ACCOUNTING FOR PARTNERSHIP FIRMS -FUNDAMENTALS

Q. 1. Features of a partnership firm are:
(A) Two or more persons are carrying common business under an agreement.
(B) They are sharing profits and losses in the fixed ratio.
(C) Business is carried by all or any of them acting for all as an agent.
(D) All of the above.

Q. 2. Following are essential elements of a partnership firm except:
(A) Atleast two persons
(B) There is an agreement between all partners
(C) Equal share of profits and loss
(D) Partnership agreement is for some business


Q.3. In case of partnership the act of any partner is:
(A) Binding on all partners
(B) Binding on that partner only
(C) Binding on all partners except that particular partner
(D) None of the above


0.4. Which of the following statement is true?
(A) a minor cannot be admitted as a partner
(B) a minor can be admitted as a partner, only into the benefits of the
partnership
(C) a minor can be admitted as a partner but his rights and liabilities are same
of adult partner
(D) none of the above

Q. 5. Oustensible partners are those who
(A) do not contribute any capital but get some share of profit for lending thei
name to the business
(B) contribute very less capital but get equal profit
(C) do not contribute any capital and without having any interest in the
business, lend their name to the business
(D) contribute maximum capital of the business

.6. Sleeping partners are those who
(A) take active part in the conduct of the business but provide no capital
However, salary is paid to them.
(B) do not take any part in the conduct of the business but provide capital and
share profits and losses in the agreed ratio
(C) take active part in the conduct of the business but provide no capital.
However, share profits and losses in the agreed ratio
(D) do not take any part in the conduct of the business and contribute no
capital. However, share profits and losses in the agreed ratio.

Q.7. The relation of partner with the firm is that of
(B) An Agent
(D) Manager
(A) An Owner
(C) An Owner and an Agent

Q.8. What should be the minimum number of persons to form a Partnership
(A) 2
(C) 10
(B) 7
(D) 20

0.9. Number of partners in a partnership firm may be
(A) Maximum Two
(C) Maximum One Hundred
(B) Maximum Ten
(D) Maximum Fifty

Q. 10. Liability of partner is
(A) Limited
(B) Unlimited
(C) Determined by Court
(D) Determined by Partnership Act


Q. 11. Which one of the following is NOT an essential feature of a partnership?
(A) There must be an agreement
(B) There must be a business
(C) The business must be carried on for profits
(D) The business must be carried on by all the partners


12. X, Y and Z are partners sharing profits and losses equally. Their capital
balances on March, 31, 2012 are 80,000, 60,000 and 40,000 respectively
Their personal assets are worth as follows : X-720,000, Y 15,000 and
Z-10,000. The extent of their liability in the firm would be

(A) X 80,000: Y-60,000 : and Z 40,000
(B) X 20,000: Y- 15,000 : and Z 10,000
(C) X- 1,00,000 : Y 275,000 : and Z-750,000
(D) Equal

13. Every partner is bound to attend diligently to his.... in
the business.
tal
(A) Rights
(C) Capital
B) Meetings
(D) Duties

Q. 14. Forming a Partnership Deed is
(A) Mandatory
(C) Not Mandatory
B) Mandatory in Writing
(D) None of the Above

Q. 15. Partnership Deed is also called..
(A) Prospectus
(B) Articles of Association
(C) Principles of Partnership
(D) Articles of Partnership

Q. 16. Which of the following is not incorporated in the Partnership Act?
(A) profit and loss are to be shared equally
(B) no interest is to be charged on capital
(C) all loans are to be charged interest @6% p.a.
(D) all drawings are to be charged interest

0. 17. When is the Partnership Act enforced?
(A) when there is no partnership deed
(B) where there is a partnership deed but there are differences of opinion
between the partners
(C) when capital contribution by the partners varies
D) when the partner's salary and interest on capital are not incorporated in
the partnership deed

Q. 18. In the absence of Partnership Deed, the interest is allowed on
(A) @ 5% p.a.
(C) @ 12% p.a.
partner's cani
(B) @ 6% p.a.
(D) No interest is allowed

0. 19. In the absence of a partnership deed, the allowable rate of interest on partner's
loan account will be
(A) 6% Simple Interest
(C) 12% Simple Interest
(B) 6% pa. Simple Interest
(D) 12% Compounded Annually

Q. 20. A and B are partners in partnership firm without any agreement. A has given a
loan of 50,000 to the firm. At the end of year loss was incurred in the
business. Following interest may be paid to A by the firm
(A) @5% Per Annum
(B) @ 6% Per Annum
(C) @ 6% Per Month
(D) As there is a loss in the business, interest can't be paid

Q. 21. A and B are partners in a pertnership firm without any agreement. A has
withdrawn 50,000 out of his Capital as drawings. Interest on drawings may
be charged from A by the firm
(A) @ 5% Per Annum
(C) @6% Per Month
(B) @ 6% Per Ann um
(D) No interest can be charge

Q. 22. A and B are partners in a partnership firm without any agreement. A devotes
more time for the firm as compare to B. A will get the following commission
in addition to profit in the firm's profit
(A) 6% of profit
(C) 5% ofprofit
(B) 4% of profit
(D) None of the above

Q. 23. In the absence of partnership deed, the following rule will apply:
(A) No interest on capital
(B) Profit sharing in capital ratio
(C) Profit based salary to working partner
(D) 9% pa, interest on drawings

Q. 24. In the absence of agreement, partners are not entitled to
(A) Salary
(C) Equal share in profit

Q. 25. Interest on capital will be paid to the partners if provided for in the partnership
deed but only out of:
(A) Profits
(C) Accumulated Profits
(B) Commission
(D) Both (a) and (b)
(B) Reserves
(D) Goodwill

Q. 26. Which one of the following items cannot be recorded in the profit and loss
appropriation account?
(A) Interest on capital
(C) Rent paid to partners
(B) Interest on drawings
(D) Partner's salary

0. 27. If any loan or advance is provided by partner then, balance of such Loan
Account should be transferred to
(A) B/S Assets side
(B) B/S Liability Side
(C) Partner's Capital A/c
(D) Partner's Current A/c

Q. 28. A, B and C were Partners with capitals of 50,000, 240,000 and R30,000
respectively carrying on business in partnership. The firm's reported profit for
the year was *80,000. As per provision of the Indian Partnership Act, 1932,
find out the share of each partner in the above amount after taking into
account that no interest has been provided on an advance by A of 20,000 in
addition to his capital contribution
(A) 226,267 for Partner B and C and 27,466 for Partner A
(B) 226,667 each partner.
(C) 33,333 for A 26,667 for B and 20,000 for C
(D) 230,000 each partner

Q. 29, X, Y and Z are partners in a firm. At the time of division of profit for the year,
there was dispute between the partners. Profit before interest on partner's
capital was 6.000 and X determined interest @24% p.a. on his loan of
80,000. There was no agreement on this point. Calculate the amount payable
to X, Y and Z respectively
(A)
2,000 to each partner
(B) Loss of 4,400 for X and Z, Y will take 14,800.
(C)400 forX, 5.200 for Y and 400 for Z.
(D) None of the above.

Q. 30, X, Y and Zare partners in a firm. At the time of division of profit for the year
there was dispute between the partners. Profit before interest on partner's
capital was 6,00,000 and Z demanded minimum profit of ?5,00,000 as his
inancial position was not good. However, there was no written agreement on
this point.
(A) Other partners will pay Z the minimum profit and will share the loss
equally.
(B) Other partners will pay Z the minimum profit and will share the loss in
capital ratio
(C) X and Y will take 250,000 each and Z will take 5,00,000.
(D) 2,00,000 to each of the partners.

0. 52. Which of the following statement is true?
(A) Fixed capital account will always have a credit balanoe
(B) Current account can have a positive or a negative balance
(C) Fluctuating capital account can have a positive or a negative balance
(D) All of the above
(iv) Capital Accounts of Partners
Q. 53. Which accounts are opened when the capitals are fixed?
(A) Only Capital Accounts
(B) Only Current Accounts
(C) Capital Accounts as well as Current Accounts
(D)
Either Capital Accounts or Current Accounts
Q. 54. Which accounts are opened when the capitals are fluctuating
(A) Only Capital Accounts
(B) Only Current Accounts
(C) Capital Accounts as well as Current Accounts
(D) Either Capital Accounts or Current Accounts
Q. 55. Balance of partner's current accounts are
(A) Debit balance
(C) Debit or Credit balances
(B) Credit balances
(D) Neither Debit nor credit balances
Q. 56. Which item is recorded on the credit side of partner's current accounts
(A) Interest on Partner's Capitals (B) Salaries of Partners
(C) Share of profits of Partners(D) All of the Above
Q. 57. If the Partners' Capital Accounts are fixed salary payable to partner' will be
recorded:
(A) On the debit side of Partners' Current Account
(B) On the debit side of Partners' Capital Account
(C) On the credit side of Partners' Current Account
(D) None of the above

Q. 58. It the Partner's Capital Accounts are fixed, interest on capital will be
recorded:
(A) On the credit side of Current Account
(B) On the credit side of Capital Account
(C) On the debit side of Current Account
(D) On the debit side of Capital Account
0. 59. If the Partner's Capital Accounts are fluctuating, in that case following
item/items will be recorded in the credit side of capital accounts
(A) Interest on capital
(C) Commission of partners
(B) Salary of partners
(D) All of the above

61. Interest on partner's capitals will be credited to
(A) Profit and Loss Account
(B) Profit and Loss Appropriation Account
(C) Interest Account
(D) Partner's Capital Accounts
0.62. For the firm interest on drawings is
(A) Capital Payment
(C) Capital Receipt
(B) Expenses
(D) Income
0.63. Interest on Partner's drawings will be debited to :
(A) Profit and Loss Account
(B) Profit and Loss Appropriation Account
(C) Partner's Current Account
(D) Interest Account
0.64. When partners' capital accounts are floating, which one of the following items
will be written on the credit side of the partners' capital accounts?
(A) Interest on drawings
(B) Loan advanced by partner to the firm
(C) Partner's share in the firm's loss
(D) Salary to the active partners
Q. 65. When partners' capital accounts are fixed, which one of the following items
will be written in the partner's capital account?:
(A) Partner's Drawings
(B) Additional capital introduced by the partner in the firm
(C) Loan taken by partner from the firm
(D) Loan Advanced by partner to the firm
Q. 66. Interest on partner's drawings will be credited to
(A) Profit and Loss Account
(B) Profit and Loss Appropriation Account
(C) Partner's Capital Accounts
(D) None of the Above
Q.67. For the firm interest on capital is:
(A) Capital Payment
(C) Loss
(B) Capital Receipt
(D) Income

0.68. On Ist April 2018, Xs Capital was 2,00,000. On 1st October 2018, he
rtroduces additional capital of乏1,00,000. Interest on capital @ 6% p.a. On
31st March, 2019 will be:
(A) 29,000
(B)? 18,000
(D) 15,000
(C) 10,500
Q. 69. X and Y are partners in the ratio of 3:2. Their capitals are 2,00,000 andy =1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm earned
a profit of 60,000 for the year ended 3 1st March 2019. Interest on Capital
will be:
(A) X 16,000; Y 78,000
(C) X R14,400; Y 9,600
(B) X 28,000; Y 4,000
(D) No Interest will be allowed
HOTS
Q. 70. X and Y are partners in the ratio of 3:2 Their capitals are 2,00,000 and
?! ,00,000 respectively. Interest on capitals is allowed @ 8%p.a. Firm earned
a profit of 15,000 for the year ended 3 1st March 2019. Interest on Capital
will be
(A) X
(C) X
16,000, Y 28,000
B) X9,000; Y 6,000
10,000; Y 75,000
(D) No Interest will be allowed

Q. 71. X and Y are partners in the ratio of 3 : 2. Their capitals are 72,00,000 and 1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm incurred a loss ofき60,000 for the year ended 31st March 2019, Interest on Capital will be:
(A) X ? 16,000, 78,000
(C) X 14,400; Y 9,600
(B) X 8,000; Y 4,000
(D) No Interest will be allowed

Q. 72, X and Y are partners in the ratio of 3 : 2. Their capitals are 72,00,000 and y. Interest on capitals is allowed @ 8% p.a. Firm earned a profit of 15,000 for the year ended 31st March 2019, As per partnership agreement, interest on capital is treated a charge on profits. Interest on Capital will be:
(A) X 16,000; Y 78,000
(B) X 9,000, Y 26,000
(D) No Interest will be allowed
(c)10,000; Y 5,000
Q. 73. A and B contribute 1,00,000 and 60,000 respectively in a partnership firm
by way of capital on which they agree to allow interest @ 8% p.a. Their profit
or loss sharing ratio is 3:2. The profit at the end of the year was 2,800 before
allowing interest on capital. If there is a clear agreement that interest on
capital will be paid even in case of loss, then B's share will be:
(A) Profit 6,000
(C) Loss R6,000
(B) Profit 4,000
(D) Loss 4,000

Q.75. Where will you record interest on drawings
(A) Debit Side of Profit & Loss Appropriation Account
(B) Credit Side of Profit&Loss Appropriation Account
(C) Credit Side of Profit& Loss Accoun
CPT; June 2011)
(D) Debit Side of Capital/Current Account only
Q.76. How would you close the Partner's Drawing Account
would you close the Partner's Drawing Account
(A) By transfer to Capital or Current Account Debit Side
(B) By transfer to Capital Account Credit Side
(C) By transfer to Current Account Credit Si
(D) Either "B' or
Q. 77. If date of drawings of the partner's is not given in the question, interest is
charged for how much time
(A) 1 month
(B) 3 months
(D) 12 months
(C) 6 months
Q. 78. Vikas is a partner in afirm .his drawing during the year ended 31^st march
2019 wereR72.000. If interest on drawings is charged @ 9% p.a. the interest
charged will be
(A) 7324
(C) 23,24
(B) 6,480
(D) 648
Q. 79, If a fixed amount is withdrawn by a partner on the first day of every month,
interest on the total amount is charged for.
(A) 6
(C) 512
o. 80. If a fixed amount is withdrawn by a partner on the last day of every
interest on the total amount is charged for ……..months
(B) 6/2
(D) 12
(A) 12
(C) 5½
(B) 61/2
(D) 6

Q. 81. If a fixed amount is withdrawn by a partner in the middle of every
interest on the total amount is charged for..months
(A) 6
(C) 512
(B) 61/2
(D) 12



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