CBSE Class 12 Accountancy Accounting For Partnership Firms MCQs

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

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Question: Money withdrawn by a partner on 1st July Rs. 20,000 and interest on drawings is fixed @ 6% (Books are closed on 31st March.)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