CBSE Class 12 Accountancy Accounting For Partnership Firms Worksheet Set A

MCQ Questions for NCERT Class 12 Accountancy Accounting For Partnership

Question. A and B are partners in a firm. They are entitled to interest on their capitals but the net profit was not sufficient for this interest, then the net profit will be distributed among partners in –
(a) Agreed ratio
(b) Profit sharing ratio
(c) Capital ratio
(d) Equally

Answer : C

Question. X, Y and Z are partners in a firm, sharing profits and losses in the ratio of 3:2:1. Before Y’s salary of Rs. 20,000, firm’s profit is Rs. 1,10,000. How much in total Y will receive from the firm?
(a) Rs. 50,000
(b) Rs. 55,000
(c) Rs. 36,067
(d) Rs. 36,667

Answer : A

Question. Nishant and Niharika are partners in a firm, sharing profits and losses in the ratio of 3:2. Before profit distribution, Nishant is entitled to 4% of the net profit (after charging such commission). Before charging commission, firm’s profit was Rs. 52,000. Niharika’s share in profit will be ___________.
(a) Rs.2,080
(b) Rs. 25,000
(c) Rs. 20,000
(d) Rs. 26,000

Answer : C

Question. Which of the following items are recorded in the Profit & Loss Appropriation Account of a partnership firm?
(a) Interest on Drawings
(b) Salary to the partner
(c) Interest on Capital
(d) All of the above

Answer : D

Question. According to Profit and Loss Account, the net profit for the year is Rs. 3,00,000. The total interest on Partners’ Capital is Rs. 30,000 and partners’ salaries Rs. 20,000. The net profit as per Profit and Loss Appropriation Account will be :
(a) Rs. 3,50,000
(b) Rs. 2,90,000
(c) Rs. 2,50,000
(d) Rs. 3,10,000

Answer : C

Question. Sagrika and Niharika are partners are partners in a firm. Sagrika’s capital is Rs. 2,00,000 and Niharika’s capital is Rs. 3,00,000. Firm’s profit is Rs. 1,00,000. Niharika’s share in profit will be:
(a) Rs. 50,000
(b) Rs. 35,000
(c) Rs. 40,000
(d) Rs. 46,000

Answer : A

Question. If a partner withdraws fixed amount in the beginning of every month, how much interest is charged on the whole amount?
(a) 6.5 months
(b) 6 months
(c) 5.5 months
(d) None of the above

Answer : A

Question. Ram and Sohan are partners in a firm, having no partnership deed. Sohan has given a loan of Rs. 5,00,000 to the firm. At the end of the year, loss was incurred in the business. How much interest will be paid to Sohan by the firm?
(a) @5% p.a.
(b) @5% p.m.
(c) @6% p.a.
(d) No interest is to be charged.

Answer : C

Question. J, K and L are partners in 5:3:2. J is guaranteed that his share of profit will not be less than Rs. 50,000. Any deficiency will be borne by K and L in the ratio of 3:1. Firm’s profit was Rs. 90,000. Share of K(in Rs.) will be –
(a) 27,000
(b) 22,000
(c) 23,250
(d) 16,750

Answer : C

Question. A and B are partners in a firm having no partnership deed. How much amount of interest on capital will be allowed to them, if they have invested Rs. 5,00,000 and Rs. 4,00,000 respectively into the business?
(a) 6% p.a.
(b) 10% p.a.
(c) No interest on capital
(d) None of these

Answer : C

Question. X, Y and Z are equal partners with fixed capitals of Rs. 5 lacs, Rs. 3 lacs and Rs. 1 lac respectively. After closing the accounts for the year ended 31st March 2021, it was discovered that interest on capitals was provided at the rate of 6% instead of 5% p.a. In the adjusting entry,
(a) Debit X and Credit Z by Rs. 2000
(b) Credit X and debit Z by Rs. 2000
(c) Debit X and credit Y by Rs. 2000
(d) Credit X and debit Y by Rs. 2000

Answer : A

Question. X is a manager in a firm, who is entitled to get a commission of 10% of the net profit after charging such commission. The net profit of the firm before charging any commission was Rs. 5,50,000. Calculate the amount of commission payable to X.
(a) Rs. 55,000
(b) Rs. 50,000
(c) Rs. 45,000
(d) None of these

Answer : B

Question. If the date of drawing of the partners is not given in the question, interest is charged for how much time?
(a) 2 months
(b) 3 months
(c) 8 months
(d) 6 months

Answer : D

Question. Rohan is a partner in a firm. He withdrew Rs. 5,000 per month on the last day of every month during the year ended 31st March 2021. If interest on drawings is charged at the rate of 8% p.a., the interest charged(in Rs) will be
(a) 2200
(b) 2400
(c) 2600
(d) 2800

Answer : A

Question. Radha is a partner in a firm. She withdrew Rs. 10,000 in the beginning of each quarter during the year ended 31st March 2021. Interest on her drawings(in Rs.) at the rate of 9% p.a. will be –
(a) 2250
(b) 1800
(c) 1350
(d) None of these

Answer : A

Question. When a partner is given guarantee by the 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. On 1st April, 2020, X’s capital was Rs. 3 lacs. On 1st Jan 2021, he introduces additional capital of Rs. 2 lacs. Interest on capital at the rate of 5% p.a. on 31st March 2021 will be –
(a) Rs. 15,000
(b) Rs. 16,250
(c) Rs. 17,500
(d) None of these

Answer : C

Question. X and Y are partners in a firm sharing profits and losses in the ratio of 2:1. Their capitals are Rs. 5 lacs and Rs. 3 lacs respectively. Interest on capital is allowed at the rate of 7% p.a. Firm earned a profit of Rs. 80,000 for the year ended 31st March 2021. Interest on capital will be –
(a) X – 35,000 , Y – 21,000
(b) X – 17,500 , Y – 10,500
(c) X – 25,000 , Y – 18,000
(d) No interest on capital will be allowed

Answer : A

Question. X, Y and Z are partners in the ratio of 2:2:1. X has given to Z a guarantee of minimum Rs. 20,000 profit. For the year ending 31st March 2021, firm’s profit is Rs. 80,000. X’s share in profit(in Rs.) will be –
(a) 28,000
(b) 32,000
(c) 36,000
(d) None of these

Answer : A

Question. X, Y, Z are partners in a firm sharing profits and losses in the ratio of 3:2:1, having capital balances of Rs. 1,00,000, Rs. 80,000 and Rs. 60,000 respectively. For the year 2021, they omitted interest on capital at the rate of 6% p.a. What will be the adjusting journal entry?
(a) Debit X Rs. 1200, Credit Y by Rs. 1200
(b) Debit X Rs. 1200, Credit Z by Rs. 1200
(c) Debit Z Rs. 1200, Credit X by Rs. 1200
(d) No adjustment entry to be passed

Answer : B

Question. Find out that goodwill which is accounted for, as per Accounting Standard 26.
(a) Purchased goodwill
(b) Self-generated goodwill
(c) Both (a) and (b)
(d) Goodwill brought in by a partner

Answer : A

Question. Capital employed in a business is Rs 2,00,000. Normal rate of return on capital employed is 15%. During the year, the firm earned a profit of Rs 48,000. Calculate goodwill on the basis of 3 years’ purchase of super profit.
(a) Rs 54,000
(b) Rs 60,000
(c) Rs 50,000
(d) None of these

Answer : A

Question. Which of the following is/are method(s) of valuation of goodwill?
(a) Average profit method
(b) Super profit method
(c) Capitalisation method
(d) All of these

Answer : D

Question. Find out those situations which create need for valuation of goodwill for a partnership firm?
(a)When existing partners change their profit sharing ratio
(b)When a new partner comes into partnership
(c) When an existing partner retires from partnership
(d) All of the above

Answer : D

Question. The profits for last 3 years were
1st year = Rs 6,000 (including abnormal gain
                 Rs 2,000)
2nd year = Rs 4,000 (after charging abnormal loss
                 Rs 3,000)
3rd year = Rs 2,500 (including abnormal income
                 Rs 1,500)
Calculate goodwill on the basis of 3 years’ purchase of last 3 years profits and losses.
(a) Rs 12,500
(b) Rs 12,000
(c) Rs 13,000
(d) Rs 16,000

Answer : B

Question. Average profit of firm is Rs 3,00,000. Total tangible assets in the firm are Rs 28,00,000 and outside liabilities are Rs 8,00,000. In same type of business, normal rate of return is 10% of capital employed. Calculate goodwill by capitalisation of super profit method.
(a) Rs 14,00,000
(b) Rs 16,00,000
(c) Rs 18,00,000
(d) Rs 10,00,000

Answer : D

Question. The profits earned by a business over the last 5 years are Rs 12,000; Rs 13,000; Rs 14,000; Rs18,000; and Rs 2,000 (loss). Based on 2 years purchase of the last 5 years profits, value of goodwill will be
(a) Rs 23,600
(b) Rs 22,000
(c) Rs 1,10,000
(d) Rs 1,18,000

Answer : B

Question. Total capital employed in the firm is Rs 8,00,00, reasonable rate of return is 15% and profit for the year is Rs 12,00,000. The value of goodwill of the firm as per capitalisation method would be
(a) Rs 82,00,000
(b) Rs 12,00,000
(c) Rs 72,00,000
(d) Rs 42,00,000

Answer : C

Question. Which of the following is not true in relation to goodwill?
(a) It is an intangible asset
(b) It is fictitious asset
(c) It has a realisable value
(d)None of the above

Answer : B

Question. When goodwill is not purchased, goodwill account can
(a) never be raised in the books
(b) be raised in thebooks
(c) be partially raised in the books
(d) be raised as per the agreement of the partners

Answer : A

Question. Nature of goodwill is
(a) intangible asset
(b) fictitious asset
(c) long-term liability
(d) current asset

Answer : A

Question. The goodwill of the firm not affected by
(a) location of the firm
(b) reputation of firm
(c) better customer service
(d)None of the above

Answer : D

Question. Which of the following factor(s) affect goodwill?
(a) Nature of business
(b) Efficiency of management
(c) Location
(d) All of these

Answer : D

Question. Weighted average method of calculating goodwill is used when
(a) profits are not equal
(b) profits show a trend
(c) profits are fluctuating
(d) None of these

Answer : B

Question. Under the capitalisation method, the formula for calculating the goodwill is
(a) super profits multiplied by the rate of return
(b) average profits multiplied by the rate of return
(c) super profits divided by the rate of return
(d) average profits divided by the rate of return

Answer : C

Question. A firm earns Rs 1,20,000 as its annual profits. The normal rate of profit being 10%. Assets of firm are Rs 14,40,000 and liabilities are Rs 4,40,000. Find value of goodwill by capitalisation method.
(a) Rs 4,00,000
(b) Rs 2,80,000
(c) Rs 2,00,000
(d) Rs 3,60,000

Answer : C

Question. The net assets of a firm including fictitious assets of Rs 5,000 are Rs 85,000. The net liabilities of the firm are Rs 30,000. The normal rate of return is 10% and the average profits of the firm are Rs 8,000. Calculate the goodwill as per capitalisation of super profits.
(a) Rs 20,000
(b) Rs 30,000
(c) Rs 25,000
(d) None of these

Answer : B

Question. The average capital employed of a firm is Rs 4,00,000 and the normal rate of return is 15%. The average profit of the firm is Rs 80,000 per annum. If the remuneration of the partners is estimated to be Rs 10,000 per annum, then on the basis of two years purchase of super profit, the value of the goodwill will be
(a) Rs 10,000
(b) Rs 20,000
(c) Rs 60,000
(d) Rs 80,000

Answer : B

1 MARK Questions

Question : What do you understand by ‘Partner’, ‘firm’ and ‘firm’s name’?
Answer : The persons who have entered into a Partnership with one another are individually called ‘Partners’ and collectively ‘a firm’ and the name under which the business carried is called ‘the firm’s name’.

Question : What is the minimum and maximum number of partners in all partnership?
Answer : Minimum 2 and Maxi 20 (In banking 10) 

Question : What is the status of partnership from an accounting viewpoint?
Answer : From an accounting viewpoint, partnership is a separate business entity. From the legal viewpoint, however, a Partnership , is not separate from the owners.

Question : In the absence of Partnership deed , how are mutual relations of partners governed?
Answer : Through Partnership Act, 1932.

Question : Give two circumstances in which the fixed capital of partners may change.
Answer : (i) When additional capital is introduced by the partners.
(ii) When a part of the capital is permanently withdrawn by the Partners.

Question : List the items that may appear on the debit side and credit side of a Partners’ Fluctuating capital account.
Answer : On debit side: Drawing, interest on drawing, share of loss, closing credit balance of 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.

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. 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. 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. 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 tor all as an agent.
(d) All of the above.

Answer: D

Question. On 1st January 2019, a partner advanced a loan of ₹1,00,000 to the firm. In the absence of agreement, interest on loan on 31st March 2019 will be :
(a) Nil
(b) ₹1,500
(c) ₹3,000
(d) ₹6,000

Answer: B

Question. A, B and C are partners. A’s capital is ₹3,00,000 and B’s capital is ₹1,00,000. C has not invested any amount as capital but he alone manages the whole business. C wants RS30,000 p.a. as salary. Firm earned a profit of ₹1,50,000. How much will be each partner’s share of profit:
(a) A ₹60,000; B ₹60,000; C ₹Nil
(b) A ₹90,000; B ₹30,000; C ₹Nil
(c) A ₹40,000; B ₹40,000 and C ₹40,000
(d) A ₹50,000; B ₹50,000 and C ₹50,000.

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 ₹4,000 p.m. in addition to a commission of 5% on net profits after charging such commission. Profit for the year is ₹6,78,000 before charging salary. Find the total remuneration of Meeta.
(a) ₹78,000
(b) ₹88,000
(c) ₹87,000
(d) ₹76,000

Answer: A

Question. Ostensible 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. 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. 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. 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. 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 1/2
(c) 5 1/2
(d) 12

Answer: A

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 ₹6,000 and Y determined interest @24% p.a. on his loan of ₹80,000. There was no agreement on this point. Calculate the amount payable to X, Y, and Z respectively.
(a) ₹2,000 to each partner.
(b) Loss of ₹4,400 for X and Z; Twill take ₹14,800.
(c) ₹400 for A, ₹5,200 for Land ₹400 for Z.
(d) None of the above.

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. Charulata is a partner in a firm. She withdrew ₹10,000 in each quarter during the year ended 31st March, 2019. Interest on her drawings @ 9% p.a. will be:
(a) ₹1,350
(b) ₹2,250
(c) ₹900
(d) ₹1,800

Answer: D

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. A and B are partners. According to Profit and Loss Account, the net profit for the year is ₹2,00,000. The total interest on partner’s drawings is ₹1,000. As salary is ₹40,000 per year and B’s salary is ₹3,000 per month. The net profit as per Profit and Loss Appropriation Account will be :
(a) ₹1,23,000
(b) ₹1,25,000
(c) ₹1,56,000
(d) ₹1,58,000

Answer: B

One mark questions:

Question. 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.

Question. 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.

Question. 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.

Question. Ramesh, a partner in the firm has advanced a loan of a Rs. 1,00,000 to the firm and has demanded on interest @ 9% per annum. The partnership deed is silent on the matter. How will you deal with it?
Answer: Since the Partnership deed is silent on payment of interest, the provisions of the Partnership Act, 1932 will apply. Accordingly, Ramesh is entitled to interest @ 6% p.a.

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 Rs. 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: He is not correct. He will only get interest on capital as per decided @10%p.a. Three and Four mark questions.

Three and Four mark questions.

1. X, Y, and Z are partners sharing profits in the ratio of 5: 4: 1. Z is given a guarantee that his share of profit in any given year would be Rs. 10000.
Deficiency if any would be borne by X and Y equally. The profits for the year 2016 amounted to Rs.80000. Pass necessary entries in the books of the firm.
Answer: 

2. A, B and C are in partners sharing profits and losses in the ratio if 1:2:3. They have omitted interest on capital @8% p.a. for two year ended 31st March2016. Their fixed capitals were Rs.4,00,000, Rs.6,00,000 and Rs.8,00,000 respectively. Pass the necessary adjusting entries
Answer: C’s current ac Dr     16000
To A’s current ac                                   16000

3. From the following balance sheet of X and Y, calculate interest on capitals @ 10% p.a. payable to X and Y for the year ended 31st December, 2016.

During the year 2016, X's drawings were Rs. 10,000 and Y's Drawing were Rs. 3,000. Profit during the year, 2008 was Rs.30, 000.
Answer: Calculation of Opening Capitals

Working Notes:
(1) As X’s drawings are shown in the Balance Sheet, it means his drawings are not deducted. From his .capital till now, so his drawings are not included back.
(2) Profits for 2016 were Rs. 30,000 and profits ofRs. 20,000· are, shown in the Balance Sheet, which means only Rs. 10,000 profits were distributed between the partner.

4. A, B and C entered into partnership on 1st April, 2016 to share profits & losses in the ratio of 4:3:3. A, however, personally guaranteed that C's share of profit after charging interest on Capital @ 5% p.a. would not be less than Rs. 40,000 in any year. The Capital contributions were: A Rs. 3, 00,000; B Rs. 2, 00,000 and C Rs. 1, 50,000.
The profit for the year ended on 31st March, 2016 amounted to Rs. 1, 60,000.
Show the Profit & Loss Appropriation Account. .
Answer: Profit and Loss Appropriation Account
(for the year ending on 31st March 2016)

Six mark questions.

1. Pappu and Munna are partners in a firm sharing profits in the ratio of 3:2. The partnership deed provided that Pappu was to be paid salary of Rs. 2,500 per month and Munna was to get a commission of Rs. 10,000 per year. Interest on capital was to be allowed @5% per annum and interest on drawings was to be charged @ 6% per annum. Interest on Pappu’s drawings Rs. 1,250 and on Munna’s drawings Rs. 425. Capital of the partners were Rs. 2,00,000 and Rs. 1,50,000 respectively, and were fixed The firm earned a profit of Rs. 90,475 for the year ended 31.03.2014. Prepare Profit and Loss Appropriation Account of the firm.
Answer: Share in profit: PappuRs. 20,850 and MunnaRs. 13,900.

2. Ram and Shyam started a partnership business on 1st January, 2015. Their capital contributions were Rs. 2,00,000 and Rs. 10,0000 respectively. The partnership deed provided:
i. Interest on capitals @10% p.a.
ii. Ram, to get a salary of Rs. 2,000 p.m. and ShyamRs. 3,000 p.m.
iii. Profits are to be shared in the ratio of 3:2.
The profits for the year ended 31st December, 2015 before making above appropriations were Rs. 2,16,000. Interest on Drawings amounted to Rs. 2,200 for Ram and Rs. 2,500 for Shyam. Prepare Profit and Loss Appropriation Account.
Answer: Profit and Loss Appropriation Account
for the year ending on 31st Dec., 2007

Q.3 P and Q are partners with capitals of Rs. 6,00,000 and Rs. 4,00,000 respectively.
The profit and Loss
Account of the firm showed a net Profit of Rs. 4, 26,800 for the year. Prepare Profit and Loss
Appropriation account after taking the following into consideration:-
(i) Interest on P's Loan of Rs. 2,00,000 to the firm
(ii) Interest on 'capital to be allowed @ 6% p.a.
(iii) Interest on Drawings @ 8% p.a. Drawings were; P Rs. 80,000 and Q Rs. 50,000.
(iv) Q is to be allowed a commission on sales @ 3%. Sales for the year was Rs. 10,00,000
(v) 10% of the divisible profits is to be kept in a Reserve Account.
Answer: Profit and Loss Account for the year ended………..

Profit and Loss Appropriation Account for the year ended……………..

4.Satnam and Qureshi after doing their MBA decided to start a partnership firm to manufacture ISI marked electronic goods for economically weaker section of the society. Satnam also expressed his willingness to admit Juliee as a partner without capital who is specially abled but a very creative and intelligent friend of him. Qureshi agreed to this. They formed a partnership on 1st April 2012 on the following terms.
(i) Satnam will contribute Rs. 4,00,000 and Qureshi will contribute 2,00,000 as capitals.
(ii) Satnam, Qureshi and Juliee will share profits in the ratio of 2:2:1.
(iii) Interest on capital will be allowed @6%pa.
Due to shortage of capital Satnam contributed 50,000 on 30th September, 2012 and
Quresh and Qureshi contributed 20,000 on 1st January, 2013 as additional capital.
The profit of the firm for the year ended 31st March,2013 was Rs.3,37,800.
Identify any two values which the firm wants to communicate to the society.
Prepare Profit and Loss Appropriation Account for the year ending 31st March 2013.
Answer: Value which the firm wants to communicate to the society.
(a) i. Adherence to law to manufacturing ISI Marked electronic goods
ii. Sensitivity towards specially able people
Divisible profit- Rs.3,00,000; share of Satnam-Rs.1,20,000; Share of
Qureshi-Rs.1,20,000; Share of Juliee-60,000