CBSE Class 12 Accountancy Accounting For Partnership Firms Worksheet Set B

Question. Eye and Boll contribute Rs 20,000 and Rs 10,000 respectively towards capital. They decide to allow interest on capital @ 6% p.a. Their respective share of profits is 2 : 3 and the net profit for the year is Rs 1,500. Show distribution of profits:
(a) Rs 1,200 to Eye; and Rs 600 to Boll.
(b) Rs 1,000 to Eye; and Rs 500 to Boll.
(c) No interest will be provided.
(d) Rs 600 to Eye; and Rs 900 to Boll.
Answer. B

Question. Sajal and Kajal are partners sharing profits and losses in the ratio of 2 : 1. On 1st April, 2018 their Capitals were:
Sajal – Rs 50,000 and Kajal – Rs 40,000.
(i) Interest on Capital is to be allowed @ 5% p.a.
(ii) Interest on the loan advanced by Kajal for the whole year, the amount of loan being Rs 30,000.
(iii) Interest on partners’ drawings @ 6% p.a. Drawings: Sajal Rs 10,000 and Kajal Rs 8,000.
(iv) 10% of the divisible profit is to be transferred to Reserve.
Net profit for the year ended 31st March, 2019 is Rs 68,460. What amount of profit will be credited to Profit & Loss Appropriation A/c.
(a) Rs 68,460
(b) Rs 66,660
(c) Rs 56,430
(d) Rs 60,390
Answer. B

Question. Agra, Delhi & Mathura are partners in a firm sharing profits in the ratio of 4 : 2 : 1. It is provided that Mathura’s share in profits would not be less than Rs 3,750. Profits for the year ended 31st March, 2021 was Rs 15,750. What
amount of Deficiency will be borne by Agra.
(a) Rs 1,000
(b) Rs 500
(c) Rs 750
(d) None of the above.
Answer. A

Question. Shola, Shabnam & Juala are partners sharing profits in the atio of 6 : 4 : 1. Juala is guaranteed a minimum profit of Rs 20,000. The firm incurred a loss of Rs 2,20,000 for the year ended 31st March, 2021. What amount of deficiency will be borne by Shola and Shabnam.
(a) Rs 10,000 each.
(b) Rs 20,000 each.
(c) Rs 24,000 by Shola & Rs 16,000 by Shabnam.
(d) Rs 12,000 by Shola & Rs 8,000 by Shabnam.
Answer. C

Question. Aalu, Tamatar & Kheera are partners in a firm sharing profits & losses in the ratio of 12 : 8 : 5. Partner Kheera is guaranteed a minimum profit of Rs 5,000 p.a. by the firm. The Losses for the year were Rs 20,000. What will be the amount of deficiency for Kheera.
(a) Rs 9,000
(b) Rs 1,000
(c) Rs 5,000
(d) Rs 4,000
Answer. A

Question. If the guarantee is given to the partner by some partners, deficiency on such will be borne by
(a) Partnership firm.
(b) All of the other partners.
(c) Partners who had given the guarantee.
(d) None of the above.
Answer. C

Question. Which of the following items will not be shown in the Profit & Loss Appropriation account?
(a) Interest on Loan.
(b) Interest on capital.
(c) Interest on Drawings.
(d) General Reserve.
Answer. A

Question. If the Partners are maintaining the capital account on Fixed basis, partner’s capital account will have:
(a) Credit balance.
(b) Debit balance.
(c) Credit or Debit balance.
(d) May have Nil balance.
Answer. A

Question. If the partnership deed is silent interest on drawings will be charged @
(a) 6% P.a
(b) 6% P.m
(c) Any other Rate.
(d) Will not be charged.
Answer. D

Question. Assertion : X spends twice the time that Y devoted to business. X claims that he should get salary of Rs 6,000/- p.m for extra time spent.
Reason : As there is no partnership deed Partnership Act 1932 applies and as per the Act partners will not be allowed any salary or remuneration.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Y wants that profits should be distributed in the ratio of capitals as he has invested more capital than X this dispute arises as the partnership deed was not there.
Reason : As there is no partnership deed Indian Partnership Act, 1932 applies and as per the Act, Profits are to be distributed equally.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : In case of losses interest on capital will not be provided.
Reason : As interest on capital is treated as the appropriation of the profits and there are no profits but interest on capital can be provided in case of losses if it is to be treated as charge.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : Tanmay Academy the Institution for Commerce had 50 partners they wanted to admit Pankaj as the partner as he is very competent person to which all the partners agree, but due to the laws he was not permitted to join as the partner.
Reason : As there were 50 partners in the firm and the maximum no of partners in the firm can be 50 only as per the Rule 10 of the companies Rule, 2014. He can’t be admitted as the partner.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : It is not essential but desirable to have a Partnership Deed.
Reason : As in the absence of the Partnership Deed the disputes can also be resolved in the court.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. B

Question. Assertion : Rent paid to the partner is not to be shown in Profit & Loss Appropriation A/c .
Reason : Rent paid to the partner is treated as the charge against profit and not the appropriation of the profits.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : Commission paid to the partner is shown in Profit & Loss Appropriation A/c
Reason : Commission paid to the partner is a charge against profit and not the appropriation of profit and hence it will be shown in Profit and Loss Account and not in Profit & Loss Appropriation A/c
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. C

Question. Assertion : Pankaj was sleeping partner who wants to inspect the books of accounts of the firm but Ruchi another partner object to this.
Reason : As Pankaj is sleeping partner he has no right to inspect the books of accounts.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : At the time of the admission of partner, when Workmen Compensation Reserve appearing in the Balance Sheet was for Rs 8,000 and the claim for Workmen was for Rs 10,000 Revaluation Account will be debited to record the claim on Workmen Compensation by Rs 10,000.
Reason : The Clain for Workmen Compensation will be debited by Rs 2,000 in Revoluation Account as the reserve for the same is already for Rs 8,000.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. 

Question. Assertion : Capital accounts can never have the Debit balance..
Reason : If the Capital account is maintained on the Fixed Capital Account Method all the transactions related to drawings, interest on capital, Interest on drawings, salary and other are shown in Current account and Capital account will be changed only when the additional capital is introduced or the permanent capital is withdrawn.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : Goodwill is Intangible Asset and not the Fictitious Asset.
Reason : As per AS 26 an Intangible Asset is an identifiable non-monetary asset, without physical substance, held for use in the production or supply of goods or services, for rental to others, or for administrative purposes.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : Self-Generated goodwill can be recorded in the books of accounts.
Reason : As per AS 26, Intangible Asset prescribes that purchased goodwill may be recognised in the books of account and written off at the earliest but within the estimated useful life and self-generated goodwill can’t be recorded in the books .
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Quality of the product effect the goodwill
Reason : If a firm enjoys good reputation for the quality of its product, there will be a ready sale so the value of the goodwill will be high.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. B

Question. Assertion : Capital employed can only by calculated by calculating:
Capital + Reserves-Goodwill, if any existing in the books-Fictitious Assets-Non-Trade Investments.
Reason : Goodwill can be calculated by another mode that is:
All Assets(except Goodwill, Non-Trade Investments and Fictitious Assets)-Outside Liabilities.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Excess of Actual Profit over normal profit is known as Weighted Average Profit.
Reason : Excess of Actual Profit over normal profit is known as Super Profit.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : The formula to calculate Goodwill by Super Profit Method is Super Profit × 100 Normal Rate of Return
Reason : The formula to calculate Goodwill by Super Profit Method is Super Profit × No of Years Purchase.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Capitalised Value of average profit is calculated to calculate the goodwill by Capitalisation of Average Profit Method.
Reason : Under Capitalisation of Average Profit Method goodwill is calculated by deducting capital employed in the business from the capitalised value of average profits on the basis of Normal Rate of Return.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : Any Abnormal Losses are deducted from the average profits to calculate the goodwill.
Reason : To calculate the Normal business profits any abnormal losses are to be added to the actual profits of the year in which the losses were there as these losses were already deducted from the profit of that year.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Purchased Goodwill means goodwill for which consideration has not been paid but is generated due to performance in the past.
Reason : Purchased Goodwill means goodwill for which consideration in money or money’s worth has been paid..
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Excess amount that a firm gets over and above the market value of assets at the time of sale of business is Reserve.
Reason : Excess amount that a firm gets over and above the market value of assets at the time of sale of business is Goodwill.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Navdeep will to withdrew Rs 20000, and the rate of interest on drawing is @ 10% p.a., but he is confused at what period of year should he withdrew :

Question. What will be the rate of interest if he withdrew in the beginning of each quarter?
(a) Rs 5,000
(b) Rs 3,000
(c) Rs 4,000
(d) Rs 5,500
Answer. A

Question. What will be the rate of interest if he withdrew in the end of each quarter ?
(a) Rs 5,000
(b) Rs 3,000
(c) Rs 4,000
(d) Rs 5,500
Answer. B

Question. What will be the rate of interest if he withdrew during the middle of each quarter ?
(a) Rs 5,000
(b) Rs 3,000
(c) Rs 4,000
(d) Rs 5,500
Answer. C

Question. A and B are partners sharing the profits and losses in the ratio of 3:2 with the capitals of Rs 2,00,000 and Rs 1,00,000 respectively. Show the distribution of profits in each of the following alternative cases:

Question. If the Partnership Deed is silent as to the interest on capital and the profits for the year are Rs 50000.
(a) profit transferred-Rs 30,000, Rs 20,000
(b) loss transferred- Rs 30,000, Rs 20,000
(c) IOC- Rs 16,000, Rs 8,000 profit transferred-Rs 15,600, Rs 10,400
(d) IOC- Rs 10,000, Rs 5,000
Answer. A

Question. If the Partnership Deed provides for interest on capital @ 8% p.a. and the losses for the year are Rs 50000.
(a) profit transferred-Rs 30,000, Rs 20,000
(b) loss transferred-Rs 30,000, Rs 20,000
(c) IOC- Rs 16,000, Rs 8,000 profit transferred-Rs 15,600, Rs 10,400
(d) IOC- Rs 10,000, Rs 5,000
Answer. B

Question. If the Partnership Deed provides for the interest on capital @ 8% p.a. and the profits for the year are Rs 50,000.
(a) profit transferred-Rs 30,000, Rs 20,000
(b) loss transferred- Rs 30,000, Rs 20,000
(c) IOC- Rs 16,000, Rs 8,000 profit transferred-Rs 15,600, Rs 10,400
(d) IOC- Rs 10,000, Rs 5,000
Answer. C

Question. Arun and Barun are partners in a firm sharing profits and losses. Their capitals on 1 April, 2015 were Rs 4,80,000 and Rs 5,40,000. On 1 October, 2015, they decided that the total capital of the firm should be Rs 10,00,000 to be contributed equally by both of them.According to the Partnerhip Deed, interest on capital is allowed to the partners @6% p.a.

Question. You are required to compute interest on capital for the year ending 31 March, 2016.
(a) Rs 29,400, Rs 31,200
(b) Rs 14,400, Rs 16,200
(c) Rs 15,000, Rs 15,000
(d) None of these
Answer. A

Question. What would be the profit sharing ratio of Arun and Barun?
(a) 1 : 1
(b) 2 : 3
(c) 3 : 2
(d) 3 : 4
Answer. A

Question. What would be the interest on capital till 30 September, 2015?
(a) Rs 29,400, Rs 31,200
(b) Rs 14,400, Rs 16,200
(c) Rs 15,000, Rs 15,000
(d) None of these
Answer. B

Question. What would the interest on capital from 1 October, 2015 to 31 March, 2016 ?
(a) Rs 29,400, Rs 31,200
(b) Rs 14,400, Rs 16,200
(c) Rs 15,000, Rs 15,000
(d) None of these
Answer. C

Question. The average Net profits expected in the future by ABC Firm are Rs 36,000 per year. The average capital employed in the business by the firm is Rs 2,00,000. The rate of return expected from capital invested in this class of business is 10%. The remuneration of the partners is estimated to be Rs 6,000 per annum.

Based on above information you are required to answer the following questions:

Question. What will be the Actual Average Profit?
(a) Rs 36,000
(b) Rs 35,000
(c) Rs 30,000
(d) Rs 6,000
Answer. C

Question. What will be the Normal Profit?
(a) Rs 10,000
(b) Rs 20,000
(c) Rs 30,000
(d) Rs 15,000
Answer. B

Question. Calculate Super Profit:
(a) Rs 35,000
(b) Rs 12,000
(c) Rs 15,000
(d) Rs 10,000
Answer. D

Question. Find out the value of goodwill on the basis of two year’s purchase of Super Profits.
(a) Rs 20,000
(b) Rs 22,000
(c) Rs 24,000
(d) Rs 23,900
Answer. A

Question. On April 1, 2021 an existing firm had assets of Rs 75000 including cash of Rs 5,000. The partner’s capital account showed a balance of Rs 60,000 and reserve constituted the rest.If the normal rate of return is 10% and the goodwill of the firm is valued at Rs 24,000 at 4 year’s purchase of super profits.

Question. What will be the Super Profits of the firm?
(a) Rs 9,000
(b) Rs 7,000
(c) Rs 8,000
(d) Rs 6,000
Answer. D

Question. Calculate Normal Profits:
(a) Rs 6,500
(b) Rs 7,500
(c) Rs 8,500
(d) Rs 8,555
Answer. B

Question. Calculate Net Assets:
(a) Rs 69,000
(b) Rs 76,000
(c) Rs 75,000
(d) Rs 80,000
Answer. C

Question. Find the Average Profits of the firm:
(a) Rs 10,000
(b) Rs 5,000
(c) Rs 13,500
(d) Rs 12,500
Answer. C

1 and 3 Mark Questions

Q1 Define partnership.
Answer. 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?
Answer. 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.
Answer. 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?
Answer. 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?
Answer. 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?
Answer. 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?
Answer. 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.
Answer.  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.
Answer.  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?
Answer.  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?
Answer.  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?
Answer. 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.
Answer. 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.
Answer. 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?
Answer. 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?
Answer.  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