CBSE Class 12 Accountancy Accounting For Partnership Firms Worksheet Set B

Accounting for partnership firms – Fundamentals

1 and 3 Mark Questions

Q1 Define partnership.

Ans. When two or more persons enter into an agreement to carry on business and share its profit and losses, it is a case of partnership. The Indian partnership Act, 1932, defines Partnership as follows:

"Partnership is the relation between persons and who have agreed to share the profits of a business carried on by all or any of them acting for all.

Q.2 What do you understand by 'partners', 'firm' and 'firms' name?

Ans. The persons who have entered in to a Partnership with one another are individually called 'Partners' and collectively 'a firm' and the name under which the business is carried is called 'the firm's name'.

Q.3 Write any four main features of partnership.

Ans. Essential elements or main features of Partnership :
i) Two or more persons: Partnership is an association of two or more persons.
ii) Agreement: The Partnership is established by an agreement either oral or in writing.
iii) Lawful Business: A Partnership formed for the purpose of carrying a business, it must be a legal business.
iv) Profit sharing: Profit of the firm is share by the partners in an agreed ration, if the ratio is not agreed then equally. Profit also includes loss.

Q.4 What is the minimum and maximum number of partners in all partnership?

Ans. There should be at least two persons to form a Partnership. The maximum number of Partners in a firm carrying an banking business should not exceed ten and in any other business should not exceed ten and in any other business it should not exceed twenty.

Q.5 What is the status of partnership from an accounting viewpoint?

Ans. From an accounting viewpoint, partnership is a separate business entity. From legal viewpoints, however, a Partnership, like a sole proprietorship, is not separate from the owners.

Q.6 What is meant by partnership deed?

Ans. Partnership deed is a written agreement containing the terms and conditions agreed by the Partners.

Q.7 State any four contents of a partnership deed.

i) The date of formation and the duration of the Partnership
ii) Name and address of the Partners
iii) Name of the firm.
iv) Interest on Partners capital and drawings
v) Ratio in which profit or losses shall be shared

Q.8 In the absence of a partnership deed, how are mutual relations of partners governed?

Ans. In the absence of Partnership deed, mutual relations are governed by the Partnership Act, 1932.

Q.9 Give any two reason in favour of having a partnership deed.

Ans. i) In case of any dispute or doubt, Partnership deed is the guiding document.
ii) It can specify the duties and powers of each Partner.

Q.10 State the provision of 'Indian partnership Act 1932’ relating to sharing of profits in absence of any provision in the partnership deed.

Ans. In the absence of any provision in the Partnership deed, profit or losses are share by the Partners equally.

Q.11 Why is it important to have a partnership deed in writing?

Ans. Partnership deed is important since it is a document defining relationship of among Partners thus is assistance in settlement of disputes, if any and also avoids possible disputes: it is good evidence in the court.

Q.12 What do you understand by fixed capital of partners?

Ans. Partners' capital is said to be fixed when the capital of Partners remain unaltered except in the case where further capital is introduced or capital is withdrawn permanently.

Q.13 What do you understand by fluctuating capital of partners?

Ans. Partner’s capital is said to be fluctuating when capital alters with every transaction in the capital account. For example, drawing, credit of interest, etc

Q.14 Give two circumstances in which the fixed capital of partners may change.

Ans. Two circumstances in which the fixed capital of Partners may change are :
i) When additional capital is introduced by the Partners.
ii) When a part of the capital is permanently withdrawn by the Partners.

Q.15 List the items that may appear on the debit side and credit side of a partner's fluctuating capital account.

Ans. On debit side: Drawing, interest on drawing, share of loss, closing credit balance of the capital. On credit side : Opening credit balance of capital, additional capital introduced, share of profit, interest on capital, salary to a Partner, commission to a Partner.

Q.16 How will you show the following in case the capitals are?

i) Fixed and   ii) Fluctuating

a) Additional capital introduced
b) Drawings
c) Withdrawal of capital
d) Interest on capital and
e) Interest on loan by partners?

Ans.i) In case, capitals are fixed:
a) On credit side of capital (b) on debit side of current A/c (c) on debit side of capital A/c (d) on credit side of current A/c (e) on credit side of loan from partner's A/c

Q.17 If the partners capital accounts are fixed, where will you record the following items :
i) Salary to partners
ii) Drawing by a partners
iii) Interest on capital and
iv) Share of profit earned by a partner?

Ans. i) Credit side of Partner's current A/c
ii) Debit side of Partner's current A/c
iii) Credit side of Partners current A/c
iv) Credit side of Partners current A/c

Please click on below link to download CBSE Class 12 Accountancy Accounting For Partnership Firms Worksheet Set B