Accountancy: CUET Mock Test - 7
40 Questions MCQ Test CUET Mock Test Series | Accountancy: CUET Mock Test - 7
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Bill and Monica are partners sharing profits and losses in the ratio of 3:2 having the capital of Rs. 80,000 and Rs. 50,000 respectively. They are entitled to 9% p.a. interest on capital before distributing the profits. During the year firm earned Rs. 7,800 after allowing interest on capital. Profits apportioned among Bill and Monica is:
What balance does a Partner’s Current Account has?
Following are the differences between Partnership and Joint Venture except.
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. Profits before interest on partner’s capital was Rs. 6,000 and Z demanded minimum profit of Rs. 5,000 as his financial position was not good. However, there was no written agreement. Profit to be distributed to X, Y and Z will be
Ram and Mohan, are partner’s. They draw for private use Rs. 6,000 and Rs. 4,000 respectively. Interest is changeable @ 6 percent per annum on drawings. What is the interest?
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:
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:
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.
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. 184,000 after allowing interest on capitals. Profits will be distributed among them will be:
The profit for the year is 184000 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 184000×2/3=56000, and for Gauri it is 184000×1/3=28000 hence option B is the correct answer
Seeta and Geeta are partners sharing profits and losses in the ratio 4:1. Meeta was manager who received the salary of Rs. 4,000 p.m. in addition to a commission of 5% on net profits after charging such commission. Profits for the year is Rs. 6,78,000 before charging salary. Find the total remuneration of Meeta
If there is no partnership deed then interest on capital will be charged at ……….p.a.
Partners are suppose to pay interest on drawings only when _______by the _______
Would interest on loan be allowed in the absence of any agreement or when partnership deed is silent?
Seeta and Geeta are partners sharing profits and losses in the ratio 4:1. Meeta was manager who received the salary of Rs. 4,000 p.m. in addition to a commission of 5% on net profits after charging such commission. Profits for the year is Rs. 6,78,000 before charging salary. Find the total remuneration of Meeta
Guarantee given to a partner ‘A’ by the other partners ‘B & C’ means
What time would be taken into consideration if equal monthly amount is drawn as drawings at the beginning of each month?
How would you close the Partner’s Drawings Account?
In the absence of any agreement, partners are liable to receive interest on their Loans @:
Interest on drawings is gain for the business. Interest on drawings is an income to the firm, and hence it is credited to the profit and loss appropriation account. On the other hand, interest on drawings is an expense to the partners, and hence it is debited to their capital accounts.
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 ______.
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 draws Rs. 1000 per month on the last day of every month. If the rate of interest is 5% k.p.a. then the total interest chargeable from him to accounting year ending on 31-12-1985 will be
There is a formula for calculating interest on drawings at the end of every month.
= amount * 12 * rate * (11/24)
= 1000 * 12 * (5/100) * (11/24)
= Rs. 275
As per Section 37 of the Indian Partnership Act, 1932, the executors would be entitled at their choice to the interest calculated from the date of death till the date of payment on the final amount due to the deceased partner at ______% p.a.:
As per section 37 of the Indian Partnership Act 1932, the executors would be entitled at their choice to the interest calculated from the date of death till the date of payment on the final amount due to the deceased partner at 6% p.a. The loan of the deceased partner is treated as a third party loan.
A Partner is an Agent of the Firm (Section 18).
A partnership is a relationship between partners who agree to share the profits of the business.
The business can be carried on by all of them or any of them acting for all. This definition suggests that a partner can be an agent of the others.
If there is no partnership deed then interest on capital will be charged at ______________p.a.
According to partnership act 1932, No interest on capital will be allowed in the absence of partnership deed.
A and B are partners A’s capital is Rs. 10,000 and B’s Capital is Rs. 6,000. Interest is payable @ 6% p.a. B is entitled to a salary of Rs. 300 per month. Profit to the year before interest and salary to B is R.s 8,000. Profits between A and B will be divided as:
Profit after interest and remuneration :
= Profit before interest and remuneration - Interest - remuneration
= Rs 8,000 - (600 + 360) - (3,600)
= Rs 3,440.
Distributing profit is equal ratio among partners
= Rs 3,440 / 2
= Rs 1,720 to each partner.
A and B are partners having capital of Rs. 50,000 and Rs. 60,000 respectively. Interest on capital is given @ 5% p.a. Profits for the year before appropriation is Rs. 4,600 provide interest on capital out of profits. Increase allocated to partners is :
Interest on capital = 2500 And 3000
but profit = 4600
so, 50000 / 60000 = 5:6
amount is divided into 5: 6
A= 4600 ÷ 11 × 5 = 2091
B = 4600 ÷ 11 × 6 = 2509
A, B and C had capitals of Rs. 50,000; Rs. 40,000 and Rs. 30,000 respectively for carrying on business in partnership. The firm’s reported profit for the year was Rs. 79,200. As per provisions of the Indian Partnership Act, 1932, find out the share of each partner in the above amount after taking into account that no interest has been provided on an advance by A of Rs. 20,000, in addition to his capital contribution.
Profit after charging interest = Profit before charging interest - Interest on loan
= Rs 79,200 - 1,200
= Rs - 78,000.
Profit distribution among partners
= Rs - 78,000 / 3
= Rs - 26,000.
Profit for B and C = Rs - 26,000
Profit for A = Rs - 26,000 + Rs - 1,200
= Rs - 27,200.
Note:-.
1) When there is no mention about the profit sharing ratio among partners its assumed to be equal.
2) If there is no agreement or no provision regarding interest on loan in the agreement then the interest will be charged @ 6% p.a.
When is Profit & Loss Appropriation Account prepared?
Profit and loss appropriation account facilitates sharing of the profits earned by the partnership firm. When there is only one proprietor in proprietorship firm there is no need of preparing p&l appropriation account.
When a partner is given Guarantee by the other partner, loss on such guarantee will be borne by
Guarantee means the surety of a particular amount of profits by one or more partners and in some cases by the firm, where the burden of guarantee is borne by the party providing such a guarantee. In other words, it is a minimum fixed amount for the partner who is given such a guarantee.
In the presence of an agreement, interest on capital is to be provided from _______?
If opening capital of a partner in the firm is Rs. 1,00,000 and closing capital is Rs. 2,00,000. Interest on capital allowed during the year Rs. 10,000 and interest on drawings charged during the year Rs. 2,000. If total drawings were Rs. 20,000, the amount of profit transferred to his capital account by the firm would be:
Profit = closing capital -opening capital +drawings -interest on capital + interst on drawings
= 200000 - 100000 + 20000 -10000 + 2000 = 112000
Interest on drawings will be shown on the credit side of the profit and loss appropriation account. Interest on drawings is the interest charged by the firm on the drawings made by the partners. It is a source of income for the firm and hence, it is to be credited to profit and loss appropriation account.
In the absence of any agreement interest on advances by a partner is allowed at 6 percent p.a. and is allowed whether there is profit or no. Interest on loan is a charge and will be provided regardless of profits earned.
Ram and Shyam are partners with the capital of Rs. 25,000 and Rs.15,000 respectively. Interest payable on capital is 10% p.a. Find the interest on capital for both the partners when the profits earned by the firm is Rs. 2,400.
As per the question, interest on Capital should be 2500 (10% of 25000) & 1500 (10% of 15000).
So, the interest will be distributed in their capital ratio i. e 5:3 so you will get 1500 & 900.
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.
In the absence of an agreement, partners are entitled to:
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.
Interest on capital will be paid to the partners if provided for in the agreement but only from______.
Interest on capital will be paid to the partners if provided for in the agreement but only from profits. Interest on capital is an appropriation and not a charge against profit hence, is provided only to the extent of profits.
If a firm prefers Partners Capital Accounts to be shown at the amount introduced by the partners as capital in firm then, the entries for salary, drawings, interest on capital or drawings and profits are made in
In case of partnership type of ownership in a business, partner current account is prepared when capital is fixed. Transactions such as drawings, salary, and interest on capital and drawings are recorded. The balance of this account fluctuates every year. The balance can be both credit or debit
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