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Accounting for Partnerships: Basic Concepts: Assertion & Reason Type Questions | Accountancy Class 12 - Commerce PDF Download

Directions: In the following questions a statement of assertion (A) is followed by a statement of reason (R). Mark the correct choice as :

Question 1:
Assertion (A): Partners shares profit and losses equally.

Reason (R): 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.

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). 

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). 

(c) Assertion (A) is true, but Reason (R) is false . 

(d) Assertion (A) is false, but Reason (R) is true.

Correct Answer is Option (d)

Partners share profit and losses equally only if provided by the partnership deed or there is no partnership deed.


Question 2:

Assertion (A): Secret Partner does not participate in the affairs of the management.
Reason (R): The secret partner is not liable to pay debts of the firm.

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). 

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). 

(c) Assertion (A) is true, but Reason (R) is false . 

(d) Assertion (A) is false, but Reason (R) is true.

Correct Answer is Option (c)

Even though the secret partner does not participate in the affairs of the management, he is liable to pay debts of the firm.


Question 3:

Assertion (A): A minor may become a partner with the consent of all the partners.
Reason (R): A minor partner can share profits and losses as per the agreement but is not liable to pay the debts of the partnership firm.

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). 

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). 

(c) Assertion (A) is true, but Reason (R) is false . 

(d) Assertion (A) is false, but Reason (R) is true.

Correct Answer is Option (b)

A minor can become a partner of the firm with the consent of the partners so as to form a partnership agreement.


Question 4:

Assertion (A): The interest on drawings is recorded in the debit side of Current Account when fixed capital method is followed.
Reason (R): The capital of the partners is fixed, and all the transactions is recorded in the Current Account.

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). 

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). 

(c) Assertion (A) is true, but Reason (R) is false . 

(d) Assertion (A) is false, but Reason (R) is true.

Correct Answer is Option (a)
The interest on drawings is recorded in the current account so as to maintain the capitals of the partners fixed.


Question 5:

Assertion (A): When the partners put in additional capital, it is recorded in the credit side of the Current Account.
Reason (R): Current Account records all the transactions relating to the interest on capital, drawings, commissions to partners, etc. when the capital is to remain fixed.

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). 

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). 

(c) Assertion (A) is true, but Reason (R) is false . 

(d) Assertion (A) is false, but Reason (R) is true.

Correct Answer is Option (d)
When a partner puts in additional capital it is shown in the capital account even if fixed capital is to be followed.


Question 6:

Assertion (A): If percentage of interest on capital is not mentioned in partnership deed, partners will not receive any interest on capital.
Reason (R): The interest on capital is charged on the capital invested by the partners.

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). 

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). 

(c) Assertion (A) is true, but Reason (R) is false . 

(d) Assertion (A) is false, but Reason (R) is true.

Correct Answer is Option (b)
The interest on capital is charges in accordance with the partnership deed, and if not mentioned it will not be charged.


Question 7:

Assertion (A): Partner needs to pay the interest on loan at 6% even if not mentioned in the partnership deed.
Reason (R): Interest on loan to partners is charged as per the Section 13 (d) of the Indian Partnership Act. 

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). 

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). 

(c) Assertion (A) is true, but Reason (R) is false . 

(d) Assertion (A) is false, but Reason (R) is true.

Correct Answer is Option (b)
As per the section 13(d) of the Partnership Act, the interest on the loan is to be charged at 6% even if it is not mentioned in the partnership deed.


Question 8:

Assertion (A): Interest on capital amount to `15,000 was shown on the credit side of the Profit and Loss Adjustment Account.
Reason (R): Interest on Capital is to be credited to the Capital/Current Accounts of the Partner.

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). 

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). 

(c) Assertion (A) is true, but Reason (R) is false . 

(d) Assertion (A) is false, but Reason (R) is true.

Correct Answer is Option (d)
Interest on capital is shown on the debit side of the Profit and Loss Adjustment Account.


Question 9:

Assertion (A): Sandhya and Manoj entered into a partnership in the profit sharing ratio 1:2. Manoj agreed to pay Sandhya if her share of profit fall short of ₹50,000. The profit earned was ₹1,77,000. Sandhya asked him to pay ₹27,000, but Manoj refused to pay anything.
Reason (R): Profit is guaranteed only when the minimum amount of profit is not earned by the partner.

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). 

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). 

(c) Assertion (A) is true, but Reason (R) is false . 

(d) Assertion (A) is false, but Reason (R) is true.

Correct Answer is Option (a)
As the profit share of Sandhya is 77,000, which is more than the guaranteed amount, so Manoj did not have to pay her.


Question 10:

Assertion (A): Goodwill of the firm is affected by the reputation of the firm.
Reason (R): The goodwill of the firm is dependent on the management capacity of the firm.

(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A). 

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). 

(c) Assertion (A) is true, but Reason (R) is false . 

(d) Assertion (A) is false, but Reason (R) is true.

Correct Answer is Option (b)
Goodwill of the firm is affected by the reputation of the firm as the firm will be able to earn more profit if its reputation is good.

The document Accounting for Partnerships: Basic Concepts: Assertion & Reason Type Questions | Accountancy Class 12 - Commerce is a part of the Commerce Course Accountancy Class 12.
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FAQs on Accounting for Partnerships: Basic Concepts: Assertion & Reason Type Questions - Accountancy Class 12 - Commerce

1. What are the basic concepts of accounting for partnerships?
Ans. The basic concepts of accounting for partnerships include understanding the partnership agreement, identifying the roles and responsibilities of each partner, determining profit and loss sharing ratios, maintaining proper books of accounts, and preparing financial statements specific to partnerships.
2. What is the significance of assertions in accounting for partnerships?
Ans. Assertions in accounting for partnerships are important because they help ensure the accuracy and reliability of the financial information. These assertions include completeness, existence, valuation, rights and obligations, and presentation and disclosure. By examining these assertions, stakeholders can have confidence in the financial statements.
3. How does the partnership agreement impact accounting for partnerships?
Ans. The partnership agreement is a crucial document that outlines the terms and conditions of the partnership. It determines profit and loss sharing ratios, capital contributions, roles and responsibilities of partners, decision-making processes, and other important aspects. Accounting for partnerships must align with the provisions of the partnership agreement to ensure accurate recording and reporting of financial transactions.
4. What are the financial statements specific to partnerships?
Ans. Financial statements specific to partnerships include the income statement, statement of changes in partners' equity, and the balance sheet. These statements provide information about the partnership's profitability, changes in partners' capital accounts, and the financial position of the partnership at a specific point in time.
5. How are profit and loss sharing ratios determined in partnerships?
Ans. Profit and loss sharing ratios in partnerships are typically determined based on the terms outlined in the partnership agreement. The agreement may specify equal sharing, sharing based on capital contributions, or sharing based on a predetermined formula. These ratios determine how profits and losses are allocated among the partners and have a significant impact on the financial results reported in the partnership's financial statements.
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