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Accounting for Partnership: Basic Concepts Class 12 MCQs Questions with Answers
I. State which of the following is correct:
Question 1.
Partnership deed may be _______
(a) oral
(b) written
(c) duplicate
(d) either written or oral
Answer
Answer: (d) either written or oral
Question 2.
If no agreement is made by partners then interest on loan will be given @ _________
(a) 5% p.a.
(b) 6% p.a.
(c) no interest
(d) 7% p.a
Answer
Answer: (b) 6% p.a.
Question 3.
Profit will be divided in ________ in the absence of partnership deed.
(a) 1 : 1
(b) 2 : 1
(c) 1 : 2
(d) equal ratio
Answer
Answer: (d) equal ratio
Question 4.
In a partnership, liability of all partners is _________
(a) unlimited
(b) limited
(c) according to capital
(d) decided by company act
Answer
Answer: (a) unlimited
Question 5.
Maximum number of partners in a partnership firm can be ________
(a) 50
(b) 20
(c) 100
(d) no limit
Answer
Answer: (d) no limit
Question 6.
When there is no partnership deed then provisions of partnership act ________ willbe applicable.
(a) 1956
(b) 1912
(c) 1932
(d) 1949
Answer
Answer: (c) 1932
Question 7.
Liability of a partner in LLP is ________
(a) limited
(b) unlimited
(c) not defined in the law
(d) limited to the capital only
Answer
Answer: (a) limited
Question 8.
Provisions of Table _______ are applicable in the absence of partnership deed.
(a) A
(b) B
(c) C
(d) D
Answer
Answer: (a) A
Question 9.
In the absence of any provision interest on capital will be calculated for _________
(a) 6 months
(b) 1 year
(c) 1 month
(d) no interest
Answer
Answer: (d) no interest
Question 10.
Minimum number of partners in a partnership are ________
(a) 5
(b) 7
(c) 2
(d) 10
Answer
Answer: (c) 2
Question 11.
Maximum number of partners in a normal partnership are ________
(a) 5
(b) 7
(c) 2
(d) 20
Answer
Answer: (d) 20
Question 12.
Maximum number of partners in a banking partnership are _________
(a) 5
(b) 7
(c) 2
(d) 10
Answer
Answer: (d) 10
Question 13.
Current accounts are opened if capital is __________
(a) fixed
(b) fluctuating
(c) not contributed
(d) fixed or fluctuating
Answer
Answer: (a) fixed
Question 14.
Balance of capital (fix) accounts may be _________
(a) Dr.
(b) Cr.
(c) Dr. or Cr.
(d) Cr. and Dr.
Answer
Answer: (b) Cr.
Question 15.
Salary to partners will be shown in _________
(a) Profit and loss account
(b) Profit and loss adjustment account
(c) Trading account
(d) Manufacturing account
Answer
Answer: (b) Profit and loss adjustment account
Question 16.
Interest on capital will be shown in ________
(a) Capital account
(b) Profit and loss adjustment account
(c) Trading account
(d) Both of capital account and profit and loss adjustment account
Answer
Answer: (d) Both of capital account and profit and loss adjustment account
Question 17.
Drawings of partners will be shown in ________
(a) Capital account
(b) Profit and loss adjustment account
(c) Profit and loss account
(d) Trading account
Answer
Answer: (a) Capital account
Question 18.
In the absence of partnership deed partners are entitled to receive __________
(a) Interest on Capital
(b) Interest on Loan
(c) Salary
(d) Commission
Answer
Answer: (b) Interest on Loan
Question 19.
When question is silent about the date of withdrawal of drawing then Interest will becalculated for ________
(a) 6 months
(b) 1 month
(c) 6½ months
(d) 1 year
Answer
Answer: (a) 6 months
Question 20.
If partnership deed mention that interest will be given 6% p.a. interest will be given _________
(a) out of profits only
(b) definitely
(c) out of losses
(d) with the permission of all partners
Answer
Answer: (a) out of profits only
Question 21.
Partners Current Account have _________
(a) debit balance
(b) credit balance
(c) debit or credit
(d) debit and credit
Answer
Answer: (c) debit or credit
Question 22.
In the absence of partnership deed how much interest will be given on capital?
(a) 5% p.a.
(b) 6% p.a.
(c) 7% p.a.
(d) No interest
Answer
Answer: (d) No interest
II. Fill in the blanks with correct word.
Question 23.
In the absence of deed, ______ salary will be given to partners.
Answer
Answer: No
Question 24.
In the absence of deed, profit will be shared in _______ ratio.
Answer
Answer: equal
Question 25.
________ accounts are opened, while capital is fixed.
Answer
Answer: current
Question 26.
________ accounts is opened, while capital is fluctuating.
Answer
Answer: capital
Question 27.
Liability of partners is ________ in a general partnership firm.
Answer
Answer: Unlimited
Question 28.
Liability of partners is ________ in LLP.
Answer
Answer: limtied
Question 29.
The business of the firm can be conducted even by ________ partner.
Answer
Answer: One
Question 30.
There must be atleast two ________ partners in LLP.
Answer
Answer: designated
Question 31.
A partnership can be formed only for a _________ business.
Answer
Answer: legal
Question 32.
Partners are mutual _______ of each other in a partnership firm/business.
Answer
Answer: agents
Question 33.
Money advanced to the firm in addition to the capital is called __________
Answer
Answer: loan
Question 34.
Partnership is the result of an between _________ two or more person.
Answer
Answer: Agreement
Question 35.
General Partnership is governed by Partnership Act ________ where LLP is govern by LLP Act _______
Answer
Answer: 1932, 2008
Question 36.
In order to form partnership there should be atleast _______ persons.
Answer
Answer: two
Question 37.
The business of _________ concern may be carried on by all the partners or any of them acting for all.
Answer
Answer: partnership
Question 38.
________ interest is to be charged on the drawings made by the partners, if there is nothing mentioned in the deed.
Answer
Answer: No
Question 39.
Maximum number of partners in a partnership firm can be ________
Answer
Answer: 50
Question 40.
Interest on partners _________ to the firm shall be paid even if there are losses.
Answer
Answer: loan
III. State whether the following statements are True or False.
Question 41.
Minimum number of partners in a partnership firms are two.
Answer
Answer: True
Question 42.
In the absence of partnership deed, no interest will be charged on drawings.
Answer
Answer: True
Question 43.
In the absence of partnership deed, profit will be distributed equally between all partners.
Answer
Answer: True
Question 44.
If majority of partners decide to close the LLP business, they can do so by giving notice in writing.
Answer
Answer: False
Question 45.
In the absence of partnership deed, interest @ 6% p.a. will be allowed on partner’s Loan.
Answer
Answer: True
Question 46.
In the absence of partnership deed, interest on capital will be given @ 6% p.a.
Answer
Answer: False
Question 47.
In case of LLP business in partnership, maximum number of partners are limited.
Answer
Answer: False
Question 48.
Partnership deed must be in written form.
Answer
Answer: False
Question 49.
A minor can never become a partner in a partnership firm.
Answer
Answer: False
Question 50.
Liability of partners in general partnership is unlimited.
Answer
Answer: True
Question 51.
If partnership deed is silent then remuneration can be given to partners.
Answer
Answer: False
Question 52.
If any partner remain absent from the business, share of profit will automatically reduce.
Answer
Answer: False
Question 53.
If time of drawings is not given then interest will be calculated for half of the time period.
Answer
Answer: True
Question 54.
In case of fixed capital accounts, balance of capital always fluctuate.
Answer
Answer: False
Question 55.
Partners Current Account always have credit balance.
Answer
Answer: False
Question 56.
Every partner is an agent of the firm.
Answer
Answer: True
Question 57.
Expenses as charge in nature are shown in profit and loss appropriation account whereas expenses as appropriation in nature are shown in profit and loss account.
Answer
Answer: False
Question 58.
A partnership Act 1932 does not differentiate kind of businesses whereas LLP Act 2008 permits only legal business to run.
Answer
Answer: False
Question 59.
Under fixed capital, any provision of salary, interest etc., are shown incurrentaccount.
Answer
Answer: True
Question 60.
LLP business is similar to company form of business.
Answer
Answer: True
IV. One word Questions
Question 61.
Chhavi and Neha were partners in a firm sharing profits and losses equally. Chhavi withdrew a fixed amount at the beginning of each quarter. Interest on drawings is charged @ 6% p.a. At the end of the year, interest on Chhavi’s drawings amounted to ₹ 900. Pass necessary journal entry for charging interest on drawings.
Answer
Answer:
Question 62.
Dev withdrew ₹ 10,000 on 15th day of every month. Interest on drawings was to be charged @ 12% per annum. Calculate interest on Dev’s drawings.
Answer
Answer: Interest On Drawings = 1,20,000 × 12/100 × 6 × 12 = 7,200
Question 63.
Amit, a partner in a partnership firm withdrew ₹ 7,000 at the beginning of each quarter. For how many months would interest on drawings be charged?
Answer
Answer: 7½ months
Question 64.
Raj and Seema started a partnership firm on 1st July 2018. They agreed that Seema was entitled to a commission of 10% of the net profit after charging Raj’s salary of ₹ 2,500 per quarter and Seema’s commission. The net profit before charging Raj’s salary and Seema’s commission for the year ended 31st March 2019 was ₹ 2,27,500. Calculate Seema’s commission.
Answer
Answer: Net profit before salary and commission = ₹ 2,27,500
Net Raj’s salary ₹ 2,500 × 3 = ₹ 7,500
Net profit after Raj’s salary but before Seema’s commission = ₹ 2,20,000
Seema’s commission = 10/110 of ₹ 2,20,000 = ₹ 20,000
Question 65.
A and B are partners in firm sharing profits and losses in the ratio of 7 : 3. Their fixed capitals were: A ₹ 9,00,000 and B ₹ 4,00,000. The partnership deed provided the following:
(i) Interest on capital @ 10% p.a.
(ii) A’s salary ₹ 50,000 per year and B’s salary ₹ 3,000 per month.
Profit for the year ended 31st March 2019 ₹ 2,78,000 was distributed without providing for interest on capital and partner’s salary. Showing your work clearly, pass the necessary adjustment entry for the above omissions.
Answer
Answer:
Journal:
Table showing Past Adjustments:
Question 66.
Partners of ABC Corporation have agreed that D, a minor, should be admitted as a partner in the firm. What will be the liability of D?
Answer
Answer: Limited
Question 67.
X, Y, and Z are partners in a firm. The firm had adopted the fixed capital method. Mention the account in which the interest on capital will be recorded:
Answer
Answer: Capital Account
Question 68.
A partnership deed provides for the payment of interest on capital but there was a loss instead of profits during the year 2010-11. Will the interest on capital be allowed?
Answer
Answer: No
Question 69.
Where is interest on a partner’s loan debited to Profit and Loss Account or Profit and Loss Appropriation Account?
Answer
Answer: Profit and loss Account
Question 70.
Is interest on a partner’s loan is payable even in case of loss to the firm?
Answer
Answer: Yes
Question 71.
Net profit of a firm is ₹ 30,000, partners’ salary is ₹ 12,000, and interest on capital is ₹ 20,000. Mention the amount of partners’ salary and interest on capital which should be debited to the Profit and Loss Appropriation Account if both items are treated as appropriation.
Answer
Answer: Partners’ salary ₹ 11,250, Interest on capital ₹ 18,750.
Note: In the ratio of salary and interest on capital i.e. 12,000 : 20,000 = 3 : 5.
Question 72.
Ram and Shyam are partners sharing profits/losses equally. Ram withdrew ₹ 1,000 p.m. regularly on the first day of every month during the year 2013-14 for personal expenses. If interest on drawings is charged @ 5% p.a. Calculate interest on the drawings of Ram.
Answer
Answer: Interest on Drawings = \(12,000 \times \frac{5}{100} \times \frac{6.5}{12}\) = ₹ 325
Question 73.
Verma and Kaul are partners in a firm. The partnership agreement provides that interest on drawings should be charged @ 6% p.a. Verma withdraws ₹ 2,000 per month starting from April 01, 2013 to March 31, 2014. Kaul withdraw ₹ 3,000 per quarter, starting from April 01, 2013. Calculate interest on partner’s drawings.
Answer
Answer: Interest on Verma’s Drawings = \(24,000 \times \frac{6}{100} \times \frac{6.5}{12}\) = ₹ 780
Interest on Kaul’s Drawings = \(12,000 \times \frac{6}{100} \times \frac{7.5}{12}\) = ₹ 450
Question 74.
Himanshu withdraws ₹ 2,500 at the end of each month. The partnership deed provides for charging the interest on drawings @ 12% p.a. Calculate interest on Himanshu’s drawings for the year ending 31st December 2013.
Answer
Answer: Interest on Drawings = \(30,000 \times \frac{12}{100} \times \frac{5.5}{12}\) = ₹ 1650
Question 75.
Bharam is a partner in a firm. He withdraws ₹ 3,000 at the starting of each month for 12 months. The books . of the firm closes on March 31 every year. Calculate interest on drawings if the rate of interest is 10% p.a.
Answer
Answer: Bharam withdraws ₹ 3,000 at the starting of each month.
Therefore, Drawings = ₹ 3,000 × 12 = 36,000
Interest on Drawings = \(36,000 \times \frac{10}{100} \times \frac{6.5}{12}\) = ₹ 1,950
Question 76.
Amit and Bhola are partners in a firm. They share profits in the ratio of 3 : 2. As per their partnership agreement, interest on drawings is to be charged @ 10% p.a. Their drawings during 2013 were ₹ 24,000 and ₹ 16,000, respectively. Calculate interest on drawings based on the assumption that the amounts were withdrawn evenly, throughout the year.
Answer
Answer: Amit’s Drawings = ₹ 24,000
Interest on Drawings @ 10% p.a = \(24,000 \times \frac{10}{100} \times \frac{6}{12}\) = ₹ 1,200
Bhola’s Drawings = ₹ 16,000
Interest on Bhola’s Drawings = \(16,000 \times \frac{10}{100} \times \frac{6}{12}\) = ₹ 800
Note: In the absence of the date of drawings, it is assumed drawings have been made in the middle of each month/period.
Question 77.
A, B, and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. B was guaranteed a profit of ₹ 2,00,000. During the year the firm earned a profit of ₹ 84,000. Calculate the net amount of Profit/Loss transferred to the capital accounts of A and C.
Answer
Answer: Net Amount of Loss transferred to:
A’s Capital Account: ₹ 87,000
C’s Capital Account: ₹ 29,000
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