NCERT SOLUTION FOR CLASS 12 PARTNERSHIP Class 12 Notes | EduRev

Class 12 : NCERT SOLUTION FOR CLASS 12 PARTNERSHIP Class 12 Notes | EduRev

 Page 1


NCERT Solutions for Class 12 Accountancy 
Partnership Accounts Chapter 1 
Accounting for Partnership : Basic Concepts Class 12 
Chapter 1 Accounting for Partnership : Basic Concepts Exercise Solutions 
<< Previous Chapter 6 : Cash Flow StatementNext Chapter 2 : Reconstitution of a Partnership Firm - 
Admission of a Partner >> 
 
Short answers : Solutions of Questions on Page Number : 100 
Q1 :   
Define Partnership Deed. 
 
Answer : 
Partnership Deed is a written agreement among the partners of a partnership firm. It 
includes agreement on profit sharing ratio, salaries, commission of partners, interest 
provided on partner's capital and drawings and interest on loan given or taken by the 
partners, etc. Generally following details are included in a partnership deed. 
1. Objective of business of the firm 
2. Name and address of the firm 
3. Name and address of all partners 
4. Profit and loss sharing ratio 
5. Contribution to capital by each partner 
6. Rights, types of roles and duties of partners 
7. Duration of partnership 
8. Rate of interest on capital, drawings and loans 
9. Salaries, commission, if payable to partners. 
10. Rules regarding admission, retirement, death and dissolution of the firm, etc. 
Answer needs Correction? Click Here 
Page 2


NCERT Solutions for Class 12 Accountancy 
Partnership Accounts Chapter 1 
Accounting for Partnership : Basic Concepts Class 12 
Chapter 1 Accounting for Partnership : Basic Concepts Exercise Solutions 
<< Previous Chapter 6 : Cash Flow StatementNext Chapter 2 : Reconstitution of a Partnership Firm - 
Admission of a Partner >> 
 
Short answers : Solutions of Questions on Page Number : 100 
Q1 :   
Define Partnership Deed. 
 
Answer : 
Partnership Deed is a written agreement among the partners of a partnership firm. It 
includes agreement on profit sharing ratio, salaries, commission of partners, interest 
provided on partner's capital and drawings and interest on loan given or taken by the 
partners, etc. Generally following details are included in a partnership deed. 
1. Objective of business of the firm 
2. Name and address of the firm 
3. Name and address of all partners 
4. Profit and loss sharing ratio 
5. Contribution to capital by each partner 
6. Rights, types of roles and duties of partners 
7. Duration of partnership 
8. Rate of interest on capital, drawings and loans 
9. Salaries, commission, if payable to partners. 
10. Rules regarding admission, retirement, death and dissolution of the firm, etc. 
Answer needs Correction? Click Here 
Q2 :   
Why is it desirable to make the partnership agreement in writing. 
Explain in 50 words. 
 
Answer : 
Partnership agreement may be oral or written. It is not compulsory to form partnership 
agreement in writing under the Partnership Act, 1932. However, written partnership 
deed is desirable than oral agreement as it helps in avoiding disputes and 
misunderstandings among the partners. Also, it helps in settling disputes (as the case 
may be) among the partners, as written partnership deed can be referred to anytime. If 
written partnership deed is duly signed and registered under Partnership Act, then it can 
be used as evidence in the court of law. 
Answer needs Correction? Click Here 
Q3 :   
List the items which may be debited or credited in the capital accounts of the 
partners when: 
(i) Capitals are fixed 
(ii) Capitals are fluctuating 
 
Answer : 
(i)When Capitals are fixed 
The following items are credited in the Partner's Capital Account when capital accounts 
are fixed. 
(a) Opening balance of capital 
(b) Additional capital introduced during an accounting year 
The following items are debited in the Partner's Capital Account when capital accounts 
are fixed. 
(a) Part of capital withdrawn 
(b) Closing balance of capital 
Page 3


NCERT Solutions for Class 12 Accountancy 
Partnership Accounts Chapter 1 
Accounting for Partnership : Basic Concepts Class 12 
Chapter 1 Accounting for Partnership : Basic Concepts Exercise Solutions 
<< Previous Chapter 6 : Cash Flow StatementNext Chapter 2 : Reconstitution of a Partnership Firm - 
Admission of a Partner >> 
 
Short answers : Solutions of Questions on Page Number : 100 
Q1 :   
Define Partnership Deed. 
 
Answer : 
Partnership Deed is a written agreement among the partners of a partnership firm. It 
includes agreement on profit sharing ratio, salaries, commission of partners, interest 
provided on partner's capital and drawings and interest on loan given or taken by the 
partners, etc. Generally following details are included in a partnership deed. 
1. Objective of business of the firm 
2. Name and address of the firm 
3. Name and address of all partners 
4. Profit and loss sharing ratio 
5. Contribution to capital by each partner 
6. Rights, types of roles and duties of partners 
7. Duration of partnership 
8. Rate of interest on capital, drawings and loans 
9. Salaries, commission, if payable to partners. 
10. Rules regarding admission, retirement, death and dissolution of the firm, etc. 
Answer needs Correction? Click Here 
Q2 :   
Why is it desirable to make the partnership agreement in writing. 
Explain in 50 words. 
 
Answer : 
Partnership agreement may be oral or written. It is not compulsory to form partnership 
agreement in writing under the Partnership Act, 1932. However, written partnership 
deed is desirable than oral agreement as it helps in avoiding disputes and 
misunderstandings among the partners. Also, it helps in settling disputes (as the case 
may be) among the partners, as written partnership deed can be referred to anytime. If 
written partnership deed is duly signed and registered under Partnership Act, then it can 
be used as evidence in the court of law. 
Answer needs Correction? Click Here 
Q3 :   
List the items which may be debited or credited in the capital accounts of the 
partners when: 
(i) Capitals are fixed 
(ii) Capitals are fluctuating 
 
Answer : 
(i)When Capitals are fixed 
The following items are credited in the Partner's Capital Account when capital accounts 
are fixed. 
(a) Opening balance of capital 
(b) Additional capital introduced during an accounting year 
The following items are debited in the Partner's Capital Account when capital accounts 
are fixed. 
(a) Part of capital withdrawn 
(b) Closing balance of capital 
(ii) When Capitals are fluctuating 
The following items are credited in the Partner's Capital Account when capital accounts 
are fluctuating. 
(a) Opening balance of capital. 
(b) Additional capital introduced during an accounting year 
(c) Salaries to the partners 
(d) Interest on capital 
(e) Share of profit 
(f) Commission and bonus to the partners 
The following items are debited in the Partner's Capital Account when capital accounts 
are fluctuating. 
(a) Drawings made during the accounting period 
(b) Interest on drawings. 
(c) Share of loss. 
(d) Closing balance of capital. 
Answer needs Correction? Click Here 
Q4 :   
Why is Profit and Loss Adjustment Account prepared? Explain. 
 
Answer : 
The Profit and Loss Adjustment Account is prepared because of the following two 
reasons. 
1.To record omitted items and rectify errors if any- After the preparation of Profit 
and Loss Account and Balance Sheet, if any error or omission is noticed, then these 
errors or omissions are adjusted by opening Profit and Loss Adjustment Account in the 
subsequent accounting period without altering old Profit and Loss Account. 
2.To distribute profit or loss between the partners- Sometimes, besides adjusting 
the items and rectifying errors, this account is also used for distribution of profit (or loss) 
among the partners. In this situation, this account acts as a substitute for Profit and 
Page 4


NCERT Solutions for Class 12 Accountancy 
Partnership Accounts Chapter 1 
Accounting for Partnership : Basic Concepts Class 12 
Chapter 1 Accounting for Partnership : Basic Concepts Exercise Solutions 
<< Previous Chapter 6 : Cash Flow StatementNext Chapter 2 : Reconstitution of a Partnership Firm - 
Admission of a Partner >> 
 
Short answers : Solutions of Questions on Page Number : 100 
Q1 :   
Define Partnership Deed. 
 
Answer : 
Partnership Deed is a written agreement among the partners of a partnership firm. It 
includes agreement on profit sharing ratio, salaries, commission of partners, interest 
provided on partner's capital and drawings and interest on loan given or taken by the 
partners, etc. Generally following details are included in a partnership deed. 
1. Objective of business of the firm 
2. Name and address of the firm 
3. Name and address of all partners 
4. Profit and loss sharing ratio 
5. Contribution to capital by each partner 
6. Rights, types of roles and duties of partners 
7. Duration of partnership 
8. Rate of interest on capital, drawings and loans 
9. Salaries, commission, if payable to partners. 
10. Rules regarding admission, retirement, death and dissolution of the firm, etc. 
Answer needs Correction? Click Here 
Q2 :   
Why is it desirable to make the partnership agreement in writing. 
Explain in 50 words. 
 
Answer : 
Partnership agreement may be oral or written. It is not compulsory to form partnership 
agreement in writing under the Partnership Act, 1932. However, written partnership 
deed is desirable than oral agreement as it helps in avoiding disputes and 
misunderstandings among the partners. Also, it helps in settling disputes (as the case 
may be) among the partners, as written partnership deed can be referred to anytime. If 
written partnership deed is duly signed and registered under Partnership Act, then it can 
be used as evidence in the court of law. 
Answer needs Correction? Click Here 
Q3 :   
List the items which may be debited or credited in the capital accounts of the 
partners when: 
(i) Capitals are fixed 
(ii) Capitals are fluctuating 
 
Answer : 
(i)When Capitals are fixed 
The following items are credited in the Partner's Capital Account when capital accounts 
are fixed. 
(a) Opening balance of capital 
(b) Additional capital introduced during an accounting year 
The following items are debited in the Partner's Capital Account when capital accounts 
are fixed. 
(a) Part of capital withdrawn 
(b) Closing balance of capital 
(ii) When Capitals are fluctuating 
The following items are credited in the Partner's Capital Account when capital accounts 
are fluctuating. 
(a) Opening balance of capital. 
(b) Additional capital introduced during an accounting year 
(c) Salaries to the partners 
(d) Interest on capital 
(e) Share of profit 
(f) Commission and bonus to the partners 
The following items are debited in the Partner's Capital Account when capital accounts 
are fluctuating. 
(a) Drawings made during the accounting period 
(b) Interest on drawings. 
(c) Share of loss. 
(d) Closing balance of capital. 
Answer needs Correction? Click Here 
Q4 :   
Why is Profit and Loss Adjustment Account prepared? Explain. 
 
Answer : 
The Profit and Loss Adjustment Account is prepared because of the following two 
reasons. 
1.To record omitted items and rectify errors if any- After the preparation of Profit 
and Loss Account and Balance Sheet, if any error or omission is noticed, then these 
errors or omissions are adjusted by opening Profit and Loss Adjustment Account in the 
subsequent accounting period without altering old Profit and Loss Account. 
2.To distribute profit or loss between the partners- Sometimes, besides adjusting 
the items and rectifying errors, this account is also used for distribution of profit (or loss) 
among the partners. In this situation, this account acts as a substitute for Profit and 
Loss Appropriation Account. The main rationale to prepare the Profit and Loss 
Adjustment Account is to ascertain true profit or loss. 
Answer needs Correction? Click Here 
Q5 :   
Give two circumstances under which the fixed capitals of partners may change. 
 
Answer : 
The following are the two circumstances under which the fixed capitals of partner may 
change. 
(i) If any additional capital is introduced by the partner during the year. 
(ii) If any part of capital is permanently withdrawn by the partner from the firm. 
Answer needs Correction? Click Here 
Q6 :   
If a fixed amount is withdrawn on the first day of every quarter, for what period 
the interest on total amount withdrawn will be calculated? 
 
Answer : 
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. 
Example: 
If a partner withdraws Rs 5,000 in the beginning of each quarter and the interest is 
charged @ 10% on the drawings, then interest on drawings is calculated as: 
Total drawings made by the partner during the whole year are Rs 20,000, i.e. Rs 5000× 
4. 
Interest on drawings  
Page 5


NCERT Solutions for Class 12 Accountancy 
Partnership Accounts Chapter 1 
Accounting for Partnership : Basic Concepts Class 12 
Chapter 1 Accounting for Partnership : Basic Concepts Exercise Solutions 
<< Previous Chapter 6 : Cash Flow StatementNext Chapter 2 : Reconstitution of a Partnership Firm - 
Admission of a Partner >> 
 
Short answers : Solutions of Questions on Page Number : 100 
Q1 :   
Define Partnership Deed. 
 
Answer : 
Partnership Deed is a written agreement among the partners of a partnership firm. It 
includes agreement on profit sharing ratio, salaries, commission of partners, interest 
provided on partner's capital and drawings and interest on loan given or taken by the 
partners, etc. Generally following details are included in a partnership deed. 
1. Objective of business of the firm 
2. Name and address of the firm 
3. Name and address of all partners 
4. Profit and loss sharing ratio 
5. Contribution to capital by each partner 
6. Rights, types of roles and duties of partners 
7. Duration of partnership 
8. Rate of interest on capital, drawings and loans 
9. Salaries, commission, if payable to partners. 
10. Rules regarding admission, retirement, death and dissolution of the firm, etc. 
Answer needs Correction? Click Here 
Q2 :   
Why is it desirable to make the partnership agreement in writing. 
Explain in 50 words. 
 
Answer : 
Partnership agreement may be oral or written. It is not compulsory to form partnership 
agreement in writing under the Partnership Act, 1932. However, written partnership 
deed is desirable than oral agreement as it helps in avoiding disputes and 
misunderstandings among the partners. Also, it helps in settling disputes (as the case 
may be) among the partners, as written partnership deed can be referred to anytime. If 
written partnership deed is duly signed and registered under Partnership Act, then it can 
be used as evidence in the court of law. 
Answer needs Correction? Click Here 
Q3 :   
List the items which may be debited or credited in the capital accounts of the 
partners when: 
(i) Capitals are fixed 
(ii) Capitals are fluctuating 
 
Answer : 
(i)When Capitals are fixed 
The following items are credited in the Partner's Capital Account when capital accounts 
are fixed. 
(a) Opening balance of capital 
(b) Additional capital introduced during an accounting year 
The following items are debited in the Partner's Capital Account when capital accounts 
are fixed. 
(a) Part of capital withdrawn 
(b) Closing balance of capital 
(ii) When Capitals are fluctuating 
The following items are credited in the Partner's Capital Account when capital accounts 
are fluctuating. 
(a) Opening balance of capital. 
(b) Additional capital introduced during an accounting year 
(c) Salaries to the partners 
(d) Interest on capital 
(e) Share of profit 
(f) Commission and bonus to the partners 
The following items are debited in the Partner's Capital Account when capital accounts 
are fluctuating. 
(a) Drawings made during the accounting period 
(b) Interest on drawings. 
(c) Share of loss. 
(d) Closing balance of capital. 
Answer needs Correction? Click Here 
Q4 :   
Why is Profit and Loss Adjustment Account prepared? Explain. 
 
Answer : 
The Profit and Loss Adjustment Account is prepared because of the following two 
reasons. 
1.To record omitted items and rectify errors if any- After the preparation of Profit 
and Loss Account and Balance Sheet, if any error or omission is noticed, then these 
errors or omissions are adjusted by opening Profit and Loss Adjustment Account in the 
subsequent accounting period without altering old Profit and Loss Account. 
2.To distribute profit or loss between the partners- Sometimes, besides adjusting 
the items and rectifying errors, this account is also used for distribution of profit (or loss) 
among the partners. In this situation, this account acts as a substitute for Profit and 
Loss Appropriation Account. The main rationale to prepare the Profit and Loss 
Adjustment Account is to ascertain true profit or loss. 
Answer needs Correction? Click Here 
Q5 :   
Give two circumstances under which the fixed capitals of partners may change. 
 
Answer : 
The following are the two circumstances under which the fixed capitals of partner may 
change. 
(i) If any additional capital is introduced by the partner during the year. 
(ii) If any part of capital is permanently withdrawn by the partner from the firm. 
Answer needs Correction? Click Here 
Q6 :   
If a fixed amount is withdrawn on the first day of every quarter, for what period 
the interest on total amount withdrawn will be calculated? 
 
Answer : 
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. 
Example: 
If a partner withdraws Rs 5,000 in the beginning of each quarter and the interest is 
charged @ 10% on the drawings, then interest on drawings is calculated as: 
Total drawings made by the partner during the whole year are Rs 20,000, i.e. Rs 5000× 
4. 
Interest on drawings  
Answer needs Correction? Click Here 
<< Previous Chapter 6 : Cash Flow StatementNext Chapter 2 : Reconstitution of a Partnership Firm - 
Admission of a Partner >> 
Short answersnumerical questionslong answers : Solutions of Questions on Page Number 
: 101 
Q1 :   
Triphati and Chauhan are partners in a firm sharing profits and losses in the ratio 
of 3:2. Their capitals were Rs 60,000 and Rs 40,000 as on January 01, 2005. 
During the year they earned a profit of Rs 30,000. According to the partnership 
deed both the partners are entitled to Rs 1,000 per month as Salary and 5% 
interest on their capital. They are also to be charged an interest of 5% on their 
drawings, irrespective of the period, which is Rs 12,000 for Tripathi, Rs 8,000 for 
Chauhan. Prepare Partner's Accounts when, capitals are fixed. 
 
Answer : 
a) If interest on Capital and Partners’ salaries and interest on drawings is charged 
against profit, the solution will be as: 
  
Profit and Loss Appropriation Account 
Dr.         Cr
Particulars 
Amount 
Rs 
Particulars 
Amoun
Rs 
Profit transferred to     Profit and Loss   30,000
Triphati’s Current Account   18,000     
Chauhan’s Current Account   12,000     
    30,000     30,000
            
  
Partners’ Capital Account 
Dr.         Cr
Particulars Tripathi Chauhan Particulars Tripathi Chauhan
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