GSEB Class 12 Accounts Important Questions Part 1 Chapter 1 Introduction to Partnership

Gujarat Board GSEB Class 12 Commerce Accounts Important Questions Part 1 Chapter 1 Introduction to Partnership Important Questions and Answers.

GSEB Class 12 Accounts Important Questions Part 1 Chapter 1 Introduction to Partnership

Answer the following questions in one or two sentences :

Question 1.
Give the meaning of partnership.
Answer:
“Partnership is the relation between the persons who have agreed upon to share the profit of a business carried on by all or any one of them acting for all.”

Question 2.
From which year Partnership Act is implemented in India?
Answer:
In the year 1932, Partnership Act is implemented in India.

Question 3.
What is partnership deed?
Answer:
A written agreement of partnership is known as a partnership deed.

Question 4.
Which type of partnership agreement is desirable?
Answer:
A written partnership agreement is always desirable.

Question 5.
Why is it necessary to have written partnership deed?
Answer:
On the basis of written partnership deed, the solution of any misunderstanding dispute in future can be obtained.

Question 6.
How salary, bonus or commission be given to the active partner of business, if no provision is there for the same in the partnership deed?
Answer:
Salary, bonus or commission will not be given to the active partner of business if no provision is there for the same in the partnership deed.

Question 7.
A partner has right to receive salary as shown in the partnership deed though business suffers a loss – True or false?
Answer:
It is true that a partner has right to receive salary as shown in the partnership deed, though business suffers a loss.

Question 8.
At what rate, interest on loan given by partner to the firm, be calculated, if no provision is there for the same in the partnership deed?
Answer:
At 6% interest on loan given by partner to the firm is calculated, if no provision is there for the same in the partnership deed.

Question 9.
How profit of the business be distributed among partners, if there is no provision in the partnership deed for the same ?
Answer:
When there is no provision for the distribution of profit or loss among the partners, profit or loss of business will be distributed equally among partners.

Question 10.
To which account, interest on loan paid to partner is to be debited ?
Answer:
Considering interest on loan paid to partner as business expense, it will be debited to profit and loss account.

Question 11.
What is fluctuating capital account method ?
Answer:
A method in which the opening balance of the capital account and the closing balance of the capital account of any partner is reported fluctuated (flexible) is known as fluctuating capital account method.

Question 12.
What is the other name of fluctuating capital account method ?
Answer:
Other name of fluctuating capital account method is temporary capital account method.

Question 13.
When fluctuating capital account method is adopted, where would you record permanent changes which takes place in the capital of partners ?
Answer:
When fluctuating capital account method is adopted, permanent changes which takes place in the capital are recorded in the capital account only.

Question 14.
Where would you record interest on drawings when partners capital accounts are kept under temporary capital account method ?
Answer:
To partners capital account, interest on drawings will be debited when partners accounts are kept under temporary capital account method.

Question 15.
What is fixed capital account method ?
Answer:
A method of partners capital under which no change is reported in opening balance and closing balance in the partners capital account is known as fixed capital account method.

Question 16.
What is the other name of fixed capital account method ?
Answer:
Fixed capital account method is also known as permanent capital account method.

Question 17.
Which accounts are prepared in the fixed capital account method ?
Answer:
Following two accounts are prepared in the fixed capital account method.

1. Partners capital accounts
2. Partners current accounts.

Question 18.
In the fixed capital account method, permanent changes in the capital are to be recorded to which account ?
Answer:
Permanent changes in the capital are recorded in the fixed capital accounts when fixed capital . account method is adopted.

Question 19.
In the fixed capital account method, to which account profit share of partner be credited ?
Answer:
Profit share of partner will be credited to partners current account when fixed capital account method is adopted.

Question 20.
In the fixed capital account method, to which account interest on capital be credited ?
Answer:
Interest on capital will be credited to partners current account when fixed capital account method is there.

Question 21.
What is partner’s current account ?
Answer:
Under fixed capital account method, the account prepared to record the transactions of the partner with the partnership firm other than permanent capital is known as current account.

Question 22.
Why it is necessary to open partners current account ?
Answer:
When firm adopted fixed capital account method, to record the transactions of the partner with the partnership firm, other than permanent capital, it is necessary to open partners current account.

Question 23.
Which kind of balance partners current account have ?
Answer:
Partners current account may have debit or credit balance.

Question 24.
In fixed capital account method, where would you transfer current account balance ₹
Answer:
When fixed capital account method is adopted, current account balance is transferred to balance sheet.

Question 25.
Where would you show debit balance of partner’s current account in the balance sheet ₹
Answer:
On the asset receivable side of balance sheet, debit balance of partners current account will
be shown.

Question 26.
Write the accounting effect for interest on partners loan.
Answer:
Considering interest on partners loan as an expense, it will be debited to profit and loss account and credited to partners current or capital account.

Question 27.
Interest on partners loan can be credited to which account instead of credited it to partners capital or current account ₹
Answer:
Interest on partners loan can be credited to partner’s loan account instead of credited it to partners capital or current account.

Question 28.
Partners drawing account will be closed and transferred to which account at the end of the year ₹
Answer:
At the end of financial year (1) In case of fluctuating capital account method, partners drawing
account will be closed and transferred to partners capital account and (2) In case of fixed capital account method partners drawings account will be closed and transferred to partners current account.

Question 29.
Why profit and loss appropriation account is prepared ₹
Answer:
To show the distribution of profit or loss among the partners, profit and loss appropriation account is prepared. It is not compulsory to prepare profit and loss appropriation account.

Question 30.
Where would you record closing balance of profit and loss appropriation account ₹
Answer:
Closing balance of profit and loss appropriation account means divisible profit and loss will be transferred to partners capital or current account.

Question 31.
What debit balance of profit and loss appropriation account suggest ₹
Answer:
Debit balance of profit and los appropriation accounts suggest divisible loss.

Question 32.
What credit balance of profit and loss appropriation account suggest ₹
Answer:
Credit balance of profit and loss appropriation account suggest divisible profit.

Question 33.
On which side of profit and loss appropriation account, interest on drawings of partners be
shown ₹
Answer:
On credit side of profit and loss appropriation account, interest on drawings of partners is to be shown.

Question 34.
What is the provision for interest payable to any partner in the income tax act ₹
Answer:
As per income tax act, section 40(b) interest payable to any partner is invalid if there is no provision for the same in partnership deed. Moreover as per section 40(b) (iv), if more than 12% interest is paid, it is again invalid.

Question 35.
What is the new provision for giving more space/advantages to small and medium scale industries and to remove unlimited liability for partners ₹
Answer:
The limited liability Partnership Act 2008, is newly introduced scheme for giving more space/ advantages to small and medium scale industries and remove unlimited liability for partner clause.

Answer the following questions :

Question 1.
Capital ratio of partners Ram, Shyam and Gopal is 3 : 2 : 1. Annual profit of the firm is ₹ 90,000.
Find out profit amount for Shyam.
Answer:
₹ 30,000

Question 2.
Tanmay, Manthan and Dhananjay are partners of a firm sharing profit and loss in 2 : 2 : 1 ratio.
If profit of the firm is ₹ 1,20,000, Find profit share of Dhananjay.
Answer:
₹ 24,000

Question 3.
Akash receives \(\frac {3}{4}\) share of Vikas and Suhas receives half part of share of Vikas. If profit of the firm is ₹ 55,000 , find profit amount received by each partner.
Answer:
New profit-loss ratio = 2 : 6 : 3 profit received by Akash, Vikas and Suhas are respectively ₹ 10,000, ₹ 30,000 and ₹ 15,000

Question 4.
Devang, Jignesh and Brijesh are partners of a firm. Brijesh receives \(\frac {1}{5}\) th share of Jignesh and Devang receives 2 times profit than Brijesh. If profit of the firm is ₹ 60,000 then find profit amount received by each partner.
Answer:
News profit-loss ratio = 2 : 5 : 1. Profit received by Devang, Jignesh and Brijesh are respectively ₹ 15,000, ₹ 37,500 and ₹ 7,500

Question 5.
Tapan receives half of shares of Vishal while Baiju receives \(\frac {1}{3}\) rd share of Tapan. If total profit of the firm is ₹ 80,000 then find profit share receives by each partner.
Answer:
New profit-loss ratio = 3 : 6 : 1, profit amount received by Tapan, Vishal and Baiju are respectively ₹ 24,000, ₹ 36,000 and ₹ 8,000

Question 6.
A receives 2 \(\frac {1}{2}\) times profit then B and C receives \(\frac {3}{4}\) th share of profit then B. If profit of the firm at the end of the year is ₹ 85,000 then find the share of C in profit.
Answer:
New profit-loss ratio = 10 : 4 : 3, profit share of C = ₹ 15,000

Question 7.
Mukesh receives \(\frac {1}{4}\) th share of Lata, Lata receives \(\frac {1}{2}\) share of Rubi, and Asha receives 3 times share of Mukesh. If profit of the firm is ₹ 80,000 then find the profit share of Lata.
Answer:
New profit-loss ratio = 1 : 4 : 8 : 3, profit share of Lata = ₹ 15,000

Question 8.
A receives 2\(\frac {1}{2}\) times profit than B. C receives 2\(\frac {1}{2}\) times profit than A, D receives y times profit than C. If profit of the firm is ₹ 1,17,000 then find the profit share of B.
Answer:
New profit-loss ratio = 10 : 4 : 15 : 10, B’s profit share = ₹ 12,000

Question 9.
Ramesh receives \(\frac {6}{7}\) th share of Naresh, while Paresh receives \(\frac {1}{3}\) rd share of Ramesh. If profit share of Paresh is ₹ 12,000 then find the total profit of the firm.
Answer:
New profit-loss share = 6 : 7 : 2, Total profit = ₹ 90,000

Question 10.
Priyam, Divam and Shivam are partners of a firm with capital ratio 3 : 2 : 1. Priyam and Divam has given assurance to Shivam that he will get minimum ₹ 25,000 from the profit. The profit of the firm is ₹ 60,000. Show the distribution of profit among partners.
Answer:
Profit share of Priyam, Divam and Shivam are resp. ₹ 17,500; ₹ 17,500 and ₹ 25,000

Question 11.
Chaitra, Vaishakh and Jeth are partners of a firm sharing profit and loss in the ratio of 5 : 3 : 2. Chaitra and Vaishakh has given assurance to Jeth that he will get minimum ₹ 30,000 from the profit. Profit of the firm is ₹ 1,00,000. Show the distribution of profit among partners.
Answer:
Profit share of Chaitra, Vaishakh and Jeth are resp. ₹ 43,750, ₹ 26,250 and ₹ 30,000

Question 12.
Amar, Akbar and Anthony are partners of a fim sharing profit and loss in the ratio of 3 : 2 : 1. Amar has given assurance to Anthony that he will get minimum ₹ 25,000 from the profit. Profit of the firm is ₹ 1,20,000. Show the distribution of profit among partners.
Answer:
Profit share of Amar, Akbar and Anthony are resp. ₹ 55,000, ₹ 40,000 and ₹ 25,000

Question 13.
Sagar, Sarita and Zarna are the partners of a firm sharing profit-loss in equal proportion. Their total capial is of ₹ 2,00,000. Their proportion of capital is 5 : 3 : 2. Firm pays interest on capital of 6% p.a. Partner Zarna received ₹ 62,400 including interest on capital. Determine total amount received by Sagar.
Answer:
Amount received by Sagar ₹ 66,000 profit ₹ 60,000 + Interest on capital ₹ 6,000

Question 14.
Jay, Vijay and Ajay are the partners of a firm sharing profit-loss in 2 : 2 : 1. Their total capital is ₹ 1,50,000 and capital ratio is 3 : 2 : 1. Firm pays interest on capital at 10% p.a. Partner Ajay received ₹ 26,500 including interest on capital. Determine total amount received by Jay.
Answer:
Amount received by Jay ₹ 55,500 (profit ₹ 48,000 + Interest on capital ₹ 7,500)

Question 15.
Amul, Pranav and Manan are partners of a firm. Opening capital balances of partners are resp. ₹ 35,000, ₹ 40,000 and ₹ 75,000. After distribution of profit at the end of the year, it was realized that interest on capital at 12% was not calculated. Write rectification entry.
Answer:
Amul’s capital A/c Dr. ₹ 1,800, Pranav’s capital A/c Dr. ₹ 1,200, To Manan’s capital A/c. ₹ 3,000

Question 16.
Jyoti, Dipak and Roshni are partners of a firm. Total capital of the firm is ₹ 2,00,000 and their capital ratio is 5 : 3 : 2. After distribution of profit at the end of the year, it was realized that interest on capital at 6% was not calculated. Write rectification entry.
Answer:
Dipak’s capital A/c Dr. ₹ 400, Roshni’s capital A/c Dr. ₹ 1,600; To Jyoti capital A/c ₹ 2,000

Question 17.
Manisha , Alpa and Kalpana are partners of a firm sharing profit and loss in 5 : 3 : 2. After
preparing accounts of the firm, it was realised that interest on drawings resp. ₹ 1,500, ₹ 1,200 and ₹ 900 was missed out. Write rectification entry.
Answer:
Alpa’s capital A/c Dr. 120, Kalpan A/c Dr. ₹ 180; To Manisha’s capital A/c ₹ 300

Question 18.
Som, Mangal and Budh are partners of a firm. After distribution of profit it was realized that interest on drawings resp. ₹ 3,000, ₹ 2,400 and ₹ 1,200 was missed out. Write rectification entry.
Answer:
Som’s capital A/c Dr. ₹ 800, Mangal’s capital A/c Dr. ₹ 200; To Budh’s capital A/c ₹ 1,000

Question 19.
Profit of the partnership firm of partners A, B and C is ₹ 90,000. They distributed profit in the ratio of 3 : 2 : 1 instead of 2 : 2 : 1. Write accounting treatment to rectify this error.
Answer:
A’s capital A/c Dr. ₹ 9,000 , To B’s capital A/c ₹ 6,000 , To C’s capital A/c ₹ 3,000

Question 20.
Profit of the partnership firm of partners, Vasant, Hemant and Shishir is ₹ 1,20,000. They
distributed profit in the ratio of 2 : 2 : 1 instead of 3 : 2 : 1. Write accounting treatment to rectify this error.
Answer:
Hemant’s capital A/c Dr. ₹ 8,000, Shishir’s capital A/c Dr. ₹ 4,000, To Vasant’s capital A/c ₹ 12,000

Question 21.
The closing capital of Raghuvir is ₹ 65,000 which includes ₹ 15,000 of drawings and ₹ 20,000
of proit. Calculate interest on opening capital balance at 5% p.a.
Answer:
₹ 3,000

Question 22.
The closing capital of Dilesh is ₹ 45,000 after giving effects of drawing ₹ 20,000 and divisible profit ₹ 15,000. Calculate interest on opening capital balance at 8% p.a.
Answer:
₹ 4,000

Question 23.
Suraj, Chandra and Tara are partners of a firm sharing profit and loss in the ratio of 5 : 7 : 9, Manager of the firm is to be paid 10% commission on profit but after the deduction of his such share. The share of Chandra is ₹ 28,000. Calculate manager’s commission.
Answer:
₹ 8,400

Question 24.
‘Kruti, Prakruti and Sanskruti are partners of a firm sharing profit and loss in the ratio of 2 : 2 : 1. Manger is to paid 5% commission on profit after deducting his share. The profit share of Sanskruti is ₹ 24,000. Calculate manager’s commission . Also calculate profit of the firm before calculating manager’s commission.
Answer:
Manager’s com. ₹ 6,000, profit before calculating manager’s commission = ₹ 1,26,000

Question 25.
Manager of a firm is to be paid 8% commission on net profit after deduction of such commission
which is arrived at ₹ 7,200. While calculating this profit amount bad debts ₹ 3,240 was not considered. Calculate rectified commission of manager.
Answer:
₹ 6,960

Question 26.
Before calculating manager’s commission and general reserve amount. Profit of the firm is
₹ 1,44,000 which includes ₹ 12,000 for general reserve. Manager is to be paid 10% commission on profit after charging such commission. Calculate profit after commission and manager’s commission.
Answer:
Profit after com. ₹ 1,20,000; Com. to manager = ₹ 12,000

Question 27.
An accountant calculate manager’s commission at 10%. On profit after charging such commission and it is arrived at ₹ 37,972. But while calculating profit, bad debts ₹ 2,420 was considered more. After rectification of accounts, (1) Find manager’ commission (rectified).
(2) \(\frac {2}{5}\) th profit share of partner Anand from profit.
Answer:
(1) Manager’s commission ₹ 38,192, Profit share of Anand ₹ 1,52,768

Question 28.
An accountant calculate manager’s commission at 10% on profit after charging such commission and it is arrived at ₹ 2,400. But while calculating profit , bad debts was considered more by ₹ 1,100. Accordingly accounts were rectified. Now, find (1) Manager’s commission (rectified).
(2) \(\frac {3}{5}\) th profit share of partner Arpit from profit.
Answer:
(1) Manager’s commission ₹ 2,500, profit share of Arpit = ₹ 15,000

Question 29.
Dilpesh withdraw, ₹ 1,500 in the beginning of every month. If interest on drawings is to be calculated at 10% p.a. then find total drawings amount and interest on drawings amount.
Answer:
Total drawings = ₹ 18,000, Int. on drawings = ₹ 975

Question 30.
Jatin withdraw ₹ 500 at the end of every month. Calculate interest on drawings at 12% p.a. Answer:
₹ 330

Question 31.
A partner withdraw equal amount at the end of every month. Total amount of drawings is
₹ 9,000. If interest on drawings is to be calculated at 12% p.a., then calculate interest on drawings.
Answer:
₹ 495

Question 32.
Ramesh and Naresh are partners of a firm. Ramesh withdraw ₹ 800 in the beginning of every month and Naresh withdraw ₹ 800 at the end of every month. Calculate interest on drawings at 12% p.a. who will pay more interest amount ₹
Answer:
Ramesh will pay more interest by ₹ 96

Question 33.
A partner withdraw equal amount in the beginning of every month from 1st November. If total
drawings is ₹ 6,000, then calculate interest on drawings at 12% p.a. company’s accounting year ends on 31st March.
Answer:
Interest on drawing = ₹ 180

Question 34.
Mansi and Meghna are partners of a firm. Their capital ratio is 3 : 2. Meghna is to be paid 5% commission on profit after charging such commission. If profit of the firm is ₹ 62,580 then find the total amount received by Meghna.
Answer:
Total amount received by Meghna ₹ 32,780 (Commission ₹ 2,980 + Profit ₹ 29,800)

Question 35.
Shah, Patel and Desai are partners sharing profit and loss in 3 : 2 : 1 ratio. Desai is to be paid 6% commissions on profit after charging such commission. If profit of the firm is ₹ 20,988 then find the total amount received by Desai.
Answer:
Amount received by Desai = ₹ 4,488 (commission ₹ 1,188 + profit ₹ 3,300)

Question 36.
Profit-loss ratio of Raj and Dev is 3 : 2. Profit-loss ratio of Raj and Dilip is 5 : 3. If profit of the firm is ₹ 62,000 then find profit amount received by partners.
Answer:
Profit-loss ratio = 15 : 10 : 8. Profit share received by Raj, Dev and Dilip are respectively ₹ 30,000, ₹ 20,000 and ₹ 12,000

Question 37.
Jayesh receives \(\frac {3}{5}\) th share of Suresh and Pankaj receives \(\frac {2}{3}\) rd share of Jayesh. If Pankaj receives ₹ 6,000 as profit, find total profit of the firm.
Answer:
Profit-loss ratio = 3 : 5 : 2, Total profit = ₹ 30,000

Question 38.
Vanita, Kavita and Sunita are partners sharing profit and loss in 5 : 3 : 2 ratio. Manager Banita receives ₹ 13,200 as commission at 10% after changing such commission. Show profit distribution among partners.
Answer:
Profit share received by Vanita, Kavita and Sunita are respectively ₹ 66,000, ₹ 39,600 and ₹ 26,400

Question 39.
Mahesh, Naresh and Jayesh are partners of a firm. Their capital are respectively ₹ 50,000, ₹ 30,000 and ₹ 20,000. Profit of the firm is ₹ 60,000. Which is distributed in capital ratio instead of equal ratio. Write rectification entry.
Answer:
Mahesh’s capital A/c Dr. ₹ 10,000, To Naresh’s capital A/c ₹ 2,000; To Jayesh’s capital A/c ₹ 8,000

Question 40.
Total capital and total drawings of partnership firm of Ram and Bharat are ₹ 1,20,000 and ₹ 12,000 resp. while calculating interest on capital at 8% and interest on drawings at 12%, Ram’s interest on capital and interest on drawings are arrived at ₹ 6,400 and ₹ 720 respectively. Find partners capital and drawings amounts.
Answer:
Ram’s capital = ₹ 80,000 and drawings ₹ 6,000; Bharat’s capital = ₹ 40,000 and drawings ₹ 6,000

Give to the point answer of the following questions :

Question 1.
Write difference : Fixed Capital Account and Current Account :
Answer:
Difference between Fixed Capital Account and Current Account is as under :

Point of Difference	Fixed Capital Account	Current Account
1. Meaning	For the partners capital account, when opening balance and closing balance remains same, then it is known as fixed capital account.	Account prepared to record the transactions of the partner with the partnership firm, other than permanet capital is known as current account.
2. Balance of account	Fixed capital account has always credit balance.	Current account has debit or credit balance
3. Recording in Balance sheet	Balance of fixed capital account is shown on the ‘capital-liability’ side of balance sheet.	Credit balance of current account is shown on the ‘capital-liability’ side of balance sheet while debit balance of current account is shown on the ‘asset receivable’ side of balance sheet.
4. Balances shown in the account	On the credit side of fixed capital account. Opening balance of capital and premanent increase in the capital balance are shown while on the debit side permanent decrease in the capital balance are shown.	On the credit side of current account, opening credit balance of current account, interest on capital, salary, bonus, com. int. on loan, int. on current account credit balance and divisible profit are shown and on the debit side of current account. Opening debit balance of current account, interest on debit balances of current account, drawings, interest on drawigns and divisible loss etc. are shown.
5. Base for A/c balance	When there is no permanent change related to capital, balance of fixed capital account remain same.	Current account balance changes every year.

Question 2.
Write difference : Charge against profit and Appropriation of profit :
Answer:
Difference between Charge against profit and Appropriation of profit is as under :

Point of Difference	Charge against profit	Appropriation of Profit
1. Meaning	Business expenses debited to profit and loss account are known as charge/expenses against profit.	From the profit and loss appropriation account when profit is allocated, it is known as appropriation of profit.
2. Entry	Charge against profit is recorded on the debit side of profit and loss account	Appropriation of profit is recorded on the debit side of profit and loss appropriation account.
3. Priority	Expenses are recorded before appropriation of profit.	Appropriation is done after recording of all expenses.
4. When to record	In all circumstances, irrespective of profit or loss, full amount is recorded.	Only in circumstances of profit , appropriation is recorded, no recording in case of loss.
5. Illustration	Interest on partners loan, manager’s commission, rent paid to partner etc. are the examples of charge aginst profit.	Interest on capital, salary of partner, bouns or commission etc. are the examples of appropriation of profit.

Select the appropriate option for each question :

Question 1.
In which year Partnership Act is implied in India ?
(A) 1932
(B) 1947
(C) 1956
(D) 1965
Answer:
(A) 1932

Question 2.
Minimum 2 partners are necessary in a partnership firm because –
(A) more capital is required in the partnership firm.
(B) more risk is there in the partnership firm.
(C) partnership emerge through agreement.
(D) unlimited liabilities of partners.
Answer:
(C) partnership emerge through agreement.

Question 3.
In partnership firm every partner is ……………….. for other partner.
(A) representative
(B) creditor
(C) officer
(D) debtor
Answer:
(A) representative

Question 4.
For the partner of a partnership concern, his liability is ………………
(A) Unlimited
(B) Limited
(C) Limited to the capital
(D) None of the given
Answer:
(A) Unlimited

Question 5.
What is the maximum number, for the partners in a banking business ?
(A) 2
(B) 10
(C) 7
(D) 20
Answer:
(B) 10

Question 6.
Who are the administrators of partnership concerns ?
(A) Owners
(B) Creditors
(C) Representatives
(D) Debtors
Answer:
(A) Owners

Question 7.
If nothing is mentioned in partnership, what is the rate of interest on loan given by partner to the firm ?
(A) 6%
(B) 12%
(C) 10%
(D) Interest will not be calculated
Answer:
(A) 6%

Question 8.
What is the maximum limit of number of partners as per Rule 10 of the Companies (miscellaneous) Rules 2014 ?
(A) 10
(B) 50
(C) 20
(D) 80
Answer:
(B) 50

Question 9.
What is the rate of interest on debit balance of current account of partner, if nothing is mentioned in partnership deed ?
(A) 5%
(B) 6%
(C) 10%
(D) Interest will not be calculated
Answer:
(D) Interest will not be calculated

Question 10.
How many methods are there to keep capital accounts in a partnership firm ?
(A) One
(B) Two
(C) Three
(D) Four
Answer:
(B) Two

Question 11.
If there is no provision in partnership deed, then in which ratio profit or loss will be shared between partners ?
(A) In the ratio of capital
(B) In the ratio of sacrifice
(C) In equal ratio
(D) In gain ratio
Answer:
(C) In equal ratio

Question 12.
In the fluctuating capital account method, when partner brought additional capital, it will be credited to ………………. account.
(A) Cash A/c
(B) Capital A/c
(C) Current A/c
(D) Bank A/c
Answer:
(B) Capital A/c

Question 13.
Where would you show interest on drawings in fluctuating capital account ?
(A) On credit side of capital account
(B) On debit side of capital account
(C) On credit side of current account
(D) On debit side of current account
Answer:
(B) On debit side of capital account

Question 14.
Where would you show share of loss of a partner ₹ In which account and on which side ?
(A) Capital A/c, Cr. side
(B) Capital A/c, Dr. side
(C) Current A/c, Cr. side
(D) Current A/c, Dr. side
Answer:
(B) Capital A/c, Dr. side

Question 15.
Generally, capital account has ………………… balance.
(A) Debit
(B) Debit or credit
(C) Credit
(D) None of the given
Answer:
(C) Credit

Question 16.
“By calculating interest on credit balance of capital, partner’s capital …………………
(A) Increases
(B) Increase or decrease
(C) Decrease
(D) None of the given
Answer:
(A) Increases

Question 17.
In the fluctuating capital account method, in which account and on which side, share of partner’s profit recorded ?
(A) Capital A/c, Cr. side
(B) Capital A/c, Dr. side
(C) Current A/c, Cr. side
(D) Current A/c, Cr. side
Answer:
(A) Capital A/c, Cr. side

Question 18.
In the fixed capital account method, to which account, balance of drawing account is transferred at the end of the year ?
(A) Capital A/c
(B) Current A/c
(C) Profit-loss A/c
(D) Profit-loss Appropriation A/c
Answer:
(B) Current A/c

Question 19.
In the fixed capital account method, to which account, interest on capital be recorded ?
(A) Capital A/c
(B) Current A/c
(C) Drawings A/c
(D) Trading A/c
Answer:
(B) Current A/c

Question 20.
In the fixed capital account method, where would you give the effect of adjustment of fluctuation of capital ?
(A) Fixed capital A/c
(B) Profit and loss A/c
(C) Current A/c
(D) Profit and loss appropriation A/c
Answer:
(A) Fixed capital A/c

Question 21.
Payment of interest on loan to partner is recorded in ……………….. account.
(A) Profit and Loss A/c, Dr. side
(B) Profit and Loss Appropriation A/c, Dr. side
(C) Profit and Loss A/c, Cr. side
(D) Current A/c, Dr. side
Answer:
(A) Profit and Loss A/c, Dr. side

Question 22.
In case of fixed capital account method, salary to the partners are recorded in ………………… account.
(A) Capital A/c
(B) Profit-Loss A/c
(C) Current A/c
(D) Profit and Loss Appropriation A/c
Answer:
(C) Current A/c

Question 23.
Generally, current account has ………………. balance.
(A) Debit
(B) Debit or Credit
(C) Credit
(D) None of the given
Answer:
(C) Credit

Question 24.
Interest on drawings is to be subtracted from …………………. balance.
(A) Capital A/c
(B) Net Profit
(C) Drawing A/c
(D) Net Loss
Answer:
(A) Capital A/c

Question 25.
By calculating interest on drawings account, partner’s capital …………………
(A) Decreases
(B) Increase or Decrease
(C) Decrease
(D) None of the given
Answer:
(A) Decreases

Question 26.
Where would you show interest on drawings account, in case of drawing account is to be prepared ?
(A) Drawing A/c
(B) Profit-Loss A/c
(C) Capital A/c
(D) Current A/c
Answer:
(A) Drawing A/c

Question 27.
Credit balance of profit and loss appropriation account means ……………..
(A) Net profit
(B) Net loss
(C) Divisible profit
(D) Divisible loss
Answer:
(C) Divisible profit

Question 28.
Which of the following is shown on the debit side of profit and loss appropriation account ?
(A) Interest on drawings
(B) Net profit
(C) Interest on debit balance of current A/c
(D) Amount to be transferred to general reserve A/c
Answer:
(D) Amount to be transferred to general reserve A/c

Question 29.
When partner withdraws equal amount in the beginning of every month, for how many months interest on drawings be calculated ?
(A) 66
(B) 12
(C) 72
(D) 78
Answer:
(D) 78

Question 30.
When partner withdraws equal amount at the end of every month, for how many months interest on drawings be calculated ?
(A) 66
(B) 72
(C) 12
(D) 78
Answer:
(A) 66

Question 31.
A partner withdraw ₹ 400 at the end of every month, then interest at 12% p.a. on drawing is ………………..
(A) ₹ 264
(B) ₹ 48
(C) ₹ 312
(D) ₹ 288
Answer:
(A) ₹ 264

Question 32.
Capital ratio for partners A, B and C is 3 : 2 : 1 and divisible profit is ₹ 45,000, then partner C receives how much amount as his share of profit ?
(A) ₹ 7,500
(B) ₹ 22,500
(C) ₹ 15,000
(D) ₹ 13,500
Answer:
(C) ₹ 15,000

Question 33.
For the financial year, if partner withdraws ₹ 1,500 in the beginning of every month from month of August, then interest @12% p.a. will be ……………….
(A) ₹ 540
(B) ₹ 648
(C) ₹ 2,430
(D) ₹ 1,440
Answer:
(A) ₹ 540

Question 34.
A partner withdraw total ₹ 6,000 in a year in equal installments at the end of the every month, then interest on drawings at 12% p.a. is ………………..
(A) ₹ 390
(B) ₹ 330
(C) ₹ 720
(D) ₹ 360
Answer:
(B) ₹ 330

Question 35.
Closing capital of a partner is ₹ 55,000 in which drawings ₹ 15,000 and profit ₹ 20,000 is included then what will be the yearly interest at 5% on capital ?
(A) ₹ 2,750
(B) ₹ 3,000
(C) ₹ 2,500
(D) ₹ 4,500
Answer:
(C) ₹ 2,500

Section-E

Answer the following questions :

Question 1.
Aruna and Bhavna are partners sharing profit and losses in equal ratio. On 1-4-2016, their capitals are ₹ 80,000 and ₹ 40,000 respectively and on the same day they withdrew ₹ 40,000 and ₹ 20,000 respectively from the firm for personal use. Bhavna has advanced a loan of ₹ 80,000 to the firm on 1-10-2016. Aruna is to be given a remuneration of ₹ 800 p.m. Bhavan is to be given commission at 5% on divisible profit. As per agreement, interest on capital is to be allowed at 5% p.a. to the partners and interest on drawings is to be charged at 10% p.a. profit of the firm for the year ending on 31-3-2017 was ₹ 89,600 before giving effects of above provisions but after calculating interest on Bhavna’s loan.

On the basis of above particulars, prepare profit and loss appropriation account and partner’s capital accounts.
Answer:
Divisible Profit : ₹ 76,000, Profit of Aruna: ₹ 38,000, Profit of Bhavna : ₹ 38,000, Closing capital account balance : Aruna: ₹ 87,600; Bhavan : ₹ 64,400

Question 2.
Tapan and Dipen are partners sharing profit and losses in equal ration on 1-4-2016, the balance of their capital accounts were ₹ 40,000 and ₹ 32,000 respectively, while the balances of their current accounts were respectively ₹ 6,000(credit) and ₹ 2,000(debit). Interest on opening balances of capital and current accounts are to be calculated at 10% p.a.. Each partner had withdrawn ₹ 7,200 during the year. Manager of the firm is to be paid commission at 5% on profit after deducting his commission. On 1-10-2016, Dipen has brought additional capital of ₹ 20,000 in the firm. The profit of the firm, for the year ending on 31-3-2017 was ₹ 29,600.

From the above particulars, prepare profit and loss appropriation account, partners capital accounts and partners current accounts.
Answer:
Divisible profit : ₹ 20,000, profit of Tapan: ₹ 10,000, profit of Dipen: ₹ 10,000 Com. for Tapan : ₹ 1,000; Closing balance of capital accounts : Tapan: ₹ 40,000; Dipen : ₹ 52,000; Closing balance of current accounts: Tapan ₹ 14,400(Cr.), Dipen: ₹ 4,800(Cr.)

Question 3.
Pooja and Arti are partners sharing profit and loss in 3 : 2 ration. On 1-4-2016, the balance of their capital accounts were ₹ 50,000 and ₹ 40,000 respectively. While the balance of their current accounts were respectively ₹ 3,000(cr.) and ₹ 2,000(dr.)

Pooja withdrawn ₹ 6,000 on 1-7-2016 and Arti withdrawn ₹ 4,000 on 1-10-2016. As per partnership deed, Interest on opening balances of capital accounts and current accounts are to be calculated at 8% and 6% p.a. respectively. While interest on drawings is to be charged at 12% p.a. Arti is to be paid commission at 5% on net profit after charging such commission.

Before giving the effects of above adjustments, profit of the firm for the year ending on 31-3-2017 is ₹ 37,770.

Prepare profit loss appropriation accounts, partners capital accounts, and partners current account in the books of the firm for the year ending on 31-3-2017.
Answer:
Divisible profit: ₹ 29,800, profit of Pooja : ₹ 17,880, Arti: ₹ 11,920, Com. to Arti ₹ 1,490, closing balance of capital accounts: Pooja : ₹ 50,000, Arti: ₹ 40,000, Closing balance of current accounts: Pooja : ₹ 18,520(cr.) , Arti : ₹ 10,250(Dr.)

Question 4.
Prem and Anand are partners of a firm sharing profit and loss in the ratio of 4 : 1. Total profit of the firm for the year ended on 31-3-2017 was ₹ 45,000. After distributing profit, it was realised that interest on capital at 5% p.a. was not given to the partners.

During the year, Prem withdraw ₹ 15,000 while Anand withdrew ₹ 8,000. On 31-3-2017, Closing balance of their capital accounts were ₹ 48,000 and ₹ 24,000 respectively.

On the basis of the above particulars, prepare revised (corrected) profit and loss appropriation account showing proper distribution and capital account of partners again.
Answer:
Divisible profit: ₹ 42,500, profit of Prem: ₹ 8,500, profit of Anand : ₹ 34,000, Interest on capital : Prem : ₹ 1,350, Anand : ₹ 1,150, Closing capital balance : Prem : ₹ 47,350, Anand : ₹ 24,650

Question 5.
Janki, Ekta and Dolly are partners of a firm. On 1-4-2016 their capital account shows balance of ₹ 1,00,000 , ₹ 1,00,000 and ₹ 50,000 respectively, while their current account balances are respectively ₹ 24,000 (credit), ₹ 18,000(debit) and ₹ 12,000(credit).

Janki withdrew ₹ 18,000 on 1-2-2017, Ekta Withdrew ₹ 12,000 on 30-11-2016 and Dolly withdrew ₹ 10,000 on 1-10-2016.

On 1-10-2016 Janki advanced a loan of ₹ 30,000 to the firm. According to provisions of partnership deed, (1) Calculate interest on opening balances of capital and current accounts at 10% p.a. and 8% p.a. respectively. (2) Ekta is to be given monthly salary of ₹ 500. (3) Interest on drawings is to be charged at 12% (4) Out of net profit, transfer ₹ 6,000 to general reserve account. (5) Ekta is to be paid 10% commission on net profit after charging such commission.
(6) Distibute 10% profit in 3 : 2 : 1 ratio and remaining 40% profit in the ratio of opening balance of capital among partners. (7) Profit of the firm before giving effects of the above provisions and after giving effect of interest on loan to Janki is. ₹ 1,69,000.

Prepare profit and loss appropriation account and partners current accounts for theyear ending on 31-3-2017.
Answer:
Divisible profit: ₹ 1,20,000, profit of Janki: ₹ 55,200, Profit of Ekta : ₹ 43,200 and profit ‘of Dolly ₹ 21,600, commission to Ekta : ₹ 12,000 Interest on drawings resp. ₹ 360, ₹ 480 and ₹ 600, Interest on Janki’s loan: ₹ 900, closing balance of current account : Janki : ₹ 72,660 (credit); Ekta : ₹ 39,280 and Dolly : ₹ 28,960.

Question 6.
Chirag, Chetan and Chinmay are partners of a firm on 1-4-2016, their capitals are respectively ₹ 64,000; ₹ 48,000 and ₹ 40,000. Chetan withdraw ₹ 4000 on 1-10-2016. Chirage withdraw ₹ 6,000 at the end of every month, while Chinmay gave loan of ₹ 10,000 on 1-12-2016 to the firm.

As per partnership deed, (i) Calculate 5% interest on capital, (ii) Interest on drawings is to be charged at 10% p.a., (iii) distribute 60% profit in 5 : 3 : 2 ratio and remaing 40% profit in 2 : 2 : 1 ratio among partners, (iv) Chetan is to be paid 5% commission on net profit. Before giving effects of above provisions, but after calculating interest on loan of Chinmay, net loss of the firm was ₹ 22,930 as on 31-3-2017. After giving effects of above adjustments and transferring it to profit and loss account, it is decided to keep new capital of the firm ₹ 1,50,000 which is to be 2 : 2 : 1 ratio. For this purpose either partner will bring or withdraw necessary cash amount. Prepare profit and loss appropriation acccount and partners capital accounts for the year ending on 31-3-2017.
Answer:
Divisible loss : ₹ 30,000, loss of Chirag : ₹ 13,800; loss of Chetan : ₹ 10,200 and loss of Chinmay ₹ 6,000. Interest on drawings : Chirag : ₹ 330, Chetan : ₹ 200. Interest on loan to Chinmay : ₹ 200. Closing balance of capital accounts : Chirag ₹ 60,000; Chetan ₹ 60,000 and Chinmay ₹ 30,000. Chirag and Chetan will bring cash ₹ 14,130 and ₹ 24,000 resp. while Chinmay will withdraw ₹ 6,200 in cash from the firm.

Question 7.
Ram, Shyam and Ghanshyam are partners of a firm. On 1-4-2016 their capital balance are resp. ₹ 70,000; ₹ 40,000 and ₹ 30,000. On the same date, partners decided to keep total capital of the firm ₹ 1,80,000 which is to be in the profit-loss ratio of 5 : 4 : 1. For this purpose, required cash is to be withdrawn or can be deposited by partners. Shyam gave loan of ₹ 18,000 to the firm on 1-8-2016. Ram withdraw ₹ 800 at the end of every month.

As per partnership deed, (1) calculate interest on capital at 10% p.a. and interest on drawings at 12% p.a. (2) Salary ₹ 13,200 to Ram and ₹ 9,000 to Ghanshyam is payable. (3) After giving effects of above adjustments, Ghanshyam is to be paid 10% commission on net profit after charging such commission. (4) 20% amount of divisible profit is to be transferred to general reserve (but not more than ₹ 16,000) (5) Ram gave assurance to Ghanshyam that he will receive ₹ 32,000 (which includes salary, commission and divisible profit.)

Before giving effects of above adjustments and after calculating interest on Shyam’s loan, profit of the firm was ₹ 1,36,472 for the year ending on 31-3-2017.

Prepare profit and loss appropriation account and partners current accounts for the year endign on 31-3-2017.
Answer:
Divisible profit : ₹ 72,000, out of which profit of Ram ₹ 36,000; profit of Shyam ₹ 28,800 and profit of Ghanshyam ₹ 7,200. Interest on Shyam’s loan : ₹ 720, Interest on drawings: Ram ₹ 528, opening balance of capital ₹ 90,000, ₹ 72,000 and ₹ 18,000 resp. for which Ram and Shyam will bring ₹ 20,000 and ₹ 32,000 cash and Ghanshyam will take away ₹ 20,000, commission of Ghanshyam ₹ 8,800, Total amount received by Ghanshyam ₹ 25,000 (Including salary, commission and profit), deficit amount ₹ 7,000 will he debited to Ram’s capital A/c and credited to Ghanshyam’s capital A/c. Closing balance of capital : Ram ₹ 1,31,072, Shyam : ₹ 1,08,720 and Ghanshyam : ₹ 51,800

Question 8.
Akash, Alap and Ronak are partners of a firm sharing profit and loss in the ratio of 5 : 3 : 2. Total capital of the firm as on 1-4-2016 is ₹ 3,00,000, which is in profit and loss sharing ratio. On the same date, partners current accounts balances are : ₹ 9000 (credit), ₹ 6000 (Credit) and ₹ 15,000 (debit) respectively. Akash and Alap withdraw ₹ 18,000 and ₹ 12,000 respectively.

AS per partnership deed, (1) Calculate interest on capital at 10% p.a. and on opening balance of current account at 12% p.a. (2) Calculate interest on drawings at 10% p.a. for six months. (3) After giving effects for interest on capital, interest on drawings and interest on current account balance, transfer 25% amount to development fund, which should not be more than ₹ 6,000. (4) After giving effects of all above adjustments, 10% commission is to be given to Ronak in excess of profit of ₹ 15,000. (5) Akash gave assurance that Ronak would receive minimum ₹ 6,000 as commission.

After giving effects of above adjustments but before crediting interest on drawing, profit of the firm is ₹ 90,000 for the year ending on 31-3-2017.

From the above information, prepare profit and loss appropriation account and partners current accounts.
Answer:
Divisible profit ₹ 50,100 out of which profit of Akash : ₹ 22,950; profit of Alap ₹ 15,030 and profit of Ronak ₹ 12,210. Developments fund ₹ 6,000, com. to Ronak ₹ 3,900, deficit amount ₹ 2,100 will be deducted from Akash’s profit and added to Ronak’s profit amounts. Closing balance of current account: Akash ₹ 29,130 (credit), Alap ₹ 19,150 (credit) and Ronak ₹ 4,220 (credit)

Question 9.
Amit and Sumit are partners sharing profit and loss in capital ratio. Total capital of the firm is ₹ 2,00,000 as on 1-4-2016 which is in 3 : 2 ratio for Amit and Sumit. Their total drawings is ₹ 40,000 which is in 2 : 3 ratio resp. for partners. Total interest on drawings in ₹ 4,800 which is to be distributed among partners in their drawings ratio.

As per pertnership deed, interest on capital is to be calculated at 12% p.a. Sumit is to be paid 10% commisison on net profit. In the year when profit is not there, monthly salary of ₹ 1,600 is to be paid to Sumit.

Without considering above adjustments, firm’s loss is ₹ 80,000 for the year ending on 31-3-2017.

Prepare profit and loss appropriation accocunt and partners capital accounts.
Answer:
Divisible loss : ₹ 1,18,400, out of which loss of Amit: ₹ 71,040, loss of Sumit: ₹ 47,360, Salary of Sumit ₹ 19,200, Closing balance of capital accounts : Amit ₹ 45,440; Sumit ₹ 34,560

Question 10.
Kareena, Karishma and Kajal are partners sharing profit and loss in 4 : 2 :1 ratio. On 1-4-2016, their capital account balances are respectively ₹ 1,20,000, ₹ 90,000 and ₹ 30,000. Drawings of the partners are respectively ₹ 30,000, ₹ 18,000 and ₹ 12,000.

Calculate interest on capital at 10% p.a. Interest on drawings is to be charged as follows : Kareena : ₹ 7,200, Karishma : ₹ 4,800, Kajal : ₹ 3,000. Profit of the firm was ₹ 75,150 before giving effects of above adjustments. Karishma is to be paid 5% commission on net profit after changing such commission. After giving effects of above adjustments to capital accounts of partners, total capital of firm is to be maintained at ₹ 2,52,000 which should be in profit and loss ratio of partners. For this purpose required cash will be withdrawn by partner or can be deposited by partner. Prepare profit and loss appropriation account and partners capital accounts.
Answer:
Divisible profit : ₹ 63,000; (Kareena ₹ 36,000; Karishma ₹ 18,000 and Kajal ₹ 9,000); Commission of Karishma ₹ 3,150; Closing balance of Capital : Kareena ₹ 1,44,000; Karishma ₹ 72,000; Kajal ₹ 36,000 for which Kareena and Kajal will bring cash resp. ₹ 13,200 and ₹ 9,000, Karishma withdraw ₹ 25,350