Short Answer Questions - Accounting for partnership firms: Fundamentals Commerce Notes | EduRev

Accountancy Class 12

Commerce : Short Answer Questions - Accounting for partnership firms: Fundamentals Commerce Notes | EduRev

The document Short Answer Questions - Accounting for partnership firms: Fundamentals Commerce Notes | EduRev is a part of the Commerce Course Accountancy Class 12.
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Q1 Define partnership.


Ans. When two or more persons enter into an agreement to carry on business and share its
profit and losses, it is a case of partnership. The Indian partnership Act, 1932, defines
Partnership as follows:
"Partnership is the relation between persons and who have agreed to share the profits of
a business carried on by all or any of them acting for all.
 

Q.2 What do you understand by 'partners', 'firm' and 'firms' name?
 

Ans. The persons who have entered in to a Partnership with one another are individually
called 'Partners' and collectively 'a firm' and the name under which the business is
carried is called 'the firm's name'.
 

Q.3 Write any four main features of partnership.
 

Ans. Essential elements or main features of Partnership :
i) Two or more persons: Partnership is an association of two or more persons.
ii) Agreement: The Partnership is established by an agreement either oral or in
writing.
iii) Lawful Business: A Partnership formed for the purpose of carrying a business, it
must be a legal business.
iv) Profit sharing: Profit of the firm is share by the partners in an agreed ration, if the
ratio is not agreed then equally. Profit also includes loss.


Q.4 What is the minimum and maximum number of partners in all partnership?


Ans. There should be at least two persons to form a Partnership. The maximum number of
Partners in a firm carrying an banking business should not exceed ten and in any other
business should not exceed ten and in any other business it should not exceed twenty.


Q.5 What is the status of partnership from an accounting viewpoint?


Ans. From an accounting viewpoint, partnership is a separate business entity. From legal
viewpoints, however, a Partnership, like a sole proprietorship, is not separate from the
owners.

Q.6 What is meant by partnership deed?


Ans. Partnership deed is a written agreement containing the terms and conditions agreed by
the Partners.


Q.7 State any four contents of a partnership deed.


Ans. i) The date of formation and the duration of the Partnership
ii) Name and address of the Partners
iii) Name of the firm.
iv) Interest on Partners capital and drawings
v) Ratio in which profit or losses shall be shared


Q.8 In the absence of a partnership deed, how are mutual relations of partners governed?


Ans. In the absence of Partnership deed, mutual relations are governed by the Partnership
Act, 1932.


Q.9 Give any two reason in favour of having a partnership deed.


Ans. i) In case of any dispute or doubt, Partnership deed is the guiding document.
ii) It can specify the duties and powers of each Partner.


Q.10 State the provision of 'Indian partnership Act 1932‘ relating to sharing of profits in
 absence of any provision in the partnership deed.


Ans. In the absence of any provision in the Partnership deed, profit or losses are share by the
Partners equally.


Q.11 Why is it important to have a partnership deed in writing?


Ans. Partnership deed is important since it is a document defining relationship of among
Partners thus is assistance in settlement of disputes, if any and also avoids possible
disputes: it is good evidence in the court.


Q.12 What do you understand by fixed capital of partners?


Ans. Partners' capital is said to be fixed when the capital of Partners remain unaltered except
in the case where further capital is introduced or capital is withdrawn permanently.


Q.13 What do you understand by fluctuating capital of partners?


Ans. Partner‘s capital is said to be fluctuating when capital alters with every transaction in
the capital account. For example, drawing, credit of interest, etc


Q.14 Give two circumstances in which the fixed capital of partners may change.


Ans. Two circumstances in which the fixed capital of Partners may change are :
i) When additional capital is introduced by the Partners.
ii) When a part of the capital is permanently withdrawn by the Partners.


Q.15 List the items that may appear on the debit side and credit side of a partner's fluctuating
 capital account.


Ans. On debit side: Drawing, interest on drawing, share of loss, closing credit balance of the
capital.
On credit side : Opening credit balance of capital, additional capital introduced, share
of profit, interest on capital, salary to a Partner, commission to a Partner.


Q.16 How will you show the following in case the capitals are?
 i) Fixed         and         ii) Fluctuating
 a) Additional capital introduced
 b) Drawings
 c) Withdrawal of capital
 d) Interest on capital and
 e) Interest on loan by partners?


Ans.i) In case, capitals are fixed:

a) On credit side of capital

(b) on debit side of current A/c

(c) on debit side of capital A/c

(d) on credit side of current A/c

(e) on credit side of loan from
partner's A/c


Q.17 If the partners capital accounts are fixed, where will you record the following items :
 i) Salary to partners
 ii) Drawing by a partners
 iii) Interest on capital and
 iv) Share of profit earned by a partner?


Ans. i) Credit side of Partner's current A/c
ii) Debit side of Partner's current A/c
iii) Credit side of Partners current A/c
iv) Credit side of Partners current A/c


Q.18 How would you calculate interest on drawings of equal amounts drawn on the Last day
 of every month?


Ans. When a partners draws a fixed amount at the beginning of each month, interest on total
drawing would be on the amount withdraw for 6.5 months at the agreed rate of interest
per annum. Apply the following formula.
Interest on drawing = total drawing x            Short Answer Questions - Accounting for partnership firms: Fundamentals Commerce Notes | EduRev


Q.19 How would you calculate interest on drawing of equal amounts drawn on the last day
 of every month?


Ans. When drawing of fixed amounts are made at regular monthly intervals on the day of
every month, Interest would be charged on the amount withdrawn at the agreed rate of
interest for 5.5 months. Apply the following formula. :
Interest on drawing = Total drawing x             Short Answer Questions - Accounting for partnership firms: Fundamentals Commerce Notes | EduRev      


Q.20 How would you calculate interest on drawing of equal amount drawn in the middle of
 every month?


Ans. Interest on drawing = Total drawing            Short Answer Questions - Accounting for partnership firms: Fundamentals Commerce Notes | EduRev


Q.21 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?


Ans. 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.


Q.22 The partnership deed provides that Anjali, the partner will get Rs. 10,000 per month as
 salary. But, the remaining partners object to it. How will this matter be resolved?


Ans. No, he is not entitled to the salary because it is not so, Provided in the Partnership deed
and according to the Partnership act, 1932 if the Partnership deed does not provided for
payment of salary to Partners, he will not be entitled to it.


Q.23 Distinction between Profit and loss and profit and loss appropriation account:


Ans. 

Short Answer Questions - Accounting for partnership firms: Fundamentals Commerce Notes | EduRev


Q.24. State the Average period to be taken for calculating interest on drawing in different cases if
 amount is withdrawn on regular interval.


Ans. TABLE SHOWING THE AVERAGE PERIOD WHEN WITHDRAWALS ARE
 MADE REGULARLY


Short Answer Questions - Accounting for partnership firms: Fundamentals Commerce Notes | EduRev

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