Quantitative Aptitude

Partnership

842 Questions
All Capital changes, admission, and withdrawal 249 Compound partnership and time-weighted capital 186 Absolute profit or percentage difference to ratio 126 Simple partnership 100 Working and sleeping partners 79 Retirement and gaining ratio 63 Interest on capital and fixed allowances 39

Partnership Questions

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

A, B and C were partners in a firm sharing profits and losses in theratio of 2 : 2 : 1 respectively with the capital balance of 50,000 for A and B, for C 25,000. B declared to retire from the firm and balance in reserve on the date was 15,000 if goodwill of the firm was valued as 30,000 and profit on revaluation was 7,050, then what amount will be transferred to the loan account of B?

  1. 70,820

  2. 50,820

  3. 25,820

  4. 58,820
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

B's amount = Capital Rs.50,000 + Reserve (Rs.15,000 × 2/5) Rs.6,000 + Goodwill (Rs.30,000 × 2/5) Rs.12,000 + Revaluation profit (Rs.7,050 × 2/5) Rs.2,820 = Rs.70,820 transferred to loan account on retirement.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

A, B and C were partners in a firm sharing profits and losses in the ratio of 2 :2 :1 respectively with the capital balance of Rs. 50,000 for A, Rs. 70,000 for B,for C Rs. 35,000. B declared to retire from the firm and balance in reserve on the date was Rs. 25,000. If goodwill of the firm was valued as Rs. 30,000 and profit on revaluation was Rs. 7,500, then what amount will be payable to B?

  1. Rs. 70,820

  2. Rs. 76,000

  3. Rs. 75,000

  4. Rs. 95,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

B's capital = 70,000. Reserve share = 25,000 * 2/5 = 10,000. Goodwill share = 30,000 * 2/5 = 12,000. Revaluation profit share = 7,500 * 2/5 = 3,000. Total = 70,000 + 10,000 + 12,000 + 3,000 = 95,000.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

Bill and Monica are partners sharing profits and losses in the ratio of $3:2$ having the capital of Rs. $80,000$ and Rs. $50,000$ respectively. They are entitled to $9\%$ p.a. interest on capital before distributing the profits. During the year firm earned Rs. $7,800$ before allowing any interest on capital. Profits apportioned among Bill and Monica is?

  1. $4,680$ and $3,120$
  2. $4,800$ and $3,000$
  3. $5,000$ and $2,800$

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

Total interest on capital = 9% of (80,000 + 50,000) = 11,700. Profit available = 7,800. Since profit is insufficient, interest is paid in the capital ratio (8:5). Bill: 7,800 * 8/13 = 4,800; Monica: 7,800 * 5/13 = 3,000.

Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

X and Y are partners sharing profit and loss at the ratio of 1/3 and 2/3 respectively. The net income for this accounting period is Rs 10,000 while salary of X = Rs 2,000, interest on Y's drawings = Rs 3,000 and interest on X's capital = Rs 2,000. What is the X's share of profit or loss after the adjustment for partner's salary, interest on capital and interest on drawings?

  1. 3,000

  2. 6,000

  3. 9,000

  4. 2,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation


X and Y share profit & loss in a 1:2 ratio. Salary of X is Rs2,000 along with interest on his capital of Rs2,000. Y has to pay interest on drawings of Rs3,000 and firm earned Rs10,000 ass profits.

                                     Profit & Loss Appropriation a/c

 Particulars (Dr.)  Amount  Particulars (Cr.)  Amount
To Interest on capital a/c (X)To salary a/c (X)To profit on appropriationX's capital a/c      3,000Y's capital a/c      6,000  2,0002,0009,000  By p/l a/cBy interest on drawings a/c (Y) 10,0003,000

Thus, X's share of profit after all appropriations is $Rs3,000$


Multiple choice book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

A and B are Partners sharing profits in the ratio of 3:2 with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p.a. B is to be allowed an annual salary of Rs. 2,500. During 2016, the profits of the year prior to calculation of interest on capital but after charging B's salary amounted to Rs. 12,500. Calculate the amount of profits to be distributed to A and B after the above effect.

  1. A's Profit Rs. 4,389; B's Profit Rs. 2,926

  2. A's Profit Rs. 4,620; B's Profit Rs. 3,080

  3. A's Profit Rs. 4,000; B's Profit Rs. 3,000

  4. A's Profit Rs. 4,300; B's Profit Rs. 2,900
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation


A and B share profits in ratio 3:2

                              Profit & Loss Appropriation A/c

 Particulars (Dr.)  Amount  Particulars (Cr.) Amount 
 To interest on capitalA's capital       3,000B's capital       1,800To salary a/c (B)To profit on appropriationA's capital         4,620B's capital         3,080 4,8002,5007,700  By P&l a/c    12,500 + B's salary  2,500  15,000

Hence, A's share of proit is $Rs4,620$ whereas B's share is $Rs3,080$

Multiple choice book keeping and accountancy dissolution of firm accounting record at the time of dissolution procedure of settlement of accounts partnership account (dissolution of partnership)

A and B were partners in a joint venture sharing profits and losses in the proportion of 4/5th and 1/5th respectively. A supplies goods to the value of  50,000 and incurs expenses amounting to 5,400. B supplies goods to the value of 14,000 and his expenses amount to 800, B sells goods at 87,400. B settles his account by bank draft. What will be the profit on venture?

  1. 17,200

  2. 17,000

  3. 18,000

  4. 18,200
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

                                       Joint Venture Account

 Particulars  Amount  Particulars  Amount
 To A's A/cGoods: 50000Expenses: 5400  55400  By B's A/c (sales)  87400
 To B's A/cGoods: 14000Expenses: 800  14800    
 To Profit A- 13760B- 3440  17200    
 Total  87400 Total   87400

                                                

Multiple choice book keeping and accountancy dissolution of firm accounting record at the time of dissolution procedure of settlement of accounts partnership account (dissolution of partnership)

Where the continuing partners carry on the business of the firm, the dead partner whose claim is not settles, his executor -
X. is entitled to share of profits since date of cessation as partner.
Y. is not entitled to claim anything other than unsettled amount.
Z. is entitled to $6\%$ interest p.a on the unsettled amount.
Select the correct answer from the options given below.

  1. Y is correct.

  2. Only X is correct.

  3. Only Z is correct.

  4. Either X or Z at his option.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

According to the Indian Partnership Act, if a partner dies and the settlement is delayed, the executor is entitled to either the share of profits earned using their capital or interest at 6% per annum on the amount due, at their option.

Multiple choice book keeping and accountancy dissolution of firm accounting record at the time of dissolution procedure of settlement of accounts partnership account (dissolution of partnership)

X, Y, Z are partners sharing profits and losses equally. They took a joint life policy of Rs 5,00,000 with a surrender value of Rs 3,00,000. The firm treats the insurance premium as an expense. Y retired and X and Z decided to share profits and losses in 2:1. The amount of Joint life policy will be transferred as:

  1. Credited to X, Y and Z's Capital accounts with Rs 1,00,000 each.

  2. Credited to X, Y and Z's capital accounts with Rs 166,667 each

  3. Credited to X, and Z capital accounts with Rs 2,50,000 each

  4. Credited to Ys capital account with Rs 3,00,000 each
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When the premium is treated as an expense, the surrender value of the policy is distributed among all partners in their old profit-sharing ratio upon the retirement of a partner.

Multiple choice maths mixture types of ratios ratios in proportion mathematical logic

$A, B$ and $C$ enter into partnership by making investments in the ratio $3:5:7$. After a year, $C $ invests another Rs. $337600$ while $A$ withdraws Rs. $45600$. The ratio of investments then changes to $24:59:167$. How much did $A$ invest initially?

  1. Rs. $45600$
  2. Rs. $96000$
  3. Rs. $141600$

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

Let initial investments by $A, B$ and $C$ are $3x, 5x, 7x$

After a year:
$A$'s investment $=3x-45600$
$C$'s investment $=7x +337600$
$(3x-45600):5x : (7x+337600) = 24 : 59 : 167$
Solving this we will get $x=47200$
So, A's initial investment was $=3x = 3\times47200 = 141600$

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

In the event of death of partner, the amount of General Reserve is transferred to partner's capital Accounts in ______________ .

  1. The new profit-sharing ratio.

  2. The old profit-sharing ratio.

  3. The capital ratio.

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

The amount of general reserve is transferred to the capital accounts of all the partners in their old profit sharing ratio. This is done to give the deceased partner's nominee the required amount of share in profits of the firm. So, All Partners' Capital Accounts are credited with their respective shares.

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

On the death of a partner, the amount of Join Life Policy is credited to the Capital Account of _____________.

  1. Only the deceased partner

  2. All partners including the deceased partner

  3. Remaining partners, in the new profit sharing ratio

  4. Remaining partners, in the old profit sharing ratio
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The amount received from a Joint Life Policy on the death of a partner is a gain for the firm, so it is distributed among all partners in their profit-sharing ratio.

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

A partner retires but the business is still being carried on 

  1. Profit sharing between the remaining partners will remain same

  2. Share proportion remains same

  3. Share proportion changes

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

When a partner retires, the remaining partners' profit-sharing ratio must change to account for the redistribution of the retiring partner's share.

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

Balances of $R _{1}, R _{2}$ & $R _{3}$ sharing profits & losses in proportion to their capitals, stood as:
$R _{1} = Rs. 3,00,000$
$R _{2} = Rs. 2,00,000$
$R _{3} = Rs. 1,00,000$
$R _{1}$ desired to retire from the firm and the remaining partners decided to carry on, joint life policy of the partners surrendered and cash obtained Rs. 60,000. What will be the treatment for Joint Life Policy A/c? 

  1. $Rs.60,000$ credited to Revaluation A/c.
  2. $Rs.60,000$ credited to Joint Life Policy A/c.
  3. $Rs.30,000$ debited to Ram's Capital A/c.

  4. Either (A) or (B).
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Readjustments takes place in case of retirement of a partner. Whenever the partner retires, the continuing partners makes gain in terms of profit sharing ratio. Therefore, the remaining partners arrange for the amount to be paid to discharge the claims of the retiring partners. Assets and liabilities are revalued, value of goodwill is raised and surrender value of joint life policy, if any, is taken into account. Revaluation profit and reserve are transferred to capital or current accounts of partners. Lastly, final amount due to retiring partner is determined and discharged.

From the above provision, it can be concluded that At the the time of retirement of partner the surrender value of joint life policy is taken into account. 
Therefore, in the given question Rs.60000 is credited to joint life policy A/c.

Multiple choice book keeping and accountancy accounting for retirement and death of partner reconstitution of partnership (retirement of partner) accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

X & Y are partners sharing profit in the ratio of 3:2. Z was admitted on the following terms:New profit sharing ratio will be 5:3:2 Machinery would be depreciated by $8\%$ (book value Rs. 1,80,000)Building would be appreciated by $15\%$ (book value Rs. 1,50,000)To create provision for bad debts $5\%$ on Debtors of Rs.25,000 Unrecorded debtors of Rs.1,250 would be brought into books Creditors amounting to Rs.2,750 died and need not to pay anything. Find the distribution of profit/loss on revalution between X & Y.    

  1. Profit 3,210 & 2,140

  2. Profit 6,510 & 4,340

  3. Profit 1,710 & 1,140

  4. Profit 1,140 & 1,710
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Revaluation: Machinery (-14,400), Building (+22,500), Provision for Bad Debts (-1,250), Unrecorded Debtors (+1,250), Creditors (-2,750). Net profit = 22,500 - 14,400 - 1,250 + 1,250 + 2,750 = 10,850. Distributed in 3:2 ratio: X gets 6,510 and Y gets 4,340.

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

Balance of A,B & C sharing profits & losses in proportion to their capitals, stood as :
A = 2,00,000
B = 3,00,000
C = 2,00,000
Joint Life Policy Reserve A/c 80,000 and Joint Life Policy A/c is shown in the balance sheet 80,000 A desired to retire from the firm and the remaining, partners decided to carry on in equal ratio, joint life policy of the partners surrendered and cash obtained 80,000 What will be the treatment for  joint Life Policy Reserve A/c?

  1. Cash received credited to Revaluation A/c

  2. JLP Reserve balance credited to Partner's Capital A/c in old profit sharing ratio.

  3. JLP Reserve balance credited to Partner's Capital A/c in new profit sharing ratio.

  4. Cash received credited to Partners' Capital A/c in old profit sharing ratio.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A Joint Life Policy Reserve represents accumulated profits. Upon the retirement of a partner or surrender of the policy, this reserve is distributed among all partners in their old profit-sharing ratio.