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Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Commerce MCQ


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8 Questions MCQ Test - Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions

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Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 1

On the basis of following information, answer the given questions:

Anita, Asha and Bashir are partners sharing profits and losses in the ratio of 3 : 2 : 1 respectively. On 1st April, 2016, they decided to change their profit sharing ratio. Their partnership deed provides that in the event of any change in the profit sharing ratio, the goodwill of the firm should be valued at two years' purchase of the average super profits for the past three years :

2015-16 Profit ₹ 40,000

2014-15 Profit ₹ 30,000

2013-14 loss ₹ 10,000

The average capital employed in the business was ₹ 1,10,000; the rate of interest expected from capital invested was 10%.

The normal profit earned by the firm is __________.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 1
Normal Profit = Capital Employed x Normal Rate of Return

Normal Profit

= ₹ 11,000

Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 2

On the basis of following information, answer the given questions:

Asif and Ravi are partners in a firm, sharing profits and losses in the ratio of 3 : 2. Their fixed capitals as on 1st April, 2016 were ₹ 6,00,000 and ₹ 4,00,000 respectively.

Their partnership deed provides for the following :

(i) Partners are to be allowed interest on their capital @ 10% per annum.

(ii) They are to be charged interest on drawings @ 4% per annum.

(iii) Asif is entitled to a salary of ₹ 2,000 per month.

(iv) Ravi is entitled to a commission of 5% of the net profit of the firm before charging such commission.

(v) Asif is entitled to a rent of ₹ 3,000 per month for the use of his premises by the firm.

The net profit of the firm for the year ended 31st March, 2017, before providing for any of the above clauses was ₹ 4,00,000.

Both partners withdrew ₹ 5,000 at the beginning of every month for the entire year.

The amount of Interest on Asif’s Capital, shown in the Profit and Loss Appropriation Account is:

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 2
₹6,00,000 × 10% = ₹60,000
Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 3

On the basis of following information, answer the given questions:

Anita, Asha and Bashir are partners sharing profits and losses in the ratio of 3 : 2 : 1 respectively. On 1st April, 2016, they decided to change their profit sharing ratio. Their partnership deed provides that in the event of any change in the profit sharing ratio, the goodwill of the firm should be valued at two years' purchase of the average super profits for the past three years :

2015-16 Profit ₹ 40,000

2014-15 Profit ₹ 30,000

2013-14 loss ₹ 10,000

The average capital employed in the business was ` 1,10,000; the rate of interest expected from capital invested was 10%.

The Super Profit of the firm is ________.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 3

Super Profit = Average Profit – Normal Profit Normal Profit = (Capital Employed × Normal rate of return )/100

= (₹1,10,000 × 10)/100 = ₹11,000

Super Profit = ₹ 20,000 – ₹11,000 = ₹9,000

Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 4

On the basis of following information, answer the given questions:

Asif and Ravi are partners in a firm, sharing profits and losses in the ratio of 3 : 2. Their fixed capitals as on 1st April, 2016 were ₹ 6,00,000 and ₹ 4,00,000 respectively.

Their partnership deed provides for the following :

(i) Partners are to be allowed interest on their capital @ 10% per annum.

(ii) They are to be charged interest on drawings @ 4% per annum.

(iii) Asif is entitled to a salary of ₹ 2,000 per month.

(iv) Ravi is entitled to a commission of 5% of the net profit of the firm before charging such commission.

(v) Asif is entitled to a rent of ₹ 3,000 per month for the use of his premises by the firm.

The net profit of the firm for the year ended 31st March, 2017, before providing for any of the above clauses was ₹ 4,00,000.

Both partners withdrew ₹ 5,000 at the beginning of every month for the entire year.

How much salary is Asif entitled to the full year?

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 4
Salary = ₹2000 × 12 = ₹24,000
Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 5

On the basis of following information, answer the given questions:

Anita, Asha and Bashir are partners sharing profits and losses in the ratio of 3 : 2 : 1 respectively. On 1st April, 2016, they decided to change their profit sharing ratio. Their partnership deed provides that in the event of any change in the profit sharing ratio, the goodwill of the firm should be valued at two years' purchase of the average super profits for the past three years :

2015-16 Profit ₹ 40,000

2014-15 Profit ₹ 30,000

2013-14 loss ₹ 10,000

The average capital employed in the business was ` 1,10,000; the rate of interest expected from capital invested was 10%.

What is the amount of goodwill as calculated?

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 5
Goodwill = ₹9,000 × 2 = ₹18,000
Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 6

On the basis of following information, answer the given questions:

Asif and Ravi are partners in a firm, sharing profits and losses in the ratio of 3 : 2. Their fixed capitals as on 1st April, 2016 were ₹ 6,00,000 and ₹ 4,00,000 respectively.

Their partnership deed provides for the following :

(i) Partners are to be allowed interest on their capital @ 10% per annum.

(ii) They are to be charged interest on drawings @ 4% per annum.

(iii) Asif is entitled to a salary of ₹ 2,000 per month.

(iv) Ravi is entitled to a commission of 5% of the net profit of the firm before charging such commission.

(v) Asif is entitled to a rent of ₹ 3,000 per month for the use of his premises by the firm.

The net profit of the firm for the year ended 31st March, 2017, before providing for any of the above clauses was ₹ 4,00,000.

Both partners withdrew ₹ 5,000 at the beginning of every month for the entire year.

How much commission is to be given to Ravi?

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 6
Net Profit = ₹4,00,000 – ₹36,000 = ₹3 ,64,000

Commission = 5% of ₹3,64,000 = ₹18,200

Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 7

On the basis of following information, answer the given questions:

Anita, Asha and Bashir are partners sharing profits and losses in the ratio of 3 : 2 : 1 respectively. On 1st April, 2016, they decided to change their profit sharing ratio. Their partnership deed provides that in the event of any change in the profit sharing ratio, the goodwill of the firm should be valued at two years' purchase of the average super profits for the past three years :

2015-16 Profit ₹ 40,000

2014-15 Profit ₹ 30,000

2013-14 loss ₹ 10,000

The average capital employed in the business was ₹ 1,10,000; the rate of interest expected from capital invested was 10%.

The total profit earned in three years is __________.

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 7
Total Profit = ₹40,000 + ₹30,000 – ₹10,000 = ₹0,000
Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 8

On the basis of following information, answer the given questions:

Asif and Ravi are partners in a firm, sharing profits and losses in the ratio of 3 : 2. Their fixed capitals as on 1st April, 2016 were ₹ 6,00,000 and ₹ 4,00,000 respectively.

Their partnership deed provides for the following :

(i) Partners are to be allowed interest on their capital @ 10% per annum.

(ii) They are to be charged interest on drawings @ 4% per annum.

(iii) Asif is entitled to a salary of ₹ 2,000 per month.

(iv) Ravi is entitled to a commission of 5% of the net profit of the firm before charging such commission.

(v) Asif is entitled to a rent of ₹ 3,000 per month for the use of his premises by the firm.

The net profit of the firm for the year ended 31st March, 2017, before providing for any of the above clauses was ₹ 4,00,000.

Both partners withdrew ₹ 5,000 at the beginning of every month for the entire year.

How will the rent be paid to Asif treated?

Detailed Solution for Test: Accounting for Partnerships: Basic Concepts- Case Based Type Questions - Question 8
Rent be paid to Asif treated by subtracted from the Net Profit. Net profit is your business's revenue after subtracting all operating, interest, and tax expenses, in addition to deducting your COGS.
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