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All questions of Accounting for Partnerships : Basic Concepts for Commerce Exam
Money withdrawn by a partner on 1st July Rs. 20,000 and interest on drawings is fixed @ 6% p.a. (Books are closed on 31st March.) The amount of interest will be Rupees:
- a)900
- b)1200
- c)600
- d)No interest will be charged.
Correct answer is option 'A'. Can you explain this answer?
Money withdrawn by a partner on 1st July Rs. 20,000 and interest on drawings is fixed @ 6% p.a. (Books are closed on 31st March.) The amount of interest will be Rupees:
a)
900
b)
1200
c)
600
d)
No interest will be charged.
|
Arun Yadav answered |
Correct Answer :- A
Explanation : Loan interest to be provided @ 6% p.a.
Loan Amount = ₹ 20,000
Time (from 1st July to 31st March) = 9 months
A’s loan interest = 20,000 * 6/100 * 9/12
= 900
This a MCQ (Multiple Choice Question) based practice test of Chapter 1 - Fundamentals of partnership and Goodwill of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinationsQ 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 61
- b)Section 13
- c)Section 48
- d)Section 4
Correct answer is 'D'. Can you explain this answer?
This a MCQ (Multiple Choice Question) based practice test of Chapter 1 - Fundamentals of partnership and Goodwill of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinations
Q 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 61
b)
Section 13
c)
Section 48
d)
Section 4
|
Nandini Iyer answered |
Section 4 in The Indian Partnership Act, 1932
Definition of “partnership”, “partner”, “firm” and “firm name”.—’’Partnership” is 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. Persons who have entered into partnership with one another are called individually “partners” and collectively a “firm”, and the name under which their business is carried on is called the “firm name”.
It is better to have the agreement in writing to avoid any ___- a)Dispute
- b)Audit
- c)Loss
- d)Case
Correct answer is option 'A'. Can you explain this answer?
It is better to have the agreement in writing to avoid any ___
a)
Dispute
b)
Audit
c)
Loss
d)
Case
|
Gaurav Saini answered |
Partnership deed plays important role in regulating the duties and responsibilities of each partner. A written partnership deed is useful to resolve disputes and misunderstanding among partners because every thing is in written form.
Aryan and Gauri were partner in a firm sharing profits and losses in the ratio of 2:1. Their capital was R.s. 90,000 and Rs. 60,000 respectively. They were entitled for interest on capital @ 12% p.a. The firm earned a profit of Rs. 84,000 after allowing interest on capitals. Profits will be distributed among them will be:
- a)Rs. 44,000; Rs. 22,000
- b)Rs. 56,000; Rs. 28,000
- c)Rs. 50,400; Rs. 33,600
- d)Rs. 39,600; Rs. 26,400
Correct answer is option 'B'. Can you explain this answer?
Aryan and Gauri were partner in a firm sharing profits and losses in the ratio of 2:1. Their capital was R.s. 90,000 and Rs. 60,000 respectively. They were entitled for interest on capital @ 12% p.a. The firm earned a profit of Rs. 84,000 after allowing interest on capitals. Profits will be distributed among them will be:
a)
Rs. 44,000; Rs. 22,000
b)
Rs. 56,000; Rs. 28,000
c)
Rs. 50,400; Rs. 33,600
d)
Rs. 39,600; Rs. 26,400
|
Niharika Datta answered |
The profit for the year is 84000 and that is given after allowing the interest on capital to the partners hence we can directly calculate the profit share for both the partners for Aryan it is 84000×2/3=56000, and for Gauri it is 84000×1/3=28000 hence option B is the correct answer
From the following, what is important for a partnership?- a)Capital more than 15 Crore
- b)Registration
- c)Sharing of Profits
- d)More than 10 Persons
Correct answer is 'C'. Can you explain this answer?
From the following, what is important for a partnership?
a)
Capital more than 15 Crore
b)
Registration
c)
Sharing of Profits
d)
More than 10 Persons
|
Arshiya Datta answered |
Sharing of profits is must for a partnership business. Profits earned by a partnership firm should be divided amongst partners in the agreed profit sharing ratio. If profit sharing ratio is not mentioned in the partnership deed or partnership deed is silent on the distribution of profits, in such a case profits will be shared equally.
Profit or loss on revaluation is shared among the old partners in _______ ratio. - a)Old Profit Sharing
- b)New Profit Sharing
- c)Capital
- d)Equal
Correct answer is option 'A'. Can you explain this answer?
Profit or loss on revaluation is shared among the old partners in _______ ratio.
a)
Old Profit Sharing
b)
New Profit Sharing
c)
Capital
d)
Equal
|
Shriyanshu Keshari answered |
Bcoz all the assets and liabilities are old which are appreciated or depriciated then they divide in their old ratio
A partner acts as ……………for a firm. - a)Agent
- b)Third Party
- c)Employee
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
A partner acts as ……………for a firm.
a)
Agent
b)
Third Party
c)
Employee
d)
None of the above
|
|
Nandini Iyer answered |
Implied authority of partner as agent of the firm
Subject to the provisions of section 22, the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm. The authority of a partner to bind the firm conferred by this section is called his implied authority.
In the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to-
- submit a dispute relating to the business of the firm to arbitration,
- open a banking account on behalf of the firm in his own name,
- compromise or relinquish any claim or portion of a claim by the firm,
- withdraw a suit or proceeding filed on behalf of the firm,
- admit any liability in a suit or proceeding against the firm,
- acquire immovable property on behalf of the firm,
- transfer immovable property belonging to the firm, or
- enter into partnership on behalf of the firm.
Registration of partnership firm is _________- a)Not Allowed
- b)Compulsory
- c)Optional
- d)Under Companies Act 2013
Correct answer is option 'C'. Can you explain this answer?
Registration of partnership firm is _________
a)
Not Allowed
b)
Compulsory
c)
Optional
d)
Under Companies Act 2013
|
|
Arjun Singhania answered |
Partnerships in India are governed by the Indian Partnership Act, 1932. As per the Partnership Act, Registration of Partnership Firms is optional and is entirely at the discretion of the partners. The Partners may or may not register their Partnership Agreement.
Below are listed Content of partnership Deed except:- a)Interest on Debentures
- b)Interest on Partners capital and drawings
- c)Name of the firm.
- d)Ratio in which profit or losses shall be share
Correct answer is option 'A'. Can you explain this answer?
Below are listed Content of partnership Deed except:
a)
Interest on Debentures
b)
Interest on Partners capital and drawings
c)
Name of the firm.
d)
Ratio in which profit or losses shall be share
|
Sankar Bose answered |
Interest paid on debentures is a charge against the profit. Partnership Deed is mainly concerned with the appropriations and some charge. Main contents of partnership deed are interest on capital, interest on drawings, name of the firm, partners, their names and address etc.
If there is no partnership deed then interest on capital will be charged at ______________p.a.- a)6%
- b)8%
- c)9%
- d)NIL
Correct answer is option 'D'. Can you explain this answer?
If there is no partnership deed then interest on capital will be charged at ______________p.a.
a)
6%
b)
8%
c)
9%
d)
NIL
|
Rajat Patel answered |
A partnership deed, also known as a partnership agreement, is a document that outlines in detail the rights and responsibilities of all parties to a business operation. It has the force of law and is designed to guide the partners in the conduct of the business. It is helpful in preventing disputes and disagreements over the role of each partner in the business and the benefits which are due to them.They charged at 6% if interest on capital if there is no partnership deed.
When a partner withdraws ?4000 at the beginning of each quarter, the interest on his drawings @ 6% p.a. will be ?:- a)240
- b)960
- c)480
- d)600
Correct answer is 'D'. Can you explain this answer?
When a partner withdraws ?4000 at the beginning of each quarter, the interest on his drawings @ 6% p.a. will be ?:
a)
240
b)
960
c)
480
d)
600
|
Ishan Choudhury answered |
Correct Answer :- d
Explanation : If a fixed amount is withdrawn on the first day of every quarter, then the interest is calculated on the amount withdrawn for a period of seven and half months.
Total drawings made by the partner during the whole year is 4000 * 4 = 16000
Interest on drawings = 16000 * 6/100 * 7.5/12
= 600
If dates of the withdrawal of drawings are not given then interest on drawings should be charged- a)For 12months
- b)For 0 months
- c)For 6 months
- d)For 8 months
Correct answer is option 'C'. Can you explain this answer?
If dates of the withdrawal of drawings are not given then interest on drawings should be charged
a)
For 12months
b)
For 0 months
c)
For 6 months
d)
For 8 months
|
|
Cute Priyanshu answered |
If the dates of the withdrawal of drawings are not given then interest on drawing should be charged for 6 months.
Ram is a partner. He made drawings as follows:
July 1 Rs. 200
August 1 Rs. 200
September 1 Rs. 300
November 1 Rs. 50
February 1 Rs. 100
If the rate of interest on drawings is 6% and accounts are closed on March 31 the interest on drawing is:
- a)Rs. 29.75
- b)Rs. 35
- c)Rs. 30
- d)Rs. 40
Correct answer is option 'A'. Can you explain this answer?
Ram is a partner. He made drawings as follows:
July 1 Rs. 200
August 1 Rs. 200
September 1 Rs. 300
November 1 Rs. 50
February 1 Rs. 100
July 1 Rs. 200
August 1 Rs. 200
September 1 Rs. 300
November 1 Rs. 50
February 1 Rs. 100
If the rate of interest on drawings is 6% and accounts are closed on March 31 the interest on drawing is:
a)
Rs. 29.75
b)
Rs. 35
c)
Rs. 30
d)
Rs. 40
|
Sameer Basu answered |
Calculation of interest on drawings:
Step 1: Calculate the average amount of drawings
Average amount of drawings = Total amount of drawings / Number of months
= (200 + 200 + 300 + 50 + 100) / 5
= Rs. 170
Step 2: Calculate the interest on drawings
Interest on drawings = Average amount of drawings x Rate of interest x Time
Time = 9 months (from July 1 to March 31)
Interest on drawings = 170 x 6/100 x 9/12
= Rs. 7.65
Therefore, the interest on drawings is Rs. 7.65.
However, this interest is only for Ram's share as he is a partner. To calculate the interest on drawings for the partnership, we need to multiply this amount by the ratio of his share in the partnership.
Let's assume that Ram's share in the partnership is 1/3
Interest on drawings for partnership = 7.65 x 1/3
= Rs. 2.55
Therefore, the interest on drawings for the partnership is Rs. 2.55.
But, the question asks for the interest on drawings for Ram only, so we need to subtract this amount from the total interest on drawings calculated earlier.
Interest on drawings for Ram = 7.65 - 2.55
= Rs. 5.10
Therefore, the interest on drawings for Ram is Rs. 5.10.
However, this calculation is based on the assumption that the interest is calculated on a simple interest basis. If the interest is calculated on a compound interest basis, the calculation will be different.
Step 1: Calculate the average amount of drawings
Average amount of drawings = Total amount of drawings / Number of months
= (200 + 200 + 300 + 50 + 100) / 5
= Rs. 170
Step 2: Calculate the interest on drawings
Interest on drawings = Average amount of drawings x Rate of interest x Time
Time = 9 months (from July 1 to March 31)
Interest on drawings = 170 x 6/100 x 9/12
= Rs. 7.65
Therefore, the interest on drawings is Rs. 7.65.
However, this interest is only for Ram's share as he is a partner. To calculate the interest on drawings for the partnership, we need to multiply this amount by the ratio of his share in the partnership.
Let's assume that Ram's share in the partnership is 1/3
Interest on drawings for partnership = 7.65 x 1/3
= Rs. 2.55
Therefore, the interest on drawings for the partnership is Rs. 2.55.
But, the question asks for the interest on drawings for Ram only, so we need to subtract this amount from the total interest on drawings calculated earlier.
Interest on drawings for Ram = 7.65 - 2.55
= Rs. 5.10
Therefore, the interest on drawings for Ram is Rs. 5.10.
However, this calculation is based on the assumption that the interest is calculated on a simple interest basis. If the interest is calculated on a compound interest basis, the calculation will be different.
Partners have decided to provide jobs to the women of economically backward society. What values can be depicted from the decision of partners.
- a)Financial Security to the weaker section of society
- b)Right to Education
- c)Social Responsibility
- d)Both Financial Security to the weaker section of society and Social Responsibility
Correct answer is option 'D'. Can you explain this answer?
Partners have decided to provide jobs to the women of economically backward society. What values can be depicted from the decision of partners.
a)
Financial Security to the weaker section of society
b)
Right to Education
c)
Social Responsibility
d)
Both Financial Security to the weaker section of society and Social Responsibility
|
|
Aryan Khanna answered |
The partners has taken a decision to provide employment to the women of economically backward section of the society. By this decision, partners are communicating the valued to the society i.e. financial security to the weaker section of society and social responsibility.
Salary paid to the manager will be shown in:- a)Profit and loss appropriation account
- b)Partners current account only
- c)Profit and loss account
- d)Partners capital account only
Correct answer is 'C'. Can you explain this answer?
Salary paid to the manager will be shown in:
a)
Profit and loss appropriation account
b)
Partners current account only
c)
Profit and loss account
d)
Partners capital account only
|
|
Naina Sharma answered |
Salary paid to manager is a charge against the profit. It means this transaction will reduce the profit of the firm. All charge items are shown in profit and loss account only. That’s why salary paid to manager is shown in profit and loss account.
Rent paid to a partner comes under:- a)Profit and Loss Account
- b)Profit and Loss appropriation Account
- c)Partners capital Account
- d)Partners current Account
Correct answer is option 'A'. Can you explain this answer?
Rent paid to a partner comes under:
a)
Profit and Loss Account
b)
Profit and Loss appropriation Account
c)
Partners capital Account
d)
Partners current Account
|
Mansi Mukherjee answered |
Rent paid to a partner is a charge against the profit. It means it will reduce the profit. That’s why it is shown in Profit and Loss Account instead of Profit and Loss Appropriation Account.
What would be the profit sharing ratio if the partnership act is complied with?- a)As per agreement
- b)Equally
- c)In Capital Ratio
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
What would be the profit sharing ratio if the partnership act is complied with?
a)
As per agreement
b)
Equally
c)
In Capital Ratio
d)
None of the above
|
|
Nikita Singh answered |
According to the partnership act the partners are to share profits equally unless anything else is agreed by the partners or is in the agreement.
Firm has earned exceptionally high profits from a contract which will not be renewed. In such a cash the profit from this contract will not be included in …- a)Profit sharing of the partners
- b)Calculation of the goodwill
- c)Both
- d)None
Correct answer is option 'B'. Can you explain this answer?
Firm has earned exceptionally high profits from a contract which will not be renewed. In such a cash the profit from this contract will not be included in …
a)
Profit sharing of the partners
b)
Calculation of the goodwill
c)
Both
d)
None
|
|
Sounak Jain answered |
Because it is not related to the admission or retirement of the partners .At the time of admission or retirement goodwill will be calculated
A and B are partners sharing profit and losses in the ratio of 3:5. On 1st July, 2012 A and B advanced loan to the business of ?40,000 and ?20,000 respectively at the agreed @ 5% p.a. Calculate Interest on loan. When accounting books are closed on 31st December every year and partnership deed allows interest on loan to the partners.- a)A= ?1,000 and B= ?500
- b)A= ?2,000 and B= ?500
- c)A= ?1,000 and B= ?1500
- d)A= ?1,500 and B=?500
Correct answer is option 'A'. Can you explain this answer?
A and B are partners sharing profit and losses in the ratio of 3:5. On 1st July, 2012 A and B advanced loan to the business of ?40,000 and ?20,000 respectively at the agreed @ 5% p.a. Calculate Interest on loan. When accounting books are closed on 31st December every year and partnership deed allows interest on loan to the partners.
a)
A= ?1,000 and B= ?500
b)
A= ?2,000 and B= ?500
c)
A= ?1,000 and B= ?1500
d)
A= ?1,500 and B=?500
|
Abhiram Choudhary answered |
Calculation of Interest on loan:
Interest on A’s Loan = 40,000 × 5/100 × 6/12 = 1,000
Interest on B’s Loan = 20,000 × 5/100 × 6/12 = 500
Interest on A’s Loan = 40,000 × 5/100 × 6/12 = 1,000
Interest on B’s Loan = 20,000 × 5/100 × 6/12 = 500
The persons who have entered into a partnership business with one another are individually called- a)Firm
- b)Co-operatives
- c)Partner
- d)Company
Correct answer is option 'C'. Can you explain this answer?
The persons who have entered into a partnership business with one another are individually called
a)
Firm
b)
Co-operatives
c)
Partner
d)
Company
|
|
Arjun Singhania answered |
Indian Partnership Act, 1932
Sec 4. Definition of "partnership", "partner", "firm" and "firm name"
"Partnership" is 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.
Persons who have entered into partnership with one another are called individually "partners" and collectively a "firm", and the name under which their business is carried on is called the "firm name".
Partnership is established by ___________- a)Lawful Business
- b)Agreement
- c)Law
- d)Section 4
Correct answer is option 'B'. Can you explain this answer?
Partnership is established by ___________
a)
Lawful Business
b)
Agreement
c)
Law
d)
Section 4
|
Saumya Desai answered |
The beginning of partnership is always because of an agreement. There should be an agreement among the partners to start a partnership business. Agreement can be written or oral that does not matter.
Indian Partnership Act year is- a)1934
- b)1935
- c)1933
- d)1932
Correct answer is option 'D'. Can you explain this answer?
Indian Partnership Act year is
a)
1934
b)
1935
c)
1933
d)
1932
|
|
Rajat Patel answered |
The Indian Partnership Act, 1932. An Act to define and amend the law relating to partnership. 1 October 1932 except section 69 which came into force on the 1st day of October 1933.
When liabilities of partners are unlimited that implies- a)Not liable for any loss in the partnership
- b)Only to the extent of capital introduced
- c)Only 50 % of Loss occurred
- d)His private assets can also be used for paying off the firm’s debt
Correct answer is option 'D'. Can you explain this answer?
When liabilities of partners are unlimited that implies
a)
Not liable for any loss in the partnership
b)
Only to the extent of capital introduced
c)
Only 50 % of Loss occurred
d)
His private assets can also be used for paying off the firm’s debt
|
Poonam Reddy answered |
Mostly, the liability of the partners of a firm is unlimited. Their personal properties can be disposed off to pay the debts of the firm if required. The creditors can claim their dues from any one of the partner or from all of them, meaning partners are liable:
• Individually
• Collectively
• Individually
• Collectively
Interest on capital to be given to X & Y when Profits shown by P/L A/C Rs. 1500 and capitals invested by X & Y are Rs. 30,000 and 20,000 (rate of interest is 10% p.a.).- a)900 and 600
- b)300 and 200
- c)600 and 900
- d)3000 and 2000
Correct answer is option 'A'. Can you explain this answer?
Interest on capital to be given to X & Y when Profits shown by P/L A/C Rs. 1500 and capitals invested by X & Y are Rs. 30,000 and 20,000 (rate of interest is 10% p.a.).
a)
900 and 600
b)
300 and 200
c)
600 and 900
d)
3000 and 2000
|
Mrinalini Bose answered |
Interest due to X and Y is ?3,000 and ?2,000 (total Rs.5,000) but profit is only ?1,500. In this case Ratio of appropriation will be 3 : 2 (3,000 : 2,000). Now divide profit ?1,500 in Ratio of appropriation i.e. 3:2.
Which of the following is not a content of partnership deed?- a)Interest on Bank Loan
- b)Interest on Partner’s Loan
- c)Interest on Capital
- d)Interest on Drawings
Correct answer is option 'A'. Can you explain this answer?
Which of the following is not a content of partnership deed?
a)
Interest on Bank Loan
b)
Interest on Partner’s Loan
c)
Interest on Capital
d)
Interest on Drawings
|
|
Poonam Reddy answered |
Interest on bank loan will be fixed by the bank and not by the partners or partnership deed. A partnership deed can show only those contents which are concerned with partners or firm. Interest on bank loan is a charge against the profit. It means it will be paid in all conditions whether there is profit or loss in the business.
What is the status of partnership from an accounting viewpoint- a)Not separate from the owners.
- b)a separate business entity.
- c)Both a separate business entity and Not separate from the owners
- d)None of these
Correct answer is option 'B'. Can you explain this answer?
What is the status of partnership from an accounting viewpoint
a)
Not separate from the owners.
b)
a separate business entity.
c)
Both a separate business entity and Not separate from the owners
d)
None of these
|
|
Alok Mehta answered |
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.
If ?3,000 withdrawn by a partner on the first day of every quarter, interest on drawings will be calculated for:- a)4.5 months
- b)6 months
- c)5.5 months
- d)7.5 months
Correct answer is option 'D'. Can you explain this answer?
If ?3,000 withdrawn by a partner on the first day of every quarter, interest on drawings will be calculated for:
a)
4.5 months
b)
6 months
c)
5.5 months
d)
7.5 months
|
Anshu Singh answered |
When a partner draws a fixed amount in the beginning of each quarter for his personal use then average period will be calculated as : Time after first drawing 12 months + Time after last drawing 3 months, and average period will be = 15/2 = 7.5.
The members of the partnership firm are called- a)Partners
- b)Managers
- c)Directors
- d)Proprietors
Correct answer is option 'A'. Can you explain this answer?
The members of the partnership firm are called
a)
Partners
b)
Managers
c)
Directors
d)
Proprietors
|
|
Priya Patel answered |
The members of the Partnership firm are called as Partners. The members of the company are called as shareholders of a company. Partnership Form of business is governed by "The Indian Partnership Act, 1932." Option (A) is Correct.
Partners collectively are called :- a)Firm’s name
- b)Company
- c)Business
- d)Firm
Correct answer is option 'D'. Can you explain this answer?
Partners collectively are called :
a)
Firm’s name
b)
Company
c)
Business
d)
Firm
|
Manik Sodhi answered |
Partners are collectively known as firm and individually known as partners.
If the partnership agreement is silent as to Interest on capital- a)6% interest on capital is allowed
- b)No interest on capital is allowed
- c)2% interest on capital is allowed
- d)5% interest on capital is allowed
Correct answer is option 'B'. Can you explain this answer?
If the partnership agreement is silent as to Interest on capital
a)
6% interest on capital is allowed
b)
No interest on capital is allowed
c)
2% interest on capital is allowed
d)
5% interest on capital is allowed
|
Vaishnavi Bajaj answered |
When rate of interest on capital is not mentioned in partnership deed, partners cannot claim for interest on capital. Interest on capital will be allowed to the partners only if rate of interest is mentioned in the partnership deed.
If partners are running a business without a partnership deed how much interest on their capitals will be given?- a)Only for 6 months @ 6% p.a.
- b)6% p.a. on capital
- c)No interest on capital
- d)10 % p.a. on capital
Correct answer is option 'C'. Can you explain this answer?
If partners are running a business without a partnership deed how much interest on their capitals will be given?
a)
Only for 6 months @ 6% p.a.
b)
6% p.a. on capital
c)
No interest on capital
d)
10 % p.a. on capital
|
Anushka Desai answered |
Partners are entitled to interest on capital only if rate of interest is mentioned in the partnership deed. But in this case business is continued without partnership deed. As per the Partnership Act, 1932, partners are enttiled to interest on capital only when there is partnership deed and rate of interest is mentioned in it.
Under fluctuating Capital method how many accounts of each partner is maintained- a)1
- b)2
- c)3
- d)4
Correct answer is option 'A'. Can you explain this answer?
Under fluctuating Capital method how many accounts of each partner is maintained
a)
1
b)
2
c)
3
d)
4
|
Nandini Chakraborty answered |
When accounts are prepared under fluctuating capital method, only one account is prepared for the partners i.e. partners capital account. All items related to partners i.e. capital, interest on capital, interest on drawings, salary, commission etc. are shown in partners capital account.
Kapur and Sharma are partners in a partnership firm. Calculate the interest on drawings made by Kapur and Sharma @ 10% p.a. for the year ending 31st December 2013. If, Kapur withdrew Rs. 2,000 per month in the beginning whereas Sharma withdrew same amount at the end of every month.- a)Kapur – Rs. 2,400 , Sharma – Rs. 2,400
- b)Kapur – Rs. 1,100, Sharma – Rs. 1,200
- c)Kapur – Rs. 1,200, Sharma – Rs. 1,200
- d)Kapur – Rs. 1,300, Sharma – Rs. 1,100
Correct answer is option 'D'. Can you explain this answer?
Kapur and Sharma are partners in a partnership firm. Calculate the interest on drawings made by Kapur and Sharma @ 10% p.a. for the year ending 31st December 2013. If, Kapur withdrew Rs. 2,000 per month in the beginning whereas Sharma withdrew same amount at the end of every month.
a)
Kapur – Rs. 2,400 , Sharma – Rs. 2,400
b)
Kapur – Rs. 1,100, Sharma – Rs. 1,200
c)
Kapur – Rs. 1,200, Sharma – Rs. 1,200
d)
Kapur – Rs. 1,300, Sharma – Rs. 1,100
|
|
Hrishikesh Pillai answered |
Interest on Kapur's drawings:
Total amount of drawings made by Kapur = Rs. 2,000 x 12 months = Rs. 24,000
Since Kapur made the drawings at the beginning of every month, we can assume that the average time for which he used the money is 6 months.
Therefore, interest on Kapur's drawings = Rs. 24,000 x 10% x 6/12 = Rs. 1,200
b) Sharma
Total amount of drawings made by Sharma = Rs. 2,000 x 12 months = Rs. 24,000
Since Sharma made the drawings at the end of every month, we can assume that the average time for which he used the money is 11.5 months (since he made the first drawing at the end of January and the last drawing at the end of December).
Therefore, interest on Sharma's drawings = Rs. 24,000 x 10% x 11.5/12 = Rs. 2,300.
Total amount of drawings made by Kapur = Rs. 2,000 x 12 months = Rs. 24,000
Since Kapur made the drawings at the beginning of every month, we can assume that the average time for which he used the money is 6 months.
Therefore, interest on Kapur's drawings = Rs. 24,000 x 10% x 6/12 = Rs. 1,200
b) Sharma
Total amount of drawings made by Sharma = Rs. 2,000 x 12 months = Rs. 24,000
Since Sharma made the drawings at the end of every month, we can assume that the average time for which he used the money is 11.5 months (since he made the first drawing at the end of January and the last drawing at the end of December).
Therefore, interest on Sharma's drawings = Rs. 24,000 x 10% x 11.5/12 = Rs. 2,300.
Fluctuating Capital account is credited with: - a)Interest on Capital
- b)Profit of the year
- c)Remuneration to the partners
- d)All of these
Correct answer is option 'D'. Can you explain this answer?
Fluctuating Capital account is credited with:
a)
Interest on Capital
b)
Profit of the year
c)
Remuneration to the partners
d)
All of these
|
Jayant Mishra answered |
Fluctuating Capital Method
Under this method as is apparent from the name, capital of each partner goes on changing from time to time. Each partner will have his separate capital account, which will be credited by his initial investment and any additional capital introduced during the year will also be credited to his capital account.
All the adjustments, which result decrease in capital will be debited to partner’s capital, such as drawing made by each partner, interest on drawings and share of loss. On the other hand, adjustments resulting increase in capital will be credited to partner’s capital, like interest on capital, partners salary if any, partner’s share of profit etc.
Balance of each partner’s capital account will be shown in the balance sheet. Debit balance of partner’s capital account is shown on the asset side and credit balance is shown on the liability side.
Explanatory Note: It should be noted that where nothing is specifically mentioned the capital method to be adopted will be the fluctuating capital method.
How would you close the Partner’s Drawings 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’
Correct answer is option 'A'. Can you explain this answer?
How would you close the Partner’s Drawings 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’
|
|
Nandini Iyer answered |
The journal entry to close the drawing or withdrawal account of a sole proprietorship includes a debit to the owner's capital account and a credit to the drawing account. To illustrate the closing entry, let's assume that at the end of the accounting year the account Eve Jones, Drawing has a debit balance of $24,000.
In the absence of partnership deed profit sharing ratio will be:- a)Equal ratio irrespective of partners capitals.
- b)Profits will not be distributed
- c)Capital Ratio
- d)Senior partner will get more profit
Correct answer is option 'A'. Can you explain this answer?
In the absence of partnership deed profit sharing ratio will be:
a)
Equal ratio irrespective of partners capitals.
b)
Profits will not be distributed
c)
Capital Ratio
d)
Senior partner will get more profit
|
Kiran Mehta answered |
When there is no partnership deed or partnership deed is prepared but it is silent on profit sharing ratio, in such a case rules of Partnership Act, 1932 will be applicable. According to which, profits or losses will be shared by the partners equally irrespective of their capitals.
Features of a partnership firm are: - a)Two or more persons carrying common business under and agreement
- b)Sharing profits and losses in the fixed ratio
- c)Business carried by all or any of them acting for all
- d)All of the above
Correct answer is option 'D'. Can you explain this answer?
Features of a partnership firm are:
a)
Two or more persons carrying common business under and agreement
b)
Sharing profits and losses in the fixed ratio
c)
Business carried by all or any of them acting for all
d)
All of the above
|
|
Sanjana Khanna answered |
Features of a Partnership Firm
Therefore, the correct answer is option 'D', which states that all of the above features are true for a partnership firm.
- Agreement: A partnership firm is formed by two or more persons who agree to carry on a common business with the objective of earning profits.
- Sharing of Profits and Losses: The partners of a firm share the profits and losses of the business in a fixed ratio. The ratio is decided upon at the time of the formation of the partnership and is mentioned in the partnership agreement.
- Joint Business: The business of the partnership firm is jointly carried on by all the partners or by any one of them acting on behalf of all the partners.
Therefore, the correct answer is option 'D', which states that all of the above features are true for a partnership firm.
What balance does a Partner’s Current Account has?- a)Debit balance
- b)Credit balance
- c)Either ‘a’ or ‘b’
- d)None of the above
Correct answer is option 'C'. Can you explain this answer?
What balance does a Partner’s Current Account has?
a)
Debit balance
b)
Credit balance
c)
Either ‘a’ or ‘b’
d)
None of the above
|
|
Shanaya Dasgupta answered |
Hold in a partnership?
A partner holds a balance of power, responsibility, and ownership in a partnership. They have a say in the decision-making process and share the profits and losses of the business. Partners are also responsible for contributing their skills, expertise, and resources to ensure the success of the partnership. Additionally, partners have a legal obligation to act in the best interest of the partnership and its stakeholders, including other partners, employees, and customers.
A partner holds a balance of power, responsibility, and ownership in a partnership. They have a say in the decision-making process and share the profits and losses of the business. Partners are also responsible for contributing their skills, expertise, and resources to ensure the success of the partnership. Additionally, partners have a legal obligation to act in the best interest of the partnership and its stakeholders, including other partners, employees, and customers.
Subject to contract between the partners, interest on capital is to be provided out of profits only. In case of insufficient profits (i.e. net profit less than the amount of interest on capital), the amount of profit is distributed:- a)In equal ratio
- b)In profit sharing ratio
- c)In capital ratio
- d)Restricted to 6% of partner’s capital
Correct answer is option 'C'. Can you explain this answer?
Subject to contract between the partners, interest on capital is to be provided out of profits only. In case of insufficient profits (i.e. net profit less than the amount of interest on capital), the amount of profit is distributed:
a)
In equal ratio
b)
In profit sharing ratio
c)
In capital ratio
d)
Restricted to 6% of partner’s capital
|
|
Alok Mehta answered |
Capital adequacy ratio. Capital Adequacy Ratio (CAR) is also known as Capital to Risk (Weighted) Assets Ratio (CRAR), is the ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss and complies with statutory Capital requirements.
Revaluation A/c is prepared to find out the profit or loss on :- a)sale of fixed assets
- b)revaluation of assets and liabilities
- c)sale of goods
- d)sale of services
Correct answer is option 'B'. Can you explain this answer?
Revaluation A/c is prepared to find out the profit or loss on :
a)
sale of fixed assets
b)
revaluation of assets and liabilities
c)
sale of goods
d)
sale of services
|
Om Desai answered |
A Revaluation Account is prepared in order to ascertain net gain or loss on revaluation of assets and liabilities and bringing unrecorded items into books. The Revaluation profit or loss is transferred to the capital account of all partners including retiring or deceased partners in their old profit sharing ratio.
‘Salary Rs. 5,000 paid to partner’ The above item will appear in _________.- a)Notes to Accounts
- b)Revaluation A/c
- c)Profit and Loss Appropriation A/c
- d)Trading A/c
Correct answer is option 'C'. Can you explain this answer?
‘Salary Rs. 5,000 paid to partner’ The above item will appear in _________.
a)
Notes to Accounts
b)
Revaluation A/c
c)
Profit and Loss Appropriation A/c
d)
Trading A/c
|
|
Hrishikesh Mukherjee answered |
Profit and loss appropriation account is an account where we record all transactions related to the partners like for example their salary,interest on capital,intrest on darawing etc.so salary to partner will also appear on debit side of p&l appropriation account
This a MCQ (Multiple Choice Question) based practice test of Chapter 1 - Fundamentals of partnership and Goodwill of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinationsQ 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 61
- b)Section 13
- c)Section 48
- d)Section 4
Correct answer is option 'D'. Can you explain this answer?
This a MCQ (Multiple Choice Question) based practice test of Chapter 1 - Fundamentals of partnership and Goodwill of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinations
Q 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 61
b)
Section 13
c)
Section 48
d)
Section 4
|
|
Jayant Mishra answered |
Partnership Firms in India are governed by the Indian Partnership Act, 1932. As per Section 4 of the Indian Partnership Act:-
“Partnership is 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”
Thus as per the above definition, there are 5 elements which constitute of a partnership namely: (1) There must be a contract; (2) between two or more persons; (3) who agree to carry on a business; (4) with the object of sharing profits and (5) the business must be carried on by all or any of them acting for all.
On the basis of following information, answer the given questions:Asif and Ravi are partners in a firm, sharing profits and losses in the ratio of 3 : 2. Their fixed capitals as on 1st April, 2016 were ₹ 6,00,000 and ₹ 4,00,000 respectively.Their partnership deed provides for the following :(i) Partners are to be allowed interest on their capital @ 10% per annum.(ii) They are to be charged interest on drawings @ 4% per annum.(iii) Asif is entitled to a salary of ₹ 2,000 per month.(iv) Ravi is entitled to a commission of 5% of the net profit of the firm before charging such commission.(v) Asif is entitled to a rent of ₹ 3,000 per month for the use of his premises by the firm.The net profit of the firm for the year ended 31st March, 2017, before providing for any of the above clauses was ₹ 4,00,000.Both partners withdrew ₹ 5,000 at the beginning of every month for the entire year.How much commission is to be given to Ravi?- a)₹ 19,047
- b)₹ 18,200
- c)₹ 19,200
- d)₹ 18,047
Correct answer is option 'B'. Can you explain this answer?
On the basis of following information, answer the given questions:
Asif and Ravi are partners in a firm, sharing profits and losses in the ratio of 3 : 2. Their fixed capitals as on 1st April, 2016 were ₹ 6,00,000 and ₹ 4,00,000 respectively.
Their partnership deed provides for the following :
(i) Partners are to be allowed interest on their capital @ 10% per annum.
(ii) They are to be charged interest on drawings @ 4% per annum.
(iii) Asif is entitled to a salary of ₹ 2,000 per month.
(iv) Ravi is entitled to a commission of 5% of the net profit of the firm before charging such commission.
(v) Asif is entitled to a rent of ₹ 3,000 per month for the use of his premises by the firm.
The net profit of the firm for the year ended 31st March, 2017, before providing for any of the above clauses was ₹ 4,00,000.
Both partners withdrew ₹ 5,000 at the beginning of every month for the entire year.
How much commission is to be given to Ravi?
a)
₹ 19,047
b)
₹ 18,200
c)
₹ 19,200
d)
₹ 18,047
|
|
Arun Yadav answered |
Net Profit = ₹4,00,000 – ₹36,000 = ₹3 ,64,000
Commission = 5% of ₹3,64,000 = ₹18,200
In the absence of an agreement, partners are entitled to:- a)Salary
- b)commission
- c)Interest on loans and advances
- d)Profit share in capital ratio
Correct answer is option 'C'. Can you explain this answer?
In the absence of an agreement, partners are entitled to:
a)
Salary
b)
commission
c)
Interest on loans and advances
d)
Profit share in capital ratio
|
|
Rajveer Jain answered |
As per the partnership act, if the partnership deed is silent about the things mentioned above so in that case the partners are not entitled for any salary or interest on capital , but as per the provision even if the partnership deed is silent the partner is entitled for an interest @6% on loan or any advance given by him to the firm
From the following, identify a situation when fixed capitals of the partners may change?- a)When current accounts are opened
- b)When drawings are made by the partners
- c)When additional capital is introduced
- d)When there is loss in the business
Correct answer is option 'C'. Can you explain this answer?
From the following, identify a situation when fixed capitals of the partners may change?
a)
When current accounts are opened
b)
When drawings are made by the partners
c)
When additional capital is introduced
d)
When there is loss in the business
|
Mohit Yadav answered |
Fixed Capital change only in two situation:- 1)-When additional capital is introduced by any partner.2)-When Permanent withdrawing made by any partner
Interest on capital will be paid to the partners if provided for in the agreement but only from ………..
a)Current Profitsb)Reservesc)Accumulated Profitsd)Goodwill Correct answer is option 'A'. Can you explain this answer?
|
Ritika Iyer answered |
Interest on capital will be paid to the partners if provided for in the agreement but only from Accumulated Profits.
Mutual Agency implies:- a)Partner cannot bind other partner by his act
- b)Bound by the act of the other partners
- c)One partner can bind other partner by his act
- d)Both One partner can bind other partner by his act and Bound by the act of the other partners
Correct answer is option 'D'. Can you explain this answer?
Mutual Agency implies:
a)
Partner cannot bind other partner by his act
b)
Bound by the act of the other partners
c)
One partner can bind other partner by his act
d)
Both One partner can bind other partner by his act and Bound by the act of the other partners
|
Mehul Choudhary answered |
Explanation of Mutual Agency:
Mutual Agency in a partnership refers to the concept that each partner has the authority to bind the other partners through their actions. This means that each partner is not only bound by their own actions but also by the actions of their fellow partners.
Key Points:
- Partner's Authority: In a partnership with mutual agency, each partner is considered to have the authority to act on behalf of the partnership and bind the other partners.
- Binding Nature: This implies that any agreements, contracts, or transactions made by one partner are legally binding on all partners, even if they were not directly involved in the decision-making process.
- Responsibility: Partners in a mutual agency partnership share both the benefits and liabilities of each other's actions. This shared responsibility is a key feature of this type of partnership.
- Legal Implications: It is essential for partners to understand the implications of mutual agency, as it means that they are not only responsible for their own actions but also for the actions of their partners.
In conclusion, mutual agency in a partnership signifies that each partner has the authority to bind the other partners through their actions, leading to shared responsibility and legal implications for all partners involved.
Mutual Agency in a partnership refers to the concept that each partner has the authority to bind the other partners through their actions. This means that each partner is not only bound by their own actions but also by the actions of their fellow partners.
Key Points:
- Partner's Authority: In a partnership with mutual agency, each partner is considered to have the authority to act on behalf of the partnership and bind the other partners.
- Binding Nature: This implies that any agreements, contracts, or transactions made by one partner are legally binding on all partners, even if they were not directly involved in the decision-making process.
- Responsibility: Partners in a mutual agency partnership share both the benefits and liabilities of each other's actions. This shared responsibility is a key feature of this type of partnership.
- Legal Implications: It is essential for partners to understand the implications of mutual agency, as it means that they are not only responsible for their own actions but also for the actions of their partners.
In conclusion, mutual agency in a partnership signifies that each partner has the authority to bind the other partners through their actions, leading to shared responsibility and legal implications for all partners involved.
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
Correct answer is option 'B'. Can you explain this answer?
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
|
|
Adarsh Yadav answered |
B
Every partner is bound to attend diligently to his……….. in the conduct of the business.- a)Rights.
- b)Meetings
- c)Capital
- d)Duties
Correct answer is option 'D'. Can you explain this answer?
Every partner is bound to attend diligently to his……….. in the conduct of the business.
a)
Rights.
b)
Meetings
c)
Capital
d)
Duties
|
|
Arun Khanna answered |
Every partner is bound to attend diligently to his duties in the conduct of business. a partner is not entitled to receive remuneration for taking part in the conduct of the business the partner shall indemnify the firm from any loss caused due to his wilful neglect in the conduct of the business of the firm.
In the absence of an agreement, partners are entitled to
- a)Salary
- b)Commission
- c)Interest on Loan and Advances
- d)Profit share in capital ratio
Correct answer is option 'C'. Can you explain this answer?
In the absence of an agreement, partners are entitled to
a)
Salary
b)
Commission
c)
Interest on Loan and Advances
d)
Profit share in capital ratio
|
|
Lakshmi Kaur answered |
Partnership Agreement and Partner's Entitlements
Partnership is an association between two or more persons who agree to carry on a business for profit. A partnership agreement is a legal document that outlines the terms and conditions of the partnership, including the rights and responsibilities of each partner.
In the absence of an agreement, partners are entitled to certain entitlements. Let's discuss these entitlements in detail below.
Interest on Loan and Advances
Partners are entitled to interest on the capital they have invested in the partnership and on any loans or advances they have made to the partnership. The rate of interest may be specified in the partnership agreement or may be determined by law.
Salary
Partners are not entitled to a salary. However, if the partnership agreement provides for a salary, partners are entitled to receive it. The partnership agreement may also specify the method of calculating the salary.
Commission
Partners are not entitled to a commission. However, if the partnership agreement provides for a commission, partners are entitled to receive it. The partnership agreement may also specify the method of calculating the commission.
Profit share in capital ratio
In the absence of an agreement, partners are entitled to share the profits and losses of the partnership in the capital ratio. This means that each partner's share of the profits and losses is determined by the proportion of their capital contribution to the partnership.
Conclusion
In the absence of a partnership agreement, partners are entitled to interest on their capital, and any loans or advances they have made to the partnership. They are not entitled to a salary or commission. The profits and losses of the partnership are shared in the capital ratio.
Partnership is an association between two or more persons who agree to carry on a business for profit. A partnership agreement is a legal document that outlines the terms and conditions of the partnership, including the rights and responsibilities of each partner.
In the absence of an agreement, partners are entitled to certain entitlements. Let's discuss these entitlements in detail below.
Interest on Loan and Advances
Partners are entitled to interest on the capital they have invested in the partnership and on any loans or advances they have made to the partnership. The rate of interest may be specified in the partnership agreement or may be determined by law.
Salary
Partners are not entitled to a salary. However, if the partnership agreement provides for a salary, partners are entitled to receive it. The partnership agreement may also specify the method of calculating the salary.
Commission
Partners are not entitled to a commission. However, if the partnership agreement provides for a commission, partners are entitled to receive it. The partnership agreement may also specify the method of calculating the commission.
Profit share in capital ratio
In the absence of an agreement, partners are entitled to share the profits and losses of the partnership in the capital ratio. This means that each partner's share of the profits and losses is determined by the proportion of their capital contribution to the partnership.
Conclusion
In the absence of a partnership agreement, partners are entitled to interest on their capital, and any loans or advances they have made to the partnership. They are not entitled to a salary or commission. The profits and losses of the partnership are shared in the capital ratio.
Chapter doubts & questions for Accounting for Partnerships : Basic Concepts - Accountancy CUET UG Mock Test Series 2026 2025 is part of Commerce exam preparation. The chapters have been prepared according to the Commerce exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for Commerce 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
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Accountancy CUET UG Mock Test Series 2026
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