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Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Commerce MCQ


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10 Questions MCQ Test - Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions

Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions for Commerce 2024 is part of Commerce preparation. The Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions questions and answers have been prepared according to the Commerce exam syllabus.The Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions below.
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Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 1

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

Assertion (A): The development of business depends upon the active partners only.

Reason (R): Active Partner is a person who provides his share in capital and also takes active part in the management of the business.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 1
As the active partner takes on the part of the management of the business, the development of the business depends on him but it is not completely true as all other partners are to be consulted for the same.
Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 2

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

Assertion (A): Nominal partners do not share the profits and losses of the firm.

Reason (R): A firm only uses the name and reputation of the nominal partners.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 2
Nominal partners do not share the profits and losses of the firm, as they are not actually the partners of the firm.
Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 3

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

Assertion (A): The fixed capital method is better as compared to the fluctuating capital method.

Reason (R): The capital of the partners is fixed, and all the transactions are recorded in the current account.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 3
It cannot be determined which method of maintaining capital is better, it depends on the preference of the partners.
Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 4

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

Assertion (A): The interest on capital is recorded in the debit side of the Current Account when fixed capital is maintained.

Reason (R): The capital of the partners is fixed, and all the transactions are recorded in the current account.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 4
The interest on capital is recorded in the credit side of the current account.
Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 5

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

Assertion (A): Profit and Loss Appropriation Account shows the correct profit earned by the firm.

Reason (R): The net profit is adjusted after taking into account the interest on capital, interest on drawings, salaries/commissions paid to the partner in the Profit and Loss Appropriation Account.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 5
The profit and loss appropriation account shows all the other items that need to be taken into account to be distributed among the partners to find the correct profit of the firm.
Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 6

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

Assertion (A): Profit and Loss Appropriation Account is only prepared when there are certain adjustments related to partnership.

Reason (R): Profit and Loss Appropriation is prepared to ascertain the profit earned by the firm and distribution among the partners.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 6
Whenever there is an adjustment relating to the partnership, Profit and Loss Appropriation Account is made to ascertain and divide the profit among the partners.
Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 7

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

Assertion (A): If percent of interest on drawings is not mentioned in partnership deed, firm would not charge any interest on drawings of partners.

Reason (R): Interest on drawings is charged only when there is profit.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 7
Interest on drawings is charged even when there is a loss.
Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 8

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

Assertion (A): When the items are omitted it is necessary to prepare Profit and Loss Adjustment Account only.

Reason (R): For the purpose of correcting these omissions or mistakes, adjustment entries are passed through Profit and Loss Adjustment Account in which adjustments in respect of each and every omission are to be made.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 8
When the items are omitted, profit and Loss Adjustment Statement or necessary journal entries can be passed when Profit and Loss Adjustment Account is prepared.
Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 9

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

Assertion (A): The interest on drawings omitted is shown on the credit side of the Profit and Loss Adjustment Account.

Reason (R): Profit and Loss Adjustment Account is prepared when there is an omission of items.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 9
The interest on drawings omitted is either shown on the credit side of Profit and Loss Adjustment Account or statement or a necessary journal entry can be passed.
Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 10

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

Assertion (A): The profit is guaranteed only to a partner.

Reason (R): The guaranteed profit is to be paid by the other partner in the specific ratio as agreed upon to the partner who has been agreed to be paid if the profit falls short.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Assertion & Reason Type Questions - Question 10
The profit is guaranteed to a partner, few partners or even to the firm
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