CBSE Class 12 Accountancy Case Study Questions Accounting for Partnership Firms Basic Concepts MCQs

Read the following information carefully and answer the questions that follow:
X and Y are partners in 3:2. Their capital balances as on 1st April 2020 amounting to ₹2,00,000 each. On 1st February, 2021, X contributed an additional capital of ₹1,00,000. Following are the terms of deed:
(a) Interest on capital @ 6% per annum
(b) Interest on drawings @ 8% per annum
(c) Salary to X ₹1500 per month
(d) Commission to Y @10% on net profit after charging interest on capital, salary and his commission. Drawings of the partners were ₹20,000 and ₹30,000 respectively during the year. Net profit earned by the firm was ₹2,08,000.

Choose the correct option based on the above information:

Question. What is the amount of Interest on capitals of X and Y:
(a) ₹12,000 each
(b) ₹12,000 to X and ₹ ₹13,000 to Y
(c) ₹13,000 to X and ₹12,000 to Y
(d) None of the above.

Answer: C

Question. What is X’s share in the net divisible profit?
(a) ₹ 124400
(b) ₹ 83600
(c) ₹ 91200
(d) ₹ 60800

Answer: C

Question. What is the amount of interest on drawings of X and Y:
(a) ₹ 1200 and ₹ 1800 respectively
(b) ₹ 800 and ₹ 1200 respectively
(c) ₹ 1200 and ₹ 800 respectively
(d) ₹ 1600 ₹ 2400 respectively

Answer: B

Question. What is the amount of commission payable to Y?
(a) ₹ 15000
(b) ₹ 16500
(c) ₹ 20800
(d) None of these

Answer: A

Question. What will be the closing capital of X after all adjustments?
(a) ₹ 422200
(b) ₹ 401400
(c) ₹ 300000
(d) ₹ 423000

Answer: B

Read the following information carefully and answer the questions that follow:
A, B and C were partners sharing profits in the ratio of 1:2:3. Their fixed capitals on 1st April, 2020 were: A ₹3,00,000; B ₹4,50,000 and C ₹10,00,000. Their partnership deed provided the following:
i. A provides his personal office to the firm for business use charging yearly rent of ₹1,50,000.
ii. Interest on capitals @8% p.a. and interest on drawings @ 10% p.a.
iii. A was allowed a salary @ 10,000 per month.
iv. B was allowed a commission of 10% of net profit as shown by Profit and Loss account, after charging such commission.
v. C was guaranteed a profit of ₹3,00,000 after making all adjustments.
The net profit for the year ended 31st march, 2021 was ₹10,30,000 before making above adjustments. You are informed that A has withdrawn ₹5,000 in the beginning of each month, B has withdrawn ₹5,000 at the end of each month and C has withdrawn ₹ 24,000 in the beginning of each quarter.

Choose the correct option based on the above information:

Question. Net profit for the year is:
(a) ₹10,30,000
(b) ₹11,80,000
(c) ₹7,30,000
(d) ₹8,80,000

Answer: D

Question. What will be the total interest on drawings?
(a) ₹24,000
(b) ₹12,000
(c) ₹36,000
(d) 48,000.

Answer: C

Question. What will be the divisible profit?
(a) ₹5,56,000
(b) ₹5,50,000
(c) ₹5,52,000
(d) ₹5,53,000.

Answer: B

Question. A’s rent will be shown in:
(a) Profit and loss account
(b) Profit and Loss Appropriation account
(c) A’s Capital account
(d) None of the above

Answer: A

Question.What will be the commission of B?
(a) ₹8,00,000
(b) ₹96,000
(c) ₹80,000
(d) ₹72,000.

Answer: C

I. Read the given extract and answer the following questions:  
Since partnership is the outcome of an agreement, it is essential that there must be some terms and conditions
agreed upon by all the partners. Such terms and conditions may be either oral or written. The law does not make it compulsory to have a written agreement. However, in order to avoid all misunderstandings and disputes, it is always the best course to have a written agreement duly signed and registered under the Act. Such a written document which contains the terms of agreement is called ‘Partnership Deed’. In the absence of a partnership deed or verbal agreement, or if the partnership deed is silent on a certain point, various provisions of Partnership Act, 1932 will be applicable. 

Question. In the absence of Partnership Deed, interest on loan of a partner is allowed:
(a) at 8% per annum
(b) at 6% per annum
(c) no interest is allowed
(d) at 12% per annum

Answer: B

Question. The Partnership Deed is silent on payment of salary to partners. Amita, a partner, claimed that since shemanages the business, she should get a monthly salary of ₹10,000. Is she entitled for the salary?
(a) No
(b) Yes
(c) Half of the salary
(d) Defined salary by law

Answer: A

Question. In the absence of Partnership Deed the profits are divided among the partners:
(a) in the ratio of their capital
(b) equally
(c) in the ratio of time devoted for the firm’s business
(d) according to their managerial abilities

Answer: B

Question. If their is a provision for the interest on capital in the partnership deed, it will be allowed only when there is ………….. .
(a) Loss
(b) Profit
(c) Profit of atleast ₹10,000
(d) Profit of at least ₹50,000

Answer: B

II. Read the given extract and answer the following questions:
Partnership Firm and partners are considered separate from each other. When partners withdraw money from business for their personal use, then the term used for such withdrawal of money is known as Drawings. Since, drawings is a type of loan provided to the partners, and they have to pay interest on the amount withdrawn from the firm, which is known as interest on drawings. 

Question. If the date of drawings of the partners 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. In a partnership firm, a partner withdrew ₹5,000 per month on the first day of every month during theyear for personal expenses. If interest on drawings is charged @ 6% p.a. the interest charged will be:
(a) ₹3,600
(b) ₹1,950
(c) ₹1,800
(d) ₹1,650

Answer: B

Question. Where would you record ‘Interest on Drawings’ when Capitals are fluctuating?
(a) Debit side of Partner’s Capital A/c
(b) Debit side of Partner’s Current A/c
(c) Credit side of Partner’s Current A/c
(d) Credit side of Partner’s Capital A/c

Answer: A

Question. How is interest on drawings calculated, if the drawings are made at regular intervals, as on the last dayof each month?
(a) Total Drawings ×Rate/100 x 6.5/12 months   
(b) Total Drawings × Rate/100×6 months/12months
(c) Total Drawings × Rate/100×55 months/12months 
(d) None of the above

Answer: C

III. Read the given information and answer the following questions: 
On 1-4-2021 Jay and Vijay, entered into partnership for supplying Oxygen concentrators to Government schools situated in remote and backward areas. They contributed capitals of ₹80,000 and ₹50,000 respectively and agreed to share the profits in the ratio of 3 : 2. The Partnership Deed provided that interest on capital shall be allowed at 9% per annum. During the year the firm earned a profit of ₹7,800. !!!

Question. What should be the amount of Vijay’s interest on Capital (Blank B)?
(a) ₹4,500
(b) ₹4,000
(c) ₹7,200
(d) ₹3,000

Answer: D

Question. Interest on capital can only be calculated using ……….. .
(a) Opening Capital
(b) Closing Capital
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Answer: A

Question. What should be the amount of Jay’s interest on Capital (Blank A)?
(a) ₹4,000
(b) ₹4,500
(c) ₹4,800
(d) ₹7,200

Answer: C

Question. When the profit is less than the amount of interest on capitals, the available profit will be distributed………….. .
(a) equally
(b) in the ratio of their capital
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Answer: B

IV. Read the given information and answer the following questions:
A and B are partners in a new start-up providing personal care services to the citizens of a city. A and B are sharing profits and losses in the ratio of 3 : 2. Their capital on 31st March, 2022 after all the adjustments stood at ₹1,65,500 and ₹1,27,600 respectively. Profits amounting to ₹50,000 for the year 2021-22 were distributed after adjusting interest on drawings @ 12% p.a. During the year A withdrew ₹15,000 at the beginning of every quarter and B withdrew ₹40,000 during the year. Partnership deed is silent on interest on drawings but provides for interest on Capital @ 5% p.a. Interest on Capital has not been provided. !

Question. What was the balance in their capital accounts on 1st April, 2021?
(a) ₹1,65,500 and ₹1,27,600
(b) ₹2,00,000 and ₹1,50,000
(c) ₹1,50,000 and ₹2,00,000
(d) None of the above

Answer: B

Question. What was the amount of interest on Drawings that was charged from A and B?
(a) ₹7,200 and ₹2,400
(b) ₹2,400 and ₹4,500
(c) ₹4,500 and ₹2,400
(d) ₹4,000 and ₹6,000

Answer: C

Question. Partners’ amount of interest on capital are:
(a) ₹10,000 and ₹7,500
(b) ₹15,000 and ₹7,500
(c) ₹16,000 and ₹6,000
(d) None of the above

Answer: A

V. Read the given information and answer the following questions:
Nancy, Shweta and Ajay were partners in a firm sharing profits and losses in the ratio of 3 : 3 : 4. Their partnership deed provided for the following: (i) Interest on capital @ 5% p.a. (ii) Interest on drawings @ 12% p.a. (iii) Interest on partners’ loan @ 6% p.a. (iv) Nancy was allowed an annual salary of ₹4,000; Shweta was allowed a commission of 10% of net profitas shown by Profit & Loss Account and Ajay was guaranteed a profit of ₹1,50,000 after making all theadjustments as provided in the partnership agreement. Their fixed capitals were Nancy—₹5,00,000; Shweta— ₹8,00,000 and Ajay— ₹4,00,000. On 1st April, 2021 Shweta extended a loan of ₹1,00,000 to the firm. The net profit of the firm for the year ended 31st March,
2021 before interest on Shweta’s loan was ₹3,06,000.   
Prepare Profit and Loss Appropriation Account of Nancy, Shweta and Ajay for the year ended 31st March, 2021 and their Current Accounts assuming that Shweta withdrew ₹5,000 at the end of each month, Nancy withdrew ₹10,000 at the end of each quarter and Ajay withdrew ₹40,000 at the end of each half year.

Question. What is each partner’s interest on drawings?
(a) ₹3300, ₹1800, ₹2400
(b) ₹1800, ₹3300, ₹2400
(c) ₹2400, ₹3600, ₹4800
(d) None of the options

Answer: B

Question. What should be the amount of profit after adjustments?
(a) ₹1,88,500
(b) ₹2,10,500
(c) ₹3,00,000
(d) None of the above

Answer: A

Question. What is the amount of Net Profit?
(a) ₹3,06,000
(b) ₹3,00,000
(c) ₹2,00,000
(d) None of the above

Answer: B

Question. Calculate the amount of Ajay’s deficiency?
(a) ₹75,400
(b) ₹74,600
(c) ₹85,000
(d) ₹56,550

Answer: B