings during the year 2019-20?

(a) ₹180 

(b) ₹90 

(c) ₹270 

(d) ₹450

 

Question. Himanshu withdrew 2,500 at the end of each month. The Partnership deed provides for charging the interest on drawings @ 12% p.a. What will be the interest on Himanshu’s drawings for the year ending 31st December, 2017?

(a) ₹300 

(b) ₹137.50 

(c) ₹1,650 

(d) ₹1,800

 

Question. Dev withdrew `10,000 on 15th day of every month. Interest on drawings was to be charged @ 12% per annum.

Interest on Dev’s drawings will be:

(a) ₹14,400 

(b) 7,200 

(c) ₹1,200 

(d) None of these

 

Question. One of the partners in a partnership firm has withdrawn `9,000 at the end of each quarter, throughout the year.

The interest on drawings at the rate of 6% per annum will be:

(a) ₹540 

(b) ₹2,160 

(c) ₹810 

(d) None of these  

 

Question: If all the partners, but one, are solvent it is

(a) Dissolution of firm
(b) Dissolution of partnership agreement
(c) May or may not cause dissolution
(d) None of the options

Answer: Dissolution of firm

 

Question: Retirement or death of a partner.

(a) Is dissolution of partnership agreement
(b) Is dissolution of a firm
(c) May or may not be a dissolution of partnership agreement
(d) None of the options

Answer: Is dissolution of partnership agreement

 

Question: The loss or gain an account of revaluation at the time of retirement of a partner is shared by

(a) All partners
(b) Remaining partners
(c) Retiring partner
(d) None of the options

Answer: All partners

 

Question: Amount due to out going partner is shown in the balance sheet as his

(a) Loan
(b) Liability
(c) Asset
(d) Capital

Answer: Loan

 

Question: If the remaining partner want to continue the business, after the retirement of a partner, a new partnership agreement

(a) Necessary
(b) Not necessary
(c) Optioned
(d) None of the options

Answer: Necessary

 

Question: In case of retirement of a partner full good will is credited to the accounts of

(a) All partners
(b) Only retiring partner
(c) Only remaining partner
(d) None of the options

Answer: All partners

 

Question: The partnership may come to an end due to the

(a) All of the options
(b) Death of a partner
(c) Insolvency of partner
(d) By giving notice

Answer: All of the options

 

Question: In the revaluation account an increase in the value of land and building

(a) Appears on the credit side
(b) Appears on the debit side
(c) Appears on the credit side of good will account
(d) Does not appear at all

Answer: Appears on the credit side

 

Question: At the time of a new partner Good will

(a) Belongs only to the old partner who have credited it
(b) Belongs to all partners, new and old
(c) Belongs only to the new partners who is going to be admitted.
(d) None of the options

Answer: Belongs only to the old partner who have credited it

 

Question: A new partner may be admitted to a partnership

(a) With the consent of all partners
(b) With the consent of two third of old partners
(c) With the consent of any one of the partners
(d) Without consent of old partners

Answer: With the consent of all partners

   

Question: At the time of admission of a new partner, general reserve is

(a) Credited to capital of old partners.
(b) Debited to capital of old partners
(c) Allowed to remain is balance sheet
(d) Debited to current account

Answer: Credited to capital of old partners.

 

Question: Good will of the firm is valued Rs. 30000. C an incoming partner purchase share of total profit Good will be raised in the books.

(a) Rs. 30000
(b) Rs. 7500
(c) Rs. 120000
(d) Rs. 7000

Answer: Rs. 30000

 

Question: Value of good will agreed upon Rs. 30000 on C,S admission and allowing him share of total profit Good will is brought in cash, the amount of good-will be as

(a) Rs. 7500
(b) Rs. 30000
(c) Rs. 120000
(d) Rs. 150000

Answer: Rs. 7500

 

Question: Good will is valued as two years purchase of the average profits of three previous years are Rs. 15000, the value of good-will be

(a) Rs. 30000
(b) Rs. 15000
(c) Rs. 50000
(d) Rs. 20000

Answer: Rs. 30000

 

Question: At the time of admission an incoming partner contributes as goodwill

(a) May or may not pay cash for good will
(b) In cash
(c) Does not pay cash
(d) None of the options

Answer: May or may not pay cash for good will

 

Question: At the time of admission of a new partner the firm is

(a) Dissolved
(b) Continued
(c) Not effected
(d) RE-organized

Answer: Dissolved

 

Question: Interest on capital Account

(a) Debit to profit & loss and credited to partners capital Account.
(b) Debited to profit & loss Account
(c) Credit to profit & loss Account
(d) Only credited to partners capital Account.

Answer: Debit to profit & loss and credited to partners capital Account.

 

Question: A partners has to pay interest on drawings what is the entry in the personal Account of the partner?

(a) Debit partners current Account
(b) Credit partners capital Account
(c) Credit partners current Account
(d) Debit the partners current Account

Answer: Debit partners current Account

 

Question: Drawings of the partners are

(a) Debited to capital Account
(b) Debited to profit & loss Account
(c) Credited to profit & loss Account
(d) Credited to capital Account

Answer: Debited to capital Account

 

Question: Capital of the partners are maintained by

(a) By Fixed & Fluctuating methods
(b) Fixed capital method.
(c) Fluctuating capital
(d) None of the options

Answer: By Fixed & Fluctuating methods

 

Question: A banking partnership business can have

(a) Not more than 10 partners.
(b) Not more than 20 partners.
(c) Not more than 50 partners.
(d) Any number of partners

Answer: Not more than 10 partners.

 

Question: Investment in partnership is made by introducing

(a) Cash or non - cash assets
(b) Cash
(c) None - cash assets
(d) None of the options

Answer: Cash or non - cash assets

 

Question: In the revaluation account a decrease in the value of plant and machinery

(a) Appears on the debit side.
(b) Appears on the credit side.
(c) Appears on the debit side of good will account
(d) Does not appear at all

Answer: Appears on the debit side.

 

Question: Revaluation account is operated to find out gain or loss at the time of

(a) All of the options
(b) Admission of a partner
(c) Retirement of a partner
(d) Death of a partner

Answer: All of the options

 

Question: An ordinary partnership business can have

(a) Not more than 20 partners.
(b) Not more than 30 partners.
(c) Not more than 50 partners.
(d) Any number of partners.

Answer: Not more than 20 partners.

 

Question: On the retirement of a partner any reserve being should be transferred to the capital account of

(a) All partners in the old profit sharing ratio
(b) Remaining partners in the new profit sharing ratio
(c) Neither the retiring partner, nor the remaining partner
(d) None of the options

Answer: All partners in the old profit sharing ratio

 

Question: If all the partners, but one are insolvent it is

(a) Dissolution of firm
(b) Dissolution of an agreement
(c) May or may not cause dissolution
(d) None of the options

Answer: Dissolution of firm

 

Question: At the time of dissolution non - cash assets are credited with

(a) Book value
(b) Market value
(c) Cost or market which ever is low
(d) As the agreed amount among the partners

Answer: Book value

 

Question: The accounting procedure at the retirement of partner is valued

(a) All of the options
(b) Revaluation of assets and liabilities
(c) Ascertaining his share of good will
(d) Finding the amount due to him

Answer: All of the options

 

Question: Partners equity is effected due to

(a) All of the options
(b) Retirement of a partner
(c) Admission of a partner
(d) Death of a partner

Answer: All of the options 

 

Question: Oustensible partners are those who

(a) do not contribute any capital but get some share of profit for lending their name to the business

(b) contribute very less capital but get equal profit

(c) do not contribute any capital and without having any interest in the business, lend their name to the business

(d) contribute maximum capital of the business

Answer: C

 

Question:  Sleeping partners are those who

(a) take active part in the conduct of the business but provide no capital. However, salary is paid to them.

(b) do not take any part in the conduct of the business but provide capital and share profits and losses in the agreed ratio

(c) take active part in the conduct of the business but provide no capital. However, share profits and losses in the agreed ratio.

(d) do not take any part in the conduct of the business and contribute no capital. However, share profits and losses in the agreed ratio.

Answer: B    

       

Question:  Interest on capital will be paid to the partners if provided for in the partnership deed but only out of:

(a) Profits

(b) Reserves

(c) Accumulated Profits

(d) Goodwill

Answer: A

 

Question:  Which one of the following items cannot be recorded in the profit and loss appropriation account?

(a) Interest on capital

(b) Interest on drawings

(c) Rent paid to partners

(d) Partner’s salary

Answer: C

 

Question:  Vikas is a partner in a firm. His drawings during the year ended 31st March, 2019 were Rs. 72,000. If interest on drawings is charged @ 9% p.a. the interest charged will be :

(a) Rs.324

(b) Rs.6,480

(c) Rs.3,240

(d) Rs.648

Answer: C

 

Question:  If a fixed amount is withdrawn by a partner on the first day of every month, interest on the total amount is charged for months:

(a) 6

(b) 6 ½

(c) 5 ½

(d) 12

Answer: B

 

Question:  X, Y and Z are partners in the ratio of 4 : 3 : 2. Salary to X Rs. 15,000 and to Z Rs.3,000 omitted and profits distributed. For rectification, now X will be credited :

(a) Rs. 15,000

(b) Rs.1,000

(c) Rs. 12,000

(d) Rs. 7,000

(viii) Guarantee of Profit to a Partner

Answer: D

 

Question:  When a partner is given guarantee by other partners, loss on such guarantee will be borne by :

(a) Partnership firm

(b) All the other partners

(c) Partners who give the guarantee

(d) Partner with highest profit sharing ratio.

Answer: C

 

Question:  If a fixed amount is withdrawn by a partner in each quarter, interest on the total amount is charged for months

(a) 3

(b) 6

(c) 4.5

(d) 7.5

 Answer: B

 

Question:  Anuradha is a partner in a firm. She withdrew Rs.6,000 in the beginning of each quarter during the year ended 31st March, 2019. Interest on her drawings @ 10% p.a. will be :

(a) Rs.900

(b) Rs. 1,200

(c) Rs. 1,500

(d) Rs.600

Answer: C

 

Question:  Which item is recorded on the credit side of partner’s current accounts :

(a) Interest on Partner’s Capitals

(b) Salaries of Partners

(c) Share of profits of Partners

(d) All of the Above

Answer: D

 

Question:  If the Partners’ Capital Accounts are fixed ‘salary payable to partner’ will be recorded:

(a) On the debit side of Partners’ Current Account

(b) On the debit side of Partners’ Capital Account

(c) On the credit side of Partners’ Current Account

(d) None of the above

Answer: C

 

Question:  On 1st June, 2018 a partner introduced in the firm additional capital Rs. 50,000. In the absence of partnership deed, on 31st March, 2019 he will receive interest:

(a) Rs.3,000

(b) Zero

(c) Rs.2,500

(d) Rs. 1,800

Answer: B

 

Question:  In the absence of Partnership Deed:

(a) Interest will not be charged on partner’s drawings

(b) Interest will be charged @ 5% p.a. on partner’s drawings

(c) Interest will be charged @ 6% p.a. on partner’s drawings

(d) Interest will be charged @ 12% p.a. on partner’s drawings

Answer: A

 

Question:  According to Profit and Loss Account, the net profit for the year is Rs.1,50,000. The total interest on partner’s capital is Rs. 18,000 and interest on partner’s drawings is Rs.2,000. The net profit as per Profit and Loss Appropriation Account will be :

(a) Rs.1,66,000

(b) Rs.1,70,000

(c) Rs.1,30,000

(d) Rs.1,34,000

Answer: D

 

Question:  In the absence of agreement, partners are not entitled to :

(a) Salary

(b) Commission

(c) Equal share in profit

(d) Both ((a) and ((b)

Answer: D

 

Question:  For the firm interest on capital is :

(a) Capital Payment

(b) Capital Receipt

(c) Loss

(d) Income

Answer: C

 

Question:  Y is a partner in a firm. He withdrew regularly Rs.3,000 at the end of every month for the six months ending 31st March, 2019. If interest on drawings is charged @ 10% p.a. the interest charged will be :

(a) Rs.375

(b) Rs.450

(c) Rs.525

(d) Rs.900

Answer: A

 

Question:  Z is a partner in a firm. He withdrew regularly Rs.2,000 every month for the six months ending 31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest charged will be:

(a) Rs.480

(b) Rs.280

(c) Rs.200

(d) Rs.240

Answer: D

 

Question:  X and Y are partners in the ratio of 3 : 2. Their capitals are Rs.2,00,000 and Rs. 1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of Rs. 15,000 for the year ended 31st March 2019. As per partnership agreement, interest on capital is treated a charge on profits. Interest on Capital will be :

(a) X Rs. 16,000; Y Rs.8,000

(b) X Rs.9,000; Y Rs.6,000

(c) X Rs. 10,000; Y Rs.5,000

(d) No Interest will be allowed

Answer: A

 

Question:  X and Y are partners in the ratio of 3 : 2. Their capitals are Rs.2,00,000 and Rs. 1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm incurred a loss of Rs.60,000 for the year ended 31st March 2019. Interest on Capital will be:

(a) X Rs. 16,000; Y Rs.8,000

(b) X Rs.8,000; Y Rs.4,000

(c) X Rs. 14,400; Y Rs.9,600

(d) No Interest will be allowed

Answer: D

 

Question:  When partners’ capital accounts are fixed, which one of the following items will be written in the partner’s capital account:

(a) Partner’s Drawings

(b) Additional capital introduced by the partner in the firm

(c) Loan taken by partner from the firm

(d) Loan Advanced by partner to the firm

Answer: B

 

Question:  Interest on partner’s drawings will be credited to

(a) Profit and Loss Account

(b) Profit and Loss Appropriation Account

(c) Partner’s Capital Accounts

(d) None of the Above

Answer: B

 

Question:  X, Y and Z are partners in the ratio of 6 : 4 : 1. In the firm X has guaranteed Z for his minimum profit of Rs. 15,000. Firm’s profit was Rs.99,000. In the firm profit X’s share will be:

(a) Rs.30,000

(b) Rs. 15,000

(c) Rs.48,000

(d) Rs.45,000

Answer: C

 

Question:  P, Q and R are partners in 3 : 2 : 1. R is guaranteed that his share of profit will not be less than Rs.70,000. Any deficiency will be borne by P and Q in the ratio of 2 : 1. Firm’s profit was Rs.2,40,000. Share of P will be :

(a) Rs. 1,00,000

(b) Rs. 1,10,000

(c) Rs. 1,20,000

(d) Rs. 1,02,000

Answer: A

 

Question:  Ajay is a partner in a firm. He withdrew Rs.2,000 per month on the last day of every month during the year ended 31st March, 2019. If interest on drawings is charged @ 9% p.a. the interest charged will be :

(a) Rs.990

(b) Rs. 1,080

(c) Rs. 1,170

(d) Rs.2,160

Answer: A

 

Question:  Sushil is a partner in a firm. He withdrew Rs.4,000 per month in the middle of every month during the year ended 31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest charged will be :

(a) Rs.2,080

(b) Rs. 1,760

(c) Rs.3,840

(d) Rs. 1,920

Answer: D

 

Question:  Features of a partnership firm are :

(a) Two or more persons are carrying common business under an agreement.

(b) They are sharing profits and losses in the fixed ratio.

(c) Business is carried by all or any of them acting for all as an agent.

(d) All of the above.

Answer: D

 

Question:  Following are essential elements of a partnership firm except:

(a) At least two persons

(b) There is an agreement between all partners

(c) Equal share of profits and losses

(d) Partnership agreement is for some business.

Answer: C

 

Question:  Number of partners in a partnership firm may be :

(a) Maximum Two

(b) Maximum Ten

(c) Maximum One Hundred

(d) Maximum Fifty

Answer: D

 

Question:  Liability of partner is :

(a) Limited

(b) Unlimited

(c) Determined by Court

(d) Determined by Partnership Act

Answer: B

 

Question:  P, Q and R sharing profits in the ratio of 2 : 1 : 1 have fixed capitals of Rs.4,00,000, Rs.3,00,000 and Rs.2,00,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals was provided @ 6% instead of 8% p.a. In the adjusting entry :

(a) Cr. P Rs. 1,000; Dr. Q Rs.1,500 and Cr. R Rs.500

(b) Dr. P Rs.500; Cr. Q Rs. 1,500 and Dr. R Rs. 1,000

(c) Cr. R. Rs.500; Dr. Q Rs. 1,500 and Cr. R Rs. 1,000

(d) Dr. P Rs. 1,000; Cr. Q Rs. 1,500 and Dr. R Rs.500

Answer: D

 

Question:  A, B and C sharing profits in the ratio of 2 : 2 : 1 have fixed capitals of Rs.3,00,000, Rs.2,00,000 and Rs. 1,00,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals was provided @ 12% instead of 10% p.a. In the adjusting entry:

(a) Cr. A Rs. 1,200; Dr. B Rs.800 and Dr. C Rs.400

(b) Dr. A Rs. 1,200; Cr. B Rs.800 and Cr. C Rs.400

(c) Cr. A Rs.800; Cr. B Rs.400 and Dr. C Rs. 1,200

(d) Dr. A Rs.800; Dr. B Rs.400 and Cr. C Rs.1,200

Answer: B

 

Question:  P and Q are partners sharing profits in the ratio of 1 : 2. R was manager who received the salary of Rs. 10,000 p.m. in addition to commission of 10% on net profits after charging such commission. Total remuneration to R amounted to Rs. 1,80,000. Profit for the year before charging salary and commission was :

(a) Rs.7,20,000

(b) Rs.6,00,000

(c) Rs.7,80,000

(d) Rs.6,60,000

Answer: C

 

Question:  Anu and Tanu are equal partners with fixed capitals of Rs.2,00,000 and Rs. 1,00,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals @ 8% p.a. was omitted to be provided. In the adjusting entry :

(a) Anu will be credited by Rs. 16,000 and Tanu will be credited by Rs.8,000

(b) Anu will be debited by Rs. 16,000 and Tanu will be debited by Rs.8,000

(c) Anu will be credited by Rs.4,000 and Tanu will be debited by Rs.4,000

(d) Anu will be debited by Rs.4,000 and Tanu will be credited by Rs.4,000

Answer: C

 

Question:  Asha and Vipasha are equal partners with fixed capitals of Rs.5,00,000 and Rs.2,00,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals was provided @ 6% instead of 5% p.a. In the adjusting entry:

(a) Asha will be debited by Rs. 1,500 and Vipasha will be credited by Rs. 1,500;

(b) Asha will be credited by Rs. 1,500 and Vipasha will be debited by Rs. 1,500;

(c) Asha will be debited by Rs.5,000 and Vipasha will be debited by Rs.2,000;

(d) Asha will be credited by Rs.5,000 and Vipasha will be credited by Rs.2,000;

Answer: A

 

Question:  Net profit of a firm is Rs.79,800. Manager is entitled to a commission of 5% of profits after charging his commission. Manager’s Commission will be:

(a) Rs.4,200

(b) Rs.380

(c) Rs.3,990

(d) Rs.3,800

Answer: D

 

Question:  A, B and C are partners. A’s capital is Rs.3,00,000 and B’s capital is Rs.1,00,000. C has not invested any amount as capital but he alone manages the whole business. C wants Rs.30,000 p.a. as salary. Firm earned a profit of Rs.1,50,000. How much will be each partner’s share of profit:

(a) A Rs.60,000; B Rs.60,000; C Rs.Nil

(b) A Rs.90,000; B Rs.30,000; C Rs.Nil

(c) A Rs.40,000; B Rs.40,000 and C Rs.40,000

(d) A Rs.50,000; B Rs.50,000 and C Rs.50,000.

Answer: D

 

Question:  A, B and C are partners in the ratio of 5: 3: 2. Before B’s salary of Rs. 17,000 firm’s profit is Rs.97,000. How much in total B will receive from the firm?

(a) Rs. 17,000

(b) Rs.40,000

(c) Rs.24,000

(d) U 1,000

Answer: D

 

Question:  Which of the following statement is true?

(a) Fixed capital account will always have a credit balance

(b) Current account can have a positive or a negative balance

(c) Fluctuating capital account can have a positive or a negative balance

(d) All of the above

Answer: D

 

Question: An incoming partner pays his share of good will in cash, and profit sharing ration of old partner is changed, Good - will be distributed among old partners

a) According to sacrifice ratio

b) As their old profit ratio

c) According to new ration

d) None of the options

Answer: According to sacrifice ratio

 

Question: When all partners are insolvent creditors will be

a) Paid rate ably

b) Paid fully

c) Taken over by the partners

d) Paid by government

Answer: Paid rate ably

 

Question: If the partnership agreement is silent as to Interest on capital

a) No interest on capital is allowed

b) 6% interest on capital is allowed

c) 5% interest on capital is allowed

d) 2% interest on capital is allowed

Answer: No interest on capital is allowed

 

Question: Where there is no partnership agreement exists between partners, what will be the profit sharing ratio between the partners?

a) Equal

b) Unequal

c) It will depend on a partners capital

d) It will depend on the experience of a partner

Answer: Equal

 

Question: Identify a situation when fixed capitals of the partners may change?

a) When additional capital is introduced

b) When current accounts are opened

c) When drawings are made by the partners

d) When there is loss in the business

Answer: When additional capital is introduced

 

Question: Registration of partnership firm is _________-

a) Optional

b) Not Allowed

c) Under Companies Act 2013

d) Compulsory

Answer: Optional

 

Question: Under fluctuation method of capital, what is the treatment of interest on capital?

a) Credited to capital account

b) Debited to capital account

c) No treatment or adjustment needed

d) Credited to current account

Answer: Credited to capital account

 

Question: Money withdrawn by a partner on 1st July Rs. 20,000 and interest on drawings is fixed @ 6% (Books are closed on 31st March.) The amount of interest will be Rupees

a) 900

b) 600

c) 1200

d) No interest will be charged.

Answer: 900

 

Question: Which of the following is not recorded in the partners current accounts?

a) Drawings

b) Interest on Drawings

c) Partners salaries

d) Administrative expenses

Answer: Drawings

 

Question: Which Section of the Partnership Act defines Partnership as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all?

a) Section 4

b) Section 13

c) Section 48

d) Section 61

Answer: Section 4 

 

Question: Partnership business must be

a) Lawful

b) Illegal

c) Voluntary

d) Immoral

Answer: lawful

 

Question: Profit and Loss appropriation account is differ from Profit and Loss account as it is prepared by

a) Only partnership firm

b) Only sole proprietorship

c) All business firms

d) Only company

Answer: Only partnership firm 

 

Question: Interest on capital is calculated on

a) Opening capital

b) Closing capital

c) Both Closing capital and Profit

d) Net Profit

Answer: Opening capital

 

Question: Under fluctuating Capital method how many accounts of each partner is maintained

a) 1

b) 4

c) 3

d) 5

Answer: 1

 

Question: Partners collectively are called

a) Firm

b) Company

c) Business

d) Proprietorship

Answer: Firm

 

Question: When interest on capital is paid whether there is profit or loss it is known as

a) Charge against profit

b) Appropriation of profit

c) Salary

d) None of the options

Answer: Charge against profit

 

Question: A partner that doesnt take part in the management of business, but he/she has made investment in business and liable to creditors of the business is known as

a) Dormant partner

b) Junior partner

c) Nominal partner

d) Active partner

Answer: Dormant partner

 

Question: In which of the following types of partnership the liability of at least one partner is unlimited whereas the liability of other partners is limited?

a) Limited partnership

b) Partnership-at-will

c) Particular partnership

d) General partnership

Answer: Limited partnership

 

Question: A Sleeping Partner is also known as

a) Dormant Partner

b) Active Partners

c) Nominal Partners

d) Minor Partner

Answer: Dormant Partner

 

Question: It is better to have the agreement in writing to avoid any ___

a) Dispute

b) Case

c) Loss

d) Audit

Answer: Dispute 

 

Question: Which one of the following is the method of goodwill valuation?

a) Super profit method

b) Average capital method

c) Super capital method

d) Capital intensity method

Answer: Super profit method

 

Question: Which of the following is not a content of partnership deed?

a) Interest on Bank Loan

b) Interest on Drawings

c) Interest on Partners Loan

d) Interest on Capital

Answer: Interest on Bank Loan

 

Question: Profit and Loss Appropriation Account is prepared ______

a) After calculating Net Profit

b) Before calculating Net Profit

c) After calculating Gross Profit

d) Before calculating Gross Profit

Answer: After calculating Net Profit

 

Question: If dates of drawings are not given, interest on drawings is charged for _______ months

a) 6

b) 3

c) 9

d) 12

Answer: 6

 

Question: Salary paid to partner should be

a) None of these

b) Debited to his current Account

c) Credited to his current Account

d) Credited to profit & loss appropriation Account

Answer: None of these

 

Question: An account operated to ascertain the loss or gain at the death of a partner is called

a) Revaluation account

b) Realization account

c) Execution account

d) Deceased partner Account

Answer: Revaluation account

 

Question: Loss on realization is

a) Debited to partners capital Account

b) Credited to partners capital Account

c) Debited to realization Account

d) Credited to realization Account

Answer: Debited to partners capital Account

 

Question: On Dissolution of a firm, Bank Overdraft is transferred to

a) Realisation Account

b) Cash Account

c) Partners Capital Account

d) Current Account

Answer: Realisation Account

 

Question: Interest on capital Allowed in Partnership firm

a) Invalid

b) Valid

c) 0.1

d) 0.05

Answer: Invalid

 

Question: How many minimum persons require for a valid partnership

a) 2

b) 3

c) 4

d) None of the options

Answer: 2 

 

Question: Which Indian Act define Partnership Rules Terms & Conditions

a) Indian Partnership Act,1932

b) Indian Partnership Act,1935

c) Indian Partnership Act,1940

d) Indian Partnership Act,1949

Answer: Indian Partnership Act,1932

 

Question: Any partner who investments in the business but does not take active part in the business is

a) Sleeping partner

b) Secret partner

c) Active partner

d) Nominal partner

Answer: Sleeping partner

 

Question: In the absence of an agreement profit and loss are divided by partners in the ratio of

a) Equally

b) Capital

c) Time devoted by each partners.

d) None of the options

Answer: Equally

 

Question: In the absence of an agreement, Interest on loan advanced by the partner to the firm is allowed at the rate of

a) 6%

b) 5%

c) 12%

d) 9%

Answer: 6%

 

Question: Current accounts of the partners should be opened when the capitals are

a) Fixed

b) Fluctuating

c) Either fixed or fluctuating

d) None of the options

Answer: Fixed

 

Question: The members of partnership firm are individually called as

a) Partner

b) Director

c) Investor

d) Manager

Answer: Partner

 

Question: The written agreement of partnership is called

a) Partnership deed

b) Articles of association

c) Memorandum of association

d) Certificate of incorporation

Answer: Partnership deed

 

Question: Partnership is formed by the partners by

a) Written or oral

b) Written agreement

c) Oral agreement

d) None of the options

Answer: Written or oral

 

Question: Liability of partners in a partnership business is

a) Un-limited

b) Limited

c) Limited & unlimited

d) None of the options

Answer: Un-limited

 

Question: Under fixed capital methods, profit will be credited to

a) Current Account

b) Capital Account

c) Drawings

d) Profit & Loss

Answer: Current Account

 

Question: The object of partnership is to

a) Earn profit

b) Not to earn profit

c) Welfare of members

d) None of the options

Answer: Earn profit

 

Question. Which one of the following is NOT an essential feature of a partnership?

(a) There must be an agreement

(b) There must be a business

(c) The business must be carried on for profits

(d) The business must be carried on by all the partners

Answer: D

 

Question. X, Y and Z are partners sharing profits and losses equally. Their capital balances on March, 31,2012 are Rs.80,000, Rs.60,000 and Rs.40,000 respectively. Their personal assets are worth as follows : X — Rs.20,000, Y— Rs. 15,000 and Z— Rs. 10,000. The extent of their liability in the firm would be :

(a) X— Rs. 80,000 : T— Rs.60,000 : and Z— Rs.40,000

(b) X— Rs.20,000 : Y— Rs.15,000 : and Z— Rs.10,000

(c) X— Rs. 1,00,000 : Y— Rs.75,000 : and Z— Rs.50,000

(d) Equal

Answer: B

 

Question. Sangeeta and Ankita are partners in a firm. Sangeeta’s capital is Rs.70,000 and Ankita’s Capital is Rs.50,000. Firm’s profit is Rs.60,000. Ankita share in profit will be:

(a) Rs.25,000

(b) Rs.30,000

(c) Rs.35,000

(d) Rs.20,000

Answer: B

 

Question. Net profit of a firm is Rs.49,500. Manager is entitled to a commission of 10% on profits before charging his commission. Manager’s Commission will be:

(a) Rs.4,950

(b) Rs.4,500

(c) Rs.5,500

(d) Rs.495

Answer: A

 

Question. Guarantee given to partner ‘A’ by the other partners ‘B & C’ means :

(a) In case of loss ‘A’ will not contribute towards that loss.

(b) In case of insufficient profits ‘A’ will receive only the minimum guarantee amount.

(c) In case of loss or insufficient profits ‘A’ will withdraw the minimum guarantee amount.

(d) All of the above.

Answer: C

 

Question. P, Q and R are partners in a firm in 3 : 2 : 1. R is guaranteed that he will get minimum of Rs.20,000 as his share of profit every year. Firm’s profit was Rs.90,000. Partners will get:

(a) P Rs.40,000; Q Rs.30,000; R Rs.20,000;

(b) P Rs.42,500; Q Rs.27,500; R Rs.20,000;

(c) P Rs.45,000; Q Rs.30,000; R Rs. 15,000;

(d) P Rs.42,000; Q Rs.28,000; R Rs.20,000;

Answer: D

 

Question.  A and B are partners in a pertnership firm without any agreement. A has withdrawn Rs.50,0()0 out of his Capital as drawings. Interest on drawings may be charged from A by the firm :

(a) @ 5% Per Annum

(b) @ 6% Per Annum

(c) @ 6% Per Month

(d) No interest can be charged

Answer: D

 

Question. A and B are partners in a partnership firm without any agreement. A devotes more time for the firm as compare to B. A will get the following commission in addition to profit in the firm’s profit:

(a) 6% of profit

(b) 4% of profit

(c) 5% of profit

(d) None of the above

Answer: D

 

Question. In case of partnership the act of any partner is :

(a) Binding on all partners

(b) Binding on that partner only

(c) Binding on all partners except that particular partner

(d) None of the above

Answer: A

 

Question. Which of the following statement is true?

(a) a minor cannot be admitted as a partner

(b) a minor can be admitted as a partner, only into the benefits of the partnership

(c) a minor can be admitted as a partner but his rights and liabilities are same of adult partner

(d) none of the above

Answer: B

 

Question. The relation of partner with the firm is that of:

(a) An Owner

(b) An Agent

(c) An Owner and an Agent

(d) Manager

Answer: C

 

Question. According to Profit and Loss Account, the net profit for the year is Rs.4,20,000. Salary of a partner is Rs.5,000 per month and the commission of another partner is Rs. 10,000. The interest on drawings of partners is Rs.4,000. The net profit as per Profit and Loss Appropriation Account will be :

(a) Rs.3,54,000

(b) Rs.3,46,000

(c) Rs.4,09,000

(d) Rs.4,01,000

Answer: A

 

Question. A and B are partners. According to Profit and Loss Account, the net profit for the year is Rs.2,00,000. The total interest on partner’s drawings is Rs.1,000. A’s salary is Rs.40,000 per year and B’s salary is Rs.3,000 per month. The net profit as per Profit and Loss Appropriation Account will be :

(a) Rs.1,23,000

(b) Rs.1,25,000

(c) Rs.1,56,000

(d) Rs.1,58,000

Answer: B

 

Question. X and Y are partners in the ratio of 3 : 2. Their capitals are Rs.2,00,000 and Rs. 1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of Rs. 15,000 for the year ended 31st March 2019. Interest on Capital will be :

(a) X Rs. 16,000; Y Rs. 8,000

(b) X Rs.9,000; Y Rs.6,000

(c) X Rs. 10,000; Y Rs.5,000

(d) No Interest will be allowed

Answer: C

 

Question. A and B contribute Rs. 1,00,000 and Rs.60,000 respectively in a partnership firm by way of capital on which they agree to allow interest @ 8% p.a. Their profit or loss sharing ratio is 3 :2. The profit at the end of the year was Rs.2,800 before allowing interest on capital. If there is a clear agreement that interest on capital will be paid even in case of loss, then B’s share will be:

(a) Profit Rs.6,000

(b) Profit Rs.4,000

(c) Loss Rs.6,000

(d) Loss Rs.4,000

(vi) Interest on Drawings

Answer: D

 

Question. Partners are supposed to pay interest on drawing only when by the

(a) Provided, Agreement

(b) Permitted, Investors

(c) Agreed, Partners

(d) ‘A’ & ‘C’ above

Answer: D

 

Question. If equal amount is withdrawn by a partner in the beginning of each month during a period of 6 months, interest on the total amount will be charged for months

(a) 2.5

(b) 3

(c) 3.5

(d) 6

Answer: C

 

Question. If equal amount is withdrawn by a partner in the end of each month during a period of 6 months, interest on the total amount will be charged for…………… months

(a) 2.5

(b) 3

(c) 3.5

(d) 6

Answer: A

 

Question. X, Y and Z are equal partners with fixed capitals of Rs.2,00,000, Rs.3,00,000 and Rs.4,00,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals @ 8% p.a. was omitted to be provided. In the adjusting entry:

(a) Dr. X and Cr. Y by Rs. 8,000

(b) Cr. X and Dr. Z by Rs.8,000

(c) Dr. X and Cr. Z by Rs. 8,000

(d) Cr. X and Dr. Y by Rs.8,000

Answer: C

 

Question. P, Q and R are equal partners with fixed capitals of Rs.5,00,000, Rs.4,00,000 and Rs.3,00,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals was provided @ 7% instead of 9% p.a. In the adjusting entry:

(a) P will be credited by Rs.2,000 and Q will be debited by Rs.2,000.

(b) P will be debited by Rs.2,000 and Q will be credited by Rs.2,000.

(c) P will be debited by Rs.2,000 and R will be credited by Rs.2,000.

(d) P will be credited by Rs.2,000 and R will be debited by Rs.2,000.

Answer: D

 

Question. In a partnership firm, a partner withdrew Rs.5,000 per month on the first day of every month during the year for personal expenses. If interest on drawings is charged @ 6% p.a. the interest charged will be:

(a) Rs.3,600

(b) Rs. 1,950

(c) Rs. 1,800

(d) Rs. 1,650

Answer: B

 

Question. If fixed amount is withdrawn by a partner on the first day of each quarter, interest on the total amount is charged for months

(a) 4.5

(b) 6

(c) 7.5

(d) 3

Answer: C

 

Question. If a fixed amount is withdrawn by a partner on the last day of each quarter, interest on the total amount is charged for months

(a) 6

(b) 4.5

(c) 7.5

(d) 3

Answer: B

 

Question. X, Y and Z are partners in the ratio of 5 : 4 : 3. 2fhas given to Z a guarantee of minimum Rs. 10,000 profit. For the year ending 31st March, 2019, firm’s profit is Rs.28,800. X’s share in profit will be :

(a) Rs.9,200

(b) Rs.9,600

(c) Rs.7,200

(d) Rs. 12,000

Answer: A

 

Question. E, F and G share profits in the ratio of 4 : 3 : 2. G is given a guarantee that his share of profits will not be less than Rs.75,000. Deficiency if any, would be borne by E and F equally Firm’s profit was Rs.2,70,000. F’s share of profit will be :

(a) Rs.90,000

(b) Rs.82,500

(c) Rs.97,500

(d) Rs.75,000

Answer: B

 

Question. X, Y and Z are partners in 5 : 4 : 1. Z is guaranteed that his share of profit will not be less than Rs. 80,000. Any deficiency will be borne by X and Y in 3 : 2. Firm’s profit was Rs.5,60,000. How much deficiency will be borne by Y :

(a) 1 2,14,400

(b) Rs. 14,400

(c) Rs. 2,09,600

(d) Rs.9,600

Answer: D

 

Question. Interest on partner’s capitals will be credited to :

(a) Profit and Loss Account

(b) Profit and Loss Appropriation Account

(c) Interest Account

(d) Partner’s Capital Accounts

Answer: D

 

Question. For the firm interest on drawings is

(a) Capital Payment

(b) Expenses

(c) Capital Receipt

(d) Income

Answer: D

 

Question. Partnership Deed is also called _____

(a) Prospectus

(b) Articles of Association

(c) Principles of Partnership

(d) Articles of Partnership

Answer: D

 

Question. Which of the following is not incorporated in the Partnership Act?

(a) profit and loss are to be shared equally

(b) no interest is to be charged on capital

(c) all loans are to be charged interest @6% p.a.

(d) all drawings are to be charged interest

Answer: D

 

Question. When is the Partnership Act enforced?

(a) when there is no partnership deed

(b) where there is a partnership deed but there are differences of opinion between the partners

(c) when capital contribution by the partners varies

(d) when the partner’s salary and interest on capital are not incorporated in the partnership deed

Answer: A

 

Question. Which accounts are opened when the capitals are fluctuating?

(a) Only Capital Accounts

(b) Only Current Accounts

(c) Capital Accounts as well as Current Accounts

(d) Either Capital Accounts or Current Accounts

Answer: D

 

Question. Balance of partner’s current accounts are :

(a) Debit balance

(b) Credit balances

(c) Debit or Credit balances

(d) Neither Debit nor credit balances

Answer: C

 

Question. X, Y and Z are partners in a firm. At the time of division of profit for the year, there was dispute between the partners. Profit before interest on partner’s capital was Rs.6,000 and Y determined interest @24% p.a. on his loan of Rs. 80,000. There was no agreement on this point. Calculate the amount payable to X, Y and Z respectively.

(a) Rs.2,000 to each partner.

(b) Loss of Rs.4,400 for X and Z; Twill take Rs.14,800.

(c) Rs.400 for X, Rs.5,200 for Land Rs.400 for Z.

(d) None of the above.

Answer: C

 

Question. X, Y and Z are partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profit before interest on partner’s capital was Rs.6,00,000 and Z demanded minimum profit of Rs.5,00,000 as his financial position was not good. However, there was no written agreement on this point.

(a) Other partners will pay Z the minimum profit and will share the loss equally.

(b) Other partners will pay Z the minimum profit and will share the loss in capital ratio.

(c) X and Y will take Rs.50,000 each and Z will take Rs.5,00,000.

(d) Rs.2,00,000 to each of the partners.

Answer: D

 

Question.  On 1st January 2019, a partner advanced a loan of Rs. 1,00,000 to the firm. In the absence of agreement, interest on loan on 31st March, 2019 will be :

(a) Nil

(b) Rs. 1,500

(c) Rs.3,000

(d) Rs.6,000

Answer: B

 

Question. P and Q sharing profits in the ratio of 2: 1 have fixed capitals of Rs.90,000 and Rs.60,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals was provided @ 6% instead of 8% p.a. In the adjusting entry:

(a) P will be credited by Rs. 1,800 and Q will be credited by Rs. 1,200;

(b) P will be debited by Rs.200 and Q will be credited by Rs.200;

(c) P will be credited by Rs.200 and Q will be debited by Rs.200;

(d) P will be debited by Rs. 1,800 and Q will be debited by Rs. 1,200;

Answer: B

 

Question. A and B sharing profits in the ratio of 7 : 3 have fixed capitals of Rs.2,00,000 and Rs. 1,00,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals was provided @ 12% instead of 10% p.a. In the adjusting entry :

(a) A will be debited by Rs.4,000 and B will be debited by Rs.2,000;

(b) A will be credited by Rs.4,000 and B will be credited by Rs.2,000;

(c) A will be debited by Rs.200 and B will be credited by Rs.200;

(d) A will be credited by Rs.200 and B will be debited by Rs.200;

Answer: D

 

Question. It the Partner’s Capital Accounts are fixed, interest on capital will be recorded:

(a) On the credit side of Current Account

(b) On the credit side of Capital Account

(c) On the debit side of Current Account

(d) On the debit side of Capital Account

Answer: A

 

Question. If the Partner’s Capital Accounts are fluctuating, in that case following item/items will be recorded in the credit side of capital accounts:

(a) Interest on capital

(b) Salary of partners

(c) Commission of partners

(d) All of the above

Answer: D

 

Question: In the absence of partnership deed remuneration or salary to the partners

(a) Not allowed

(b) Allowed

(c) 25% of profit

(d) None of the options

Answer: Not allowed

 

Question: In which partnership deed, all the liabilities of partners are limited

(a) General Partnership

(b) Limited Partnership

(c) Special Partnership

(d) Legal Partnership

Answer: General Partnership

 

Question: The partnership that is made for fulfilling a particular task, it is called

(a) Special Partnership

(b) Legal Partnership

(c) General Partnership

(d) None of the options

Answer: Special Partnership

 

Question: The partnership that is made in accordance with the Act, is called

(a) Legal Partnership

(b) Special Partnership

(c) General Partnership

(d) None of the options

Answer: Legal Partnership

 

Question: The partner whose liability is limited is called

(a) General Partner

(b) Dormant Partner

(c) Special Partner

(d) None of the options

Answer: General Partner

 

Question: Partners current account are opened when their capital accounts are

(a) Fixed

(b) Fluctuating

(c) General

(d) None of the options

Answer:  Fixed

 

Question: In the absence of an agreement in partnership, the partnership act provides for

(a) Interest on Loan

(b) Interest on Capital

(c) Interest on Drawing

(d) None of the options

Answer: Interest on Loan

 

Question: Interest payable on the capitals of partners is written

(a) In profit & Loss appropriation A/c

(b) In Profit & Loss Account

(c) In Partners Salary Account

(d) None of the options

Answer: in profit & Loss appropriation A/c

 

Question: No interest is paid on capital unless all partners are not

(a) Agreed

(b) Not Agreed

(c) Some partners agreed

(d) None of the options

Answer: Agreed

 

Question: Interest on drawings charges to keep control on

(a) Unnecessary Drawings

(b) Unnecessary Exp.

(c) Unnecessary capital

(d) None of the options

Answer: Unnecessary Drawings

 

Question: In case of partnership business, a separate capital account is maintained for

(a) Each Partner

(b) Special Partner

(c) Sleeping Partner

(d) None of the options

Answer: Each Partner 

 

Question: The capital accounts of partners may be maintained by following any of the following two methods:

(a) Fixed Capital Accounts

(b) Fluctuating Capital Accounts

(c) Both

(d) None of the options

Answer: Fixed Capital Accounts

 

Question: How many accounts prepared for partners under Fixed Capital Accounts method

(a) 2

(b) 3

(c) 4

(d) 5

Answer: 2

 

Question: Under Fixed Capital Accounts method Balance of Capital account will always show

(a) A credit balance

(b) A debit balance

(c) Dr and Cr. Both

(d) None of the options

Answer: A credit balance

  

Question: Which accounts prepared for partners under Fixed Fluctuating Capital Accounts method

(a) Capital Account

(b) Current Account

(c) Salary A/c

(d) None of the options

Answer: Capital Account

 

Question: Interest on partners capital will be allowed only when

(a) Mentioned in the partnership deed.

(b) 1 Partner Agreed

(c) Special Partner agreed

(d) None of the options

Answer: Mentioned in the partnership deed.

 

Question: Interest on Capital is always calculated on the

(a) Opening Capital

(b) Profit of Partners

(c) Drawings on Partners

(d) None of the options

Answer: Opening Capital

 

Question: When date of Drawings is not given, Interest is calculated for a period of

(a) 6 months

(b) 9 months

(c) 12 months

(d) None of the options

Answer: 6 months

 

Question: When different amount are withdrawn on different date, Which methods to calculate the amount of Interest on Drawing

(a) Simple Interest Method

(b) Product Method

(c) Both

(d) None of the options

Answer: Simple Interest Method

 

Question: Direct Method will be used only , when

(a) Amount should be same throughout the period

(b) Date of Drawings should be same throughout the period

(c) Drawings should be made throughout the period regularly without any gap.

(d) All of the options

Answer: Amount should be same throughout the period

 

Question: Liability of a partner is

(a) Limited to capital

(b) Limited

(c) Unlimited

(d) None of the options

Answer: Limited to capital

 

Question: Partnership deed is also called

(a) Articles of partnership

(b) Articles of association

(c) Principals of partnership

(d) None of the options

Answer: Articles of partnership

 

Question: The relationship of partners with the firm is

(a) As Agent

(b) As Manager

(c) As Servant

(d) None of the options

Answer: As Agent

 

Question: In which year did the partnership act passed

(a) 1932

(b) 1956

(c) 1947

(d) 1952

Answer: 1932

 

Question: Partnership agreement can be

(a) Oral or Written

(b) Oral

(c) Written

(d) None of the options

Answer: Oral or Written

 

Question: The Interest on partners capital account is to be credited to

(a) Partners Capital A/c

(b) Profit & loss A/c

(c) Interest A/c

(d) None of the options

Answer: Partners Capital A/c

 

Question: In the partnership firm, profit and losses are shared

(a) As per agreement

(b) Equally

(c) 25% Each

(d) None of the options

Answer: As per agreement

 

Question: In the absence of an agreement in partnership, the partnership act provides for

(a) Interest on Loan

(b) Interest on Capital

(c) Interest on Drawing

(d) None of the options

Answer: Interest on Loan

 

Question: In the absence of partnership deed remuneration or salary to the partners

(a) Not allowed

(b) Allowed

(c) 25% of profit

(d) None of the options

Answer: Not allowed

 

Question: Which accounts prepared for partners under Fixed Fluctuating Capital Accounts method

(a) Capital Account

(b) Current Account

(c) Salary A/c

(d) None of the options

Answer: Capital Account

 

Question: What should be the minimum number of persons to form a Partnership :

(a) 2

(b) 7

(c) 10

(d) 20

Answer: A

 

Question: Every partner is bound to attend diligently to his ______ in the conduct of the business.

(a) Rights

(b) Meetings

(c) Capital

(d) Duties

Answer: D

 

Question: Forming a Partnership Deed is :

(a) Mandatory

(b) Mandatory in Writing

(c) Not Mandatory

(d) None of the Above

Answer: C

 

Question: In the absence of Partnership Deed, the interest is allowed on partner’s capital:

(a) @ 5% p.a.

(b) @ 6% p.a.

(c) @ 12% p.a.

(d) No interest is allowed

Answer: D

 

Question: In the absence of a partnership deed, the allowable rate of interest on partner’s loan account will be :

(a) 6% Simple Interest

(b) 6% p.a. Simple Interest

(c) 12% Simple Interest

(d) 12% Compounded Annually

Answer: B

 

Question: A and B are partners in partnership firm without any agreement. A has given a loan of Rs.50,000 to the firm. At the end of year loss was incurred in the business. Following interest may be paid to A by the firm :

(a) @5% Per Annum

(b) @ 6% Per Annum

(c) @ 6% Per Month

(d) As there is a loss in the business, interest can’t be paid

Answer: B

 

Question: If any loan or advance is provided by partner then, balance of such Loan Account should be transferred to :

(a) B/S Assets side

(b) B/S Liability Side

(c) Partner’s Capital A/c

(d) Partner’s Current A/c

Answer: B

 

Question: A, B and C were Partners with capitals of Rs.50,000; Rs.40,000 and Rs.30,000 respectively carrying on business in partnership. The firm’s reported profit for the year was Rs. 80,000. As per provision of the Indian Partnership Act, 1932, find out the share of each partner in the above amount after taking into account that no interest has been provided on an advance by A of Rs.20,000 in addition to his capital contribution.

(a) Rs.26,267 for Partner B and C and Rs.27,466 for Partner A.

(b) Rs.26,667 each partner.

(c) Rs.33,333 for A Rs.26,667 for B and Rs.20,000 for C.

(d) Rs.30,000 each partner.

Answer: A

 

Question: A partner introduced additional capital of Rs. 30,000 and advanced a loan of Rs.40,000 to the firm at the beginning of the year. Partner will receive year’s interest :

(a) Rs.4,200

(b) Rs.2,400

(c) Nil

(d) Rs. 1,800

Answer: B

 

Question: In the absence of partnership deed, partners share profits or losses :

(a) In the ratio of their Capitals

(b) In the ratio decided by the court

(c) Equally

(d) In the ratio of time devoted

Answer: C

 

Question: In the absence of express agreement, interest @ 6% p.a. is provided:

(a) On opening balance of partner’s capital accounts

(b) On closing balance of partner’s capital accounts

(c) On loan given by partners to the firm

(d) On opening balance of partner’s current accounts

Answer: C

 

Question: Which of the following items are recorded in the Profit & Loss Appropriation Account of a partnership firm?

(a) Interest on Capital

(b) Salary to Partner

(c) Transfer to Reserve

(d) All of the above

Answer: D

 

Question: Is rent paid to a partner appropriation of profits?

(a) It is appropriation of profit

(b) It is not appropriation of profit

(c) If partner’s contribution as capital is maximum

(d) If partner is a working partner.

Answer: B

 

Question: According to Profit and Loss Account, the net profit for the year is Rs. 1,40,000. The total interest on partner’s capital is Rs. 8,000 and a partner is to be allowed commission of Rs.5,000. The total interest on partner’s drawings is Rs.1,200. The net profit as per Profit and Loss Appropriation Account will be :

(a) Rs.1,28,200

(b) Rs.1,44,200

(c) Rs.1,25,800

(d) Rs.1,41,800

Answer: A

 

Question: Ram and Shy am are partners in the ratio of 3: 2. Before profit distribution, Ram is entitled to 5% commission of the net profit (after charging such commission). Before charging commission, firm’s profit was Rs.42,000. Shyam’s share in profit will be:

(a) Rs. 16,000

(b) Rs.24,000

(c) Rs.26,000

(d) Rs. 16,400

Answer: A

 

Question: A, B and C are partners in a firm without any agreement. They have contributed Rs.50,000, Rs.30,000 and Rs.20,000 by way of capital in the firm. A was unable to work for six months in a year due to illness. At the end of year, firm earned a profit of Rs. 15,000. A’s share in the profit will be :

(a) Rs.7,500

(b) Rs.3,750

(c) Rs.5,000

(d) Rs.2,500

Answer: C

 

Question: In a partnership firm, partner A is entitled a monthly salary of Rs.7,500. At the end of the year, firm earned a profit of Rs.75,000 after charging A’s salary. If the manager is entitled a commission of 10% on the net profit after charging his commission, Manager’s commission will be :

(a) Rs.7,500

(b) Rs. 16,500

(c) Rs.8,250

(d) Rs. 15,000

Answer: D

 

Question: Seeta and Geeta are partners sharing profits and losses in the ratio 4:1. Meeta was manager who received the salary of Rs.4,000 p.m. in addition to a commission of 5% on net profits after charging such commission. Profit for the year is Rs. 6,78,000 before charging salary. Find the total remuneration of Meeta.

(a) Rs.78,000

(b) Rs.88,000

(c) Rs.87,000

(d) Rs.76,000

Answer: A

 

Question: Which accounts are opened when the capitals are fixed?

(a) Only Capital Accounts

(b) Only Current Accounts

(c) Capital Accounts as well as Current Accounts

(d) Either Capital Accounts or Current Accounts

Answer: C

 

Question: If the Partner’s Capital Accounts are fluctuating, in that case “transfer to reserves” will be recorded in the

(a) Profit and Loss Account

(b) Profit and Loss Appropriation Account

(c) Partner’s Capital Accounts

(d) None of the Above

Answer: B

 

Question: Interest on Partner’s drawings will be debited to :

(a) Profit and Loss Account

(b) Profit and Loss Appropriation Account

(c) Partner’s Current Account

(d) Interest Account

Answer: C

 

Question: When partners’ capital accounts are floating, which one of the following items will be written on the credit side of the partners’ capital accounts? :

(a) Interest on drawings

(b) Loan advanced by partner to the firm

(c) Partner’s share in the firm’s loss

(d) Salary to the active partners

Answer: D

 

Question: On 1st April 2018, Ts Capital was Rs.2,00,000. On 1st October 2018, he introduces additional capital of Rs. 1,00,000. Interest on capital @ 6% p.a. on 31 st March, 2019 will be:

(a) Rs.9,000

(b) Rs. 18,000

(c) Rs. 10,500

(d) Rs.15,000

Answer: D

 

Question: X and Y are partners in the ratio of 3: 2. Their capitals are Rs.2,00,000 and 1 Rs. 1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of Rs. 60,000 for the year ended 31st March 2019. Interest on Capital will be:

(a) X Rs. 16,000; Y Rs.8,000

(b) X Rs.8,000; Y Rs.4,000

(c) X Rs. 14,400; Y Rs.9,600

(d) No Interest will be allowed

Answer: A

 

Question: Where will you record interest on drawings:

(a) Debit Side of Profit & Loss Appropriation Account

(b) Credit Side of Profit & Loss Appropriation Account

(c) Credit Side of Profit & Loss Account

(d) Debit Side of Capital/Current Account only.

Answer: B

 

Question: How would you close the Partner’s Drawing Account:

(a) By transfer to Capital or Current Account Debit Side.

(b) By transfer to Capital Account Credit Side.

(c) By transfer to Current Account Credit Side.

(d) Either ‘B’ or ‘C

Answer: A

 

Question: If date of drawings of the partner’s is not given in the question, interest is charged for how much time (a) 1 month

(b) 3 months

(c) 6 months

(d) 12 months

Answer: C

 

Question: If a fixed amount is withdrawn by a partner on the last day of every month, interest on the total amount is charged for ___ months:

(a) 12

(b) 6 ½

(c) 5 ½

(d) 6

Answer: A

 

Question: If a fixed amount is withdrawn by a partner in the middle of every month, interest on the total amount is charged for ____ months

(a) 6

(b) 6 ½

(c) 5 ½

(d) 12

Answer: B

 

Question: Bipasa is a partner in a firm. She withdrew Rs.6,000 at the end of each quarter during the year ended 31st March, 2019. Interest on her drawings @ 10% p.a. will be :

(a) Rs.900

(b) Rs.600

(c) Rs. 1,500

(d) Rs. 1,200

Answer: A

 

Question: Charulata is a partner in a firm. She withdrew Rs. 10,000 in each quarter during the year ended 31st March, 2019. Interest on her drawings @ 9% p.a. will be:

(a) Rs. 1,350

(b) Rs.2,250

(c) Rs.900

(d) Rs. 1,800

Answer: D

 

Question: If equal amount is withdrawn by a partner in each month during a period of 6 months, interest on the total amount will be charged for ........... months

(a) 6

(b) 3

(c) 2.5

(d) 3.5

Answer: B

 

Question: X is a partner in a firm. He withdrew regularly Rs. 1,000 at the beginning of every month for the six months ending 31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest charged will be :

(a) Rs.240

(b) Rs.140

(c) Rs.100

(d) Rs.120

Answer: B

 

Question: A partner withdraws Rs. 8,000 each on 1st April and 1st Oct. Interest on his drawings @ 6% p.a. on 31st March will be:

(a) Rs.480

(b) Rs.720

(c) Rs.240

(d) Rs.960

Answer: B

 

Question: A partner draws Rs.2,000 each on 1st April 2018, 1st July 2018, 1st October, 2018 and 1st January 2019. For the year ended 31st March, 2019 interest on drawings @ 8% per annum will be:

(a) Rs.540

(b) Rs.320

(c) Rs.960

(d) Rs.400

Answer: D

 

Question: A partner withdraws from firm Rs.7,000 at the end of each month. At the rate of 6% per annum total interest will be:

(a) Rs.5,040

(b) Rs.2,310

(c) Rs.3,570

(d) Rs. 1,370

Answer: B

 

Question: Sony and Romy are equal partners with fixed capitals of Rs.4,00,000 and Rs.3,00,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals was provided @ 8% instead of 10% p.a. In the adjusting entry:

(a) Sony will be credited by Rs.8,000 and Romy will be credited by Rs.6,000.

(b) Sony will be debited by Rs.8,000 and Romy will be debited by Rs.6,000.

(c) Sony will be debited by Rs. 1,000 and Romy will be credited by Rs. 1,000.

(d) Sony will be credited by Rs. 1,000 and Romy will be debited by Rs. 1,000.

Answer: D

 

Question: X and Yare partners in the ratio of 3: 2. Their fixed capitals are Rs.2,00,000 and Rs. 1,00,000 respectively. After closing the accounts for the year ending 31st March, 2019, it was discovered that interest on capital was allowed @ 12% instead of 10% per annum. By how much amount X will be debited/credited in the adjustment entry: .

(a) Rs.600 (Debit)

(b) Rs.400 (Credit)

(c) Rs.400 (Debit)

(d) Rs.600 (Credit)

Answer: C

 

Question: A, Y and Z are equal partners with fixed capitals of Rs.5,00,000, Rs.3,00,000 and Rs. 1,00,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals was provided @ 6% instead of 5% p.a. In the adjusting entry:

(a) Dr. X and Cr. Z by Rs.2,000

(b) Cr. Z and Dr. Z by Rs.2,000

(c) Dr. Z and Cr. Y by Rs.2,000

(d) Cr. Z and Dr. Y by Rs.2,000

Answer: A

 

 

ASSERTION –REASON BASED QUESTIONS

Question. Read the following Assertion (a) and Reason(R) . Choose one of the correct alternatives given below.
Assertion (a) : In a specified situation, interest on the Partners’ Capital is shown in the Profit and Loss Account.
Reason(R) : Interest on capital is transferred to the debit of the Profit and Loss Account if it is specified to be a charge.
Alternatives:
(a) Both Assertion (a) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (a) .
(b) Both Assertion (a) and Reason (R) are true and Reason (R) is not the correct explanation Assertion (a) .
(c) Assertion (a) is true but the Reason (R) is false
(d) Assertion (a) is false but the Reason (R) is true
Answer : B

Question. Read the following Assertion (a) and Reason(R) . Choose one of the correct alternatives given below.
Assertion (a) : Adith, a partner in the firm gave a loan of ₹. 50,000 to the firm without an agreement to rate of interest. Interest on Loan by Adith is to be allowed at @6% p.(a)
Reason (R) : In the absence of the Partnership Deed, Provisions of the Partnership act 1932, apply. Thus interest on a loan to a Partner should be charged @6% p.a
Alternatives:
(a) Both Assertion (a) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (a) .
(b) Both Assertion (a) and Reason (R) are true and Reason (R) is not the correct explanation for Assertion (a) .
(c) Assertion (a) is true but the Reason (R) is false
(d) Assertion (a) is false but the Reason (R) is true
Answer : C

Question. Read the following Assertion (a) and Reason(R) . Choose one of the correct alternatives given below.
Assertion (a) : Ankur, Bhaskar and Rakesh are partners with capitals of ₹. 3, 00,000, 4, 00,000 and 5, 00,000 respectively. The partnership deed provided to allow remuneration to each partner of ₹, 50,000 p.(a) and interest on capital @5% p.(a) Profit for the year ended 31st March 2021 of ₹. 2, 10,000 was distributed without allowing remuneration and interest on capital. Rectifying entry for the above will be Dr. Ankur and Cr Rakesh by ₹. 5000.
Reason (R) : Remuneration and Interest to Ankur, Bhaskar and Rakesh are ₹. 65000, 70,000 and 75000 respectively. Each partner was credited by ₹. 70000. As a result Ankur was ex-cess credited by 5000 and Rakesh was short credited by 5000. Thus Ankur will be debited and Rakesh will be credited by ₹. 5000.
Alternatives:
(a) Both Assertion (a) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (a) .
(b) Both Assertion (a) and Reason (R) are true and Reason (R) is not the correct explanation Assertion (a) .
(c) Assertion (a) is true but the Reason (R) is false
(d) Assertion (a) is false but the Reason (R) is true
Answer : A

Question. Read the following Assertion (a) and Reason(R) . Choose one of the correct alternatives given below.
Assertion (a) : If drawings by a partner are on the different dates and/or amounts of draw-ings is not the same interest on drawings is calculated using the product metho(d)
Reason (R) : Interest on drawings is charged for the period it is drawn by a partner, in case the amount of drawings and/or period for which is drawn is not uniform, average method cannot be applied to determine interest on capital.
Alternatives:
(a) Both Assertion (a) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (a) .
(b) Both Assertion (a) and Reason (R) are true and Reason (R) is not the correct explanation Assertion (a) .
(c) Assertion (a) is true but the Reason (R) is false
(d) Assertion (a) is false but the Reason (R) is true
Answer : B

Question. Read the following Assertion (a) and Reason(R) . Choose one of the correct alternatives given below.
Assertion (a) Sandhya, Sudheer, and Namitha are partners sharing profits in the ratio of 3:2:1, Sandhya is guaranteed a minimum profit share of ₹. 75000 p.a after appropriations. Profit for the year after all adjustments were ₹. 1, 80,000. The profit share of Sandhya and Namitha will be Rs.90000, 30000 respectively.
Reason (R) : The profit share of Sudheer is ₹. 75000 since her actual share is ₹. 60000(1, 80000*2/6) . Balance profit ₹, 105000 will be distributed between Sandhya and Namitha in the ratio of 3:1. Thus Sandhya will get ₹. 78750, and Namitha ₹. 26,250.
Alternatives:
(a) Both Assertion (a) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (a) .
(b) Both Assertion (a) and Reason (R) are true and Reason (R) is not the correct explanation Assertion (a) .
(c) Assertion (a) is true but the Reason (R) is false
(d) Assertion (a) is false but the Reason (R) is true
Answer : D

Question. Read the hypothetical text and answer the following questions.
A B and C are partners in a firm. Their capitals are ₹ 30,000, ₹ 20,000 and ₹ 10,000 re-spectively. As per the partnership deed,
i) C is to be allowed remuneration of ₹ 3,000 p.(a)
ii) Interest on capital @ 5% p.(a)
iii) Profits should be distributed in the ratio of 2:2:1.
Ignoring the above terms, a net profit of ₹ 18,000 was distributed among the partners equally.

Question. How much interest on capital is to be credited to partner A?
(a) ₹ 1,500
(b) ₹ 1,000
(c) ₹ 900
(d) ₹ 800
Answer : A

Question. How much profit is to be credited to Partner B after all adjustments?
(a) ₹ 2,400
(b) ₹ 4,800
(c) ₹ 1,000
(d) ₹ 1,200
Answer : B

Question. What is the total profit to be credited to A, B, and C after all adjustments?
(a) ₹ 12,000
(b) ₹ 8,000
(c) ₹ 9,000
(d) ₹ 10,000
Answer : A

Question. What is the amount of the past adjustment entry?
(a) ₹ 350
(b) ₹ 450
(c) ₹ 250
(d) ₹ 55
Answer : B

 

Question. Read the hypothetical text and answer the following questions.
A, B and C are partners in a firm sharing profits and losses in the ratio of 2:2:1. Their capitals (Fixe(d) are ₹ 1, 00,000, ₹ 80,000, and ₹ 70,000 respectively. For the year 2018-19, interest on capital was to be credited to them @ 9% p.(a) instead of 12%

Question. What was the net amount that should be credited to partner B?
(a) ₹ 1,500
(b) ₹ 2,400
(c) ₹ 1,800
(d) ₹1,200
Answer : B

Question. What is the total amount of salary to be credited to the Partners’ capital account?
(a) ₹ 1,20,000
(b) ₹ 2,40,000
(c) ₹ 1,80,000
(d) No salary will be given
Answer : D

Question. What was the net amount that should be credited to partner C?
(a) ₹ 1,800
(b) ₹ 2,000
(d) ₹ 2,100
(d) ₹ 1,700
Answer : D

Question. What was the amount that was debited to partner B?
(a) ₹ 1,500
(b) ₹ 2,000
(c) ₹ 3,000
(d) ₹ 4,000
Answer : A

Question. What was the number of past adjustment entries?
(a) ₹ 400
(b) ₹ 300
(c) ₹ 600
(d) ₹ 500
Answer : B

Part 1 Chapter 01 Accounting for Not for Profit Organisation
CBSE Class 12 Accountancy Accounting for Not for Profit Organisation MCQs
Part 1 Chapter 03 Reconstitution of a Partnership Firm Admission of a Partner
CBSE Class 12 Accountancy Admission Of A Partner MCQs
CBSE Class 12 Accountancy Reconstitution Of Firm MCQs
Part 1 Chapter 04 Reconstitution of a Partnership Firm Retirement Death of a Partner
CBSE Class 12 Accountancy Retirement or Death of a Partner MCQs
Part 2 Chapter 04 Analysis of Financial Statements
CBSE Class 12 Accountancy Analysis of Financial Statement and Tools MCQs

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