Partnership Accounts MCQ -

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Partnership Accounts MCQ

1. Which statement is NOT TRUE

a Partnership agreement may be written or Oral.

b In case of Fluctuating Partners’ Capital, any changes in capital like interest on drawings, salary are recorded in the Partners’ Current account.

c Partners are entitled to interest on capital if it is specifically mentioned in the Partnership Deed.

d In the absence of any agreement, partners are entitled to receive interest on their Loans @ 6% p.a

In case of Fluctuating Partners’ Capital, any changes in capital like interest on drawings, salary are recorded in the Partners’ Capital account. So, Statement (b) is not true. So, option (b) is the correct answer.

2. In absence of any agreement, Interest on partners loan may be paid @

(a) 12% Simple Interest.

(b) 12% Compounded Annually.

(d) 6% p.a. Simple Interest.

In the absence of any agreement, partners are entitled to receive interest on their Loans @ 6% p.a. So, option (d) is correct

3. A partner Acts as ……………. for a firm.

(a) Agent.

(b) Third party.

(d) All of the Above.

A partner Acts as an agent for a firm. So, option (a) is correct

4. R and S are partners with the capital of Rs.25, 000 and Rs.15, 000 respectively. Interest payable on capital is 10% p.a. Find the interest on capital for both the partners when the profits earned by the firm is Rs.2, 400.

(a) Rs.2, 500 and Rs.1, 500.

(b) Rs.1, 500 and Rs.900.

(d) None of the above.

Total interest on capital @10% on 40000 amounts to Rs. 4000. As the profit amount is insufficient to pay the Interest, no interest is payable. So, option (c) is correct

5. In the absence of an agreement, partners are entitled to:

(a) Salary.

(b) Commission.

(d) Profit share in capital ratio.

In the absence of an agreement, partners are entitled to Interest on Loan and Advances @ 6% p.a. So, option (c) is correct

6. Interest on capital will be paid to the partners if provided for in the agreement but only from

(a) Profits.

(b) Goodwill.

(d) None of the above

Interest on capital will be paid to the partners if provided for in the agreement only from profits. So, option (c) is correct.

7. The time to be taken into consideration if equal monthly amount is drawn as drawing at the beginning of each month:

(a) 7 months.

(b) 6 months.

(d) 6.5 months. Ö

The time to be taken into consideration if equal monthly amount is drawn as drawing :

at the beginning of each month is 6.5 months
at the middle of each month is 6 months
at the end of each month is 5.5 months

So, option (d) is correct.

8. A draws Rs.1, 000 per month on the last day of every month. If the rate of interest is 5% p.a. then the total interest on drawings will be:

(a) Rs.325

(b) Rs.275

(d) Rs.350

Total Number of Months for Interest Calculation = (11 + 10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1) month’s = 66 months. So, the interest of drawing’s = Rs.1,000 x 66 /12 x 5% = Rs.1,000 x (66 /12) x (5 /100) = Rs.275. So, option (c) is correct.

9. A and B are partners. A’s Capital is Rs.10, 000 and B’s Capital is Rs.6, 000. Interest is payable @ 6% p.a. B is entitled to a salary of Rs.300 per month. Profit to the year before interest and salary to B is Rs.8, 000. Amount of Profits between A and B will be divided as:

(a) Rs.1,720 to A and Rs.1,720 to B

(b) Rs.2,000 to A and Rs.1,440 to B

(d) None of the above.

Interest on capital =(10,000 + 6,000) x 6/100 = 960 and B’s salary = (300 x 12 months)=3, 600.

So, the Net profit = Rs.8, 000 – Rs. (960 + 3,600) = Rs.3, 440.

If nothing is mentioned about profit sharing ratio, the profit is distributed equally the partner.

i.e. A gets Rs.1, 720 and B get Rs.1, 720. Hence option (d) is correct.

10. The interest on the capital accounts of partners is credited to :

(a) Interest A/c

(b) Partners’ Capital A/c

(d) None of the above.

The interest on the capital accounts of partners is credited to Partners’ Capital A/c. Hence option (b) is correct.

11. Interest payable on the capital of the partners is charged in:

(a) Profit and Loss A/c

(b) Profit and Loss Adjustment A/c

(d) Realization A/c

Interest payable on the capital of the partners is appropriation of profit and is chargeable to the firm only to the extent of available profit. Hence option (c) is correct.

12. When premium in Joint Life Policy is treated as an expenses, joint life Policy will appear in Balance Sheet at:

(a) Book Value

(b) Face Value

(d) Nil Value.

When premium in Joint Life Policy is treated as expense, joint life Policy will appear in Balance Sheet at Nil value.Hence option (d) is correct.

13. If the goodwill raised at the time of retirement of a partner is to be written off, then, the capital accounts of the remaining partners are debited in

(a)	New profit sharing ratio	√
(b)	Capital ratio
(c)	Old profit sharing ratio
(d)	Sacrifice ratio.

If the goodwill raised at the time of retirement of a partner is to be written off, then, the capital accounts of the remaining partners are debited in New profit sharing ratio. Hence option (a) is correct.

14. Guarantee given to a partner ‘X’ by the other partners ‘Y & Z’ means:

(a) In case of loss ‘X’ will not contribute towards that loss.

(b) In case of insufficient profits ‘X’ will receive only the minimum guarantee amount.

(d) All of the above.

When Guarantee is given to a partner ‘X’ by the other partners ‘Y & Z’, In case of loss or

Partnership Accounts MCQ

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