Accounts of Partnership firms- Fundamentals, Unit-3.

In the absence of a partnership deed, profits of the firm will be shared by the partners in-----------------------------------------------
1. Equal ratio
2. Capital ratio
3. Both (a) and (b)
4. None of these
In the absence of an agreement among the partners, interest on capital is-----------------------------------------
1. Not allowed
2. Allowed at bank rate
3. Allowed @ 5% per annum
4. Allowed @ 6% per annum
As per the Indian Partnership Act, 1932, the rate of interest allowed on loans advanced by partners is-----------------------------
1. 8% per annum
2. 12% per annum
3. 5% per annum
4. 6% per annum
Which of the following is shown in Profit and loss appropriation account-------------------------------------------
1. Office expenses
2. Salary of staff
3. Partners’ salary
4. Interest on bank loan
When fixed capital method is adopted by a partnership firm, which of the following items will appear in capital account------------------------------------------------
1. Additional capital introduced
2. Interest on capital
3. Interest on drawings
4. Share of profit
When a partner withdraws regularly a fixed sum of money at the middle of every month, period for which interest is to be calculated on the drawings on an average is------------------------------------------------------
1. 5.5 moths
2. 6 months
3. 12 months
4. 6.5 months
Which of the following is the incorrect pair----------------------------------------------
1. Interest on drawings – Debited to capital account
2. Interest on capital – Credited to capital account
3. Interest on loan – Debited to capital account
4. Share of profit – Credited to capital account
In the absence of an agreement, partners are entitled to-----------------------
1. Salary
2. Commission
3. Interest on loan
4. Interest on capital
Pick the odd one out--------------------------------------
1. Partners share profits and losses equally
2. Interest on partners’ capital is allowed at 7% per annum
3. No salary or remuneration is allowed
4. Interest on loan from partners is allowed at 6% per annum.
Profit after interest on drawings, interest on capital and remuneration is ` 10,500. Geetha, a partner, is entitled to receive commission @ 5% on profits after charging such commission--------------------
Find out commission
1. ` 50
2. Firm name
3. Partnership firm
4. Partner's name
The name under which the business of a firm is carried on is called the --------------------------------------------------
1. Company name
2. Firm name
3. Partnership firm
4. Partner's name
The profit or loss arising from the partnership business is shared by the partners in the----------------------------------------
1. Old ratio
2. new ratio
3. agreed ratio
4. sacrifice ratio
In India, partnership firms arer governed by the Indian Partnership Act--------------------------------------
1. 1932
2. 1930
3. 1992
4. 1986
The maximum number of paretners in a partnership firm is ------------------------------------
1. 25
2. 10
3. 30
4. 50
In sole propertiorship, the profit or loss in the profit and loss account is transferred directly to the sole proprietor's--------------------------
1. drawings account
2. capital account
3. profit sharing ratio
4. old ratio
The balance is the appropriation account is transferred to the partner's capital account in the---------------------------------
1. agree ratio
2. sacrifice ratio
3. profit sharing ratio
4. old ratio
Capital account balance of the sole proprtietor alone as shown in the balance sheet of-------------------------------------
1. Sole proprietorship
2. partnership
3. joint Hindu family
4. Company
Amount invested by partners in the partnership business is called---------------------------------
1. Owner's capital
2. Partner's capital
3. Profit and loss appropriation
4. None of these
Which of the following method, the capital of the partners is not altered and it remains generally fixed--------------------------
1. Fixed capital method
2. Fluctuating capital method
3. Both a and b
4. None of these
All the transactions between the partner and the firm are recorded in the----------------------------------------------
1. capital account
2. drawings account
3. profit and loss account
4. revaluation account
The rate of interest on capital is generally agreed by the partners and is mentioned in the----------------------------------------------------------
1. Capital account
2. profit and loss account
3. partnership deed
4. none of these
Interest on capital is to be calculated on the capitals at the beginning for the--------------------------------------
1. particular period
2. relevant period
3. average period
4. all of these
Period of interest refers to the period from the date of drawings to the closing date of the ---------------------------------
1. Opening year
2. closing year
3. previous year
4. accounting year
(i) The sole proprietorship has its limitations such as limited capital, limited managerial ability and limited risk-bearing capacity. }
(ii) The sole proprietorship has its limitations such as unlimited capital, unlimited managerial capacity and unlimited risk bearing capacity.}
(iii) The partnership has its limitations such as Unlimited capital, unlimited managerial ability and unlimited risk-b earing capacity. } -------- Choose the correct statement.
1. (i) is correct
2. (i) and (ii) are correct
3. (ii) and (iii) are correct
4. (i), (ii) and (iii) are correct
(i) An incoming partner pays his share of good will in cash, and profit sharing ratio of old partner is changed, Good-will be distributed among old partners, according to new ration.
(ii) Any partner who investments in the business but does not take active part in the businesses secret partner.
(iii) 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.
1. (i) and (ii) are correect
2. (iii) is correct
3. (ii) and (iii) are correct
4. (i), (ii) and (iii) are correct.
(i) Any partner who investments in the business but does not take active part in the business is nominal partner
(ii) The capital account will continue to show the same balance from year to year unlesas some amount of capital is introduced or with drawn.
(iii) In the absence of an agreement, interest on loan advanced by the partner to the firm is allowed at the rate of 7%
1. (ii) and (iii) are correct
2. (i) and (ii) are correct
3. (ii) is correct
4. (i), (ii) and (iii) are correct
(i) On the retirement of a partner any reserve being should be transferred to the capital account of neither the retiring partner, nor the remaining partner.
(ii) Amount due to out going partner is shown in the balance sheet as his liability.
(iii) A partnership firm, the net profit as shown by the profit and loss account need certain adjustments with regard to interest on capitals, interewst on drawings, salary and commiassion to the partners.
1. (ii) and (iii) are correct
2. (i) and (ii) are correct
3. (i), (ii) and (iii) are correct
4. (i), (ii) and (iii) are correct
(I) Current accounts of the partners sshould be opened when the capitals are Either fixed or fluctuating.
(ii) Good will is the present value of a firm's anticipated excess earnings in future and the efforts had already made in the past.
(iii) Any partner who invest in the business but does not take active part in the business is Nominal partner.
1. (ii) and (iii) are correct
2. (i) and (ii) are correct
3. (ii) is correct
4. (i),(ii) and (iii) are correct.

Partnership Accounts – Basic Concepts