Commerce Accountancy · Quantitative Aptitude

Partnership Accounting

181 Questions

Partnership accounting involves calculating profit and loss sharing ratios among business partners. It covers topics like interest on capital, joint life policies, and capital balances. These questions are a staple in commerce exams and test core accountancy principles.

Profit sharing ratiosInterest on capitalJoint venture accountingCapital balance calculationsPartner retirement policies

Partnership Accounting Questions

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

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.Profits before interest on partner's capital was Rs.15,000 and Y demands interest at 24%p.a. on his loan of Rs.80,000. There was no agreement on this point.Calculate the amount payable to X, Y and Z respectively.

  1. Rs. 5,000 to each partner

  2. Loss of Rs. 4,200 for X and Z & Y will take home Rs.15,000

  3. Rs.3,400 for X, Rs. 8,200 for Y and Rs. 3,400 for Z

  4. Rs. 5,000 to each partner.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In the absence of partnership deed, Interest on loan at 6% will be calculated and also profit will be shared equally.

Interest on loan = 80000*6/100 = 4800. 
Profit available for distribution = 15000 - 4800 = 10200 
Profit distributed = 10200/ 3 = 3400.
Share of X = 3400.
Share of Y = 3400+4800 = 8200
share of Z = 3400. 

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Which of the following statements is true in case of Joint Venture?

  1. Co-venturer's contribution of goods is debited in Joint Bank A/c.

  2. Co-venturer's contribution in cash is debited in Venturer's personal account.

  3. Discount on discounting of B/R is debited to Venturer's personal account.

  4. Sale proceed received is credited to Joint Venture Account.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses, and costs associated with it. 

  • When the sales proceeds or collections Joint bank account. Dr. To joint venture account.  When the collections received by co- ventures  etc, are debited and expenses of joint venture, purchase of goods are credited.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Which of the following statements is not true ?

  1. Joint venture is a going concern.

  2. Joint venture is terminable in nature.

  3. Joint venture does not follow accrual basis of accounting.

  4. The co-venturer shares the profit in agreed ratio.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A joint venture is typically formed for a specific project or purpose and is temporary in nature. It is not a going concern, which is a concept applied to businesses intended to operate indefinitely.

Multiple choice elements of book keeping and accountancy adjustments in preparation of financial statements manager's commission on net profit preparation of final accounts preparation of financial statements

Interest on capital is calculated on _____________.

  1. Opening capital

  2. Additional Capital

  3. Closing capital

  4. Both A & B
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Interest on capital is to be calculated on the capitals at the beginning for the relevant period. If there is any additional capital introduced or capital withdrawn during the year, it will cause change in the capitals and interest is to be calculated proportionately on the changed capitals for the relevant period.

Interest on capital = Amount of capital x Rate of interest per annum x Period of interest

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) introduction to debentures meaning and features of debentures meaning of debentures

When business is sold to company, shares and debentures received are distributed in:

  1. The profit sharing ratio

  2. Equal ratio

  3. The ratio of their capitals standing before profit or loss on realization has been transferred

  4. The ratio of their capitals standing after profit or loss on realization has been transferred
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Whatever the company pays as consideration will be credited to the Realisation Account. If expenses are incurred by the firm, the amount will be debited to the Realisation Account. If the creditors are taken over by the company, no further treatment is necessary beyond transferring them to the credit of Realisation Account; but if creditors are to be paid by the firm, the actual amount paid to them will be debited to liability account concerned; the difference between the book figure and the amount actually paid will be transferred to Realisation Account. The profit or’ loss on realisation will be transferred to the capital accounts in the profit-sharing ratio.

Multiple choice book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

Use the following information .

  1. X and Y enter into a joint venture sharing profits & losses in the ratio of 3:2.
  2. X is entitled to get 1% commission on purchase and Y is entitled to get 5% commission on sales.
  3. X purchased goods for 4,00,000 and sent the same to Y. Supplier allowed a cash discount of 5%.
  4. X drew a bill on Y for an amount equivalent to 80% of the original cost of goods. X got it discounted at 3,00,000.
  5. Y sold 50% goods for 5,00,000 and paid 4,000 towards selling & administration expenses and insurance and 1,000 still outstanding. Y allowed a cash discount of 5% to a customer to whom goods were sold for 2,00,000. Bad Debts amounted to 16,000.
  6. 50% of balance goods are taken over by Y at 60% of Cost.
  7. Remaining Goods were destroyed by fire and insurance claim was received by Y to the extent of 60%.
The profit on Joint Venture is:

  1. 1,80,000.

  2. 1,60,000.

  3. 1,40,000.

  4. None of these.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The profit calculation involves accounting for purchases, discounts, commissions, sales, and losses (bad debts, fire). Following the joint venture accounting steps leads to 1,60,000.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

A and B enter into a joint venture sharing profits and losses equally. A provides goods from his stock Rs. 10,000. He pays expenses amounting to Rs 1000. B incurs further expenses on carriage Rs. 2,000. He receives cash for sales Rs. 15,000. He also takes over goods to the value of Rs. 3,000. What will be the amount to be remitted by B to A Rs.

  1. Rs. 13,500

  2. Rs. 15,000

  3. Rs. 11,000

  4. Rs. 10,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Total costs: 10,000 (A) + 1,000 (A) + 2,000 (B) = 13,000. Total sales: 15,000 (cash) + 3,000 (goods taken by B) = 18,000. Profit = 5,000. Profit share = 2,500 each. B owes A: 10,000 (goods) + 1,000 (expenses) + 2,500 (profit) - 3,000 (goods taken) = 10,500. Wait, calculation check: B collected 15,000 cash. B owes A 13,500.

Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

M and N enter into a joint venture where M supplies goods worth Rs. 6,000 and spends Rs. 300 on various expenses. N sells the entire lot for Rs. 7,800 meeting selling expenses amounting to Rs. 300. Profit sharing ratio equal. N remits to M the amount due. The amount of remittance will be _______________.

  1. Rs. 6,900

  2. Rs. 7,500

  3. Rs. 6,300

  4. Rs. 6,600
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

In a joint venture, A contributes Rs. 8,000 and B contributes Rs. 10,000. Goods are purchased for Rs. 11,000. Expenses amount to Rs. 1,000. Sales amount to Rs. 14,000, the remaining goods were taken by B at an agreed price of Rs. 400. A and B share profits and losses in the ratio of 1:2 respectively. As a final settlement, how much A will receive ?

  1. Rs. 8,800

  2. Rs. 9,000

  3. Rs. 8,000

  4. Rs. 13,800
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice elements of book keeping and accountancy methods of valuation of closing stock adjustment for closing stock only closing stock meaning, kinds and important terms relating to stock

A and B entered into a joint Venture to purchase and sell a new item. They agreed to share the profits and losses equally, A purchased goods worth Rs. 90,000 and spent Rs. 25,000 in sending the goods, B spent Rs. 5,000 as selling expenses and sold goods for Rs. 20,0000. What will be the amount  remitted by B to A as final settlement ?

  1. Rs. 1,55,000

  2. Rs. 1,50,000

  3. Rs. 1,15,000

  4. Rs. 80,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Total cost: 90,000 + 25,000 + 5,000 = 120,000. Sales: 200,000. Profit: 80,000. Share: 40,000 each. B collected 200,000, spent 5,000. B owes A: 90,000 (goods) + 25,000 (expenses) + 40,000 (profit) = 155,000.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

A, B and C were partners sharing profit and losses in the ratio of 3 :2 :1. A retired and firm received the joint life policy Rs. 12,000. The Joint Life Policy Account appearing in the balance sheet at Rs. 20,000. What will be the treatment for the balance in Joint Life Policy i.e., Rs.8,000.

  1. Rs. 8,000 credited to partner's current account in profit sharing ratio.

  2. Rs. 8,000 debited to revaluation account

  3. Rs. 8,000 debited to partner's capital account in profit sharing ratio.

  4. Either (b) or (c)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The profit on the joint life policy i.e., RS-8,000 will either be debited to revaluation account or distributed to partners capital account in profit sharing ratio. 

Either way through revaluation or through transferring in partners capital account its distributed to the partners in their profit sharing ratio. 

Multiple choice elements of book keeping and accountancy book of original record - journal understand the need for journal journals functions, advantages, objects and importance of journal

A purchased goods costing Rs. 1,00,000. B sold the. goods for Rs. 1,60,000. Profit sharing ratio between A and B being equal, what will be the final remittance ?

  1. B will remit Rs. 1,30,000 to A

  2. B will remit Rs. 1,55,000 to A

  3. A will remit Rs. 1,05,000 to B

  4. B will remit Rs. 30,000 to A
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A spent 1,00,000. Total sales were 1,60,000. Profit is 60,000. Shared equally, each gets 30,000 profit. A invested 1,00,000 and is entitled to 30,000 profit, total 1,30,000. Since B collected 1,60,000, B must remit 1,30,000 to A.