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

Clear all your Commerce doubts with EduRev Join for Free

Join for Free

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 share 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 typically share profits and losses equally only if stated in the partnership deed.
• If there is no deed, the default rule applies, which may not guarantee equal sharing.
• The provided reason accurately describes the nature of a partnership.

Question 2:

Assertion (A): The 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)

• A secret partner does not take part in management.
• However, they are still responsible for the firm's debts, which contradicts Reason (R).

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 with the consent of all partners.
• While a minor can share profits, they are not liable for the firm's debts.
• This distinction means that Reason (R) does not fully explain Assertion (A).

Question 4:

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

• Under the fixed capital method, interest on drawings is recorded on the debit side of the Current Account.
• This practice ensures that the partners' capital remains unchanged.
• All transactions are documented in the Current Account, reflecting the fixed nature of the partners' capital.

Question 5:

Assertion (A): When the partners put in additional capital, it is recorded in the credit side of the Current Account.
Reason (R): The 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 partners introduce additional capital, it is recorded in the capital account, not the Current Account.
• This applies even when using the fixed capital method.

Question 6:

Assertion (A): If percentage of interest on capital is not mentioned in the 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 absence of a specified interest rate in the partnership deed means no interest will be paid on capital.
• However, this does not invalidate the principle that interest on capital is applicable.

Question 7:

Assertion (A): A Partner needs to pay the interest on the loan at 6%, even if not mentioned in the partnership deed.
Reason (R): Interest on loans 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)

• The law states that interest on loans to partners is charged at 6%.
• However, the assertion suggests a mandatory condition that may not apply universally.

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 should be recorded on the debit side of the Profit and Loss Adjustment Account.
• This contradicts Assertion (A), which claims it is on the credit side.
• However, Reason (R) accurately states that interest on capital is credited to the partners' capital accounts.

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 fell 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)

• Sandhya's share of profit is ₹77,000, which is more than the guaranteed amount of ₹50,000.
• Therefore, Manoj is not required to pay her any amount.

Question 10:

Assertion (A): The 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 is influenced by the firm's reputation.
• It is also shaped by various factors, including management capacity.
• Thus, while both statements are true, Reason (R) does not directly explain Assertion (A).