Tag: book keeping and accountancy

Quizzes (126) Questions (1524)

Questions Related to book keeping and accountancy

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

The interest on partners capital accounts is to be credited to _______________.

  1. Interest Account

  2. Profit and Loss Account

  3. Drawing Account

  4. Partner's Capital Account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Interest on partner's capital is an amount at an agreed rate of interest which is credited to a partner based on the amount of capital contributed by him/her.

Interest on partner's capital is an expense to the firm and hence debited to profit and loss appropriation A/c. On the other hand it is an income for partners and hence credited to partner's capital A/c.

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

Partnership created for a particular adventure or a particular undertaking is called __________.

  1. Particular partnership

  2. Limited partnership

  3. Partnership at will

  4. Fixed partnership
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A partnership can be formed for carrying on continuous business, or it can be formed for one particular venture or undertaking. If the partnership is formed only to carry out one business venture or to complete one undertaking such a partnership is known as a particular partnership.

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

The transferee of a share of a partner's interest in a firm is called ____________.

  1. senior partner

  2. active partner

  3. sub partner

  4. dormant partner
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A Sub-partner is a partner in a partnership firm who agrees to share his profits in a partnership firm with an outsider to the firm. A sub-partner does not hold any right against the firm nor is liable to any debts caused by the firm.

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

X and Y are two partners sharing profit and loss in the ratio 2:1. They decided to share profit and loss in future in the ratio of 3:2 If the goodwill of the firm is valued Rs. 60,000, how the adjustment in profit sharing ratio will be affected?

  1. Y pay X Rs. 4,000

  2. X pay Y Rs. 4,000

  3. X pay Y Rs. 6,000

  4. Y pay X Rs. 6,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Earlier goodwill was distributed in ratio 2:1 between X and Y

i.e. 60000  as  40000 - X & 20000 - Y.
Now , X = 60000 * 3/5 = 36000 ; Y = 60000 * 2/5 = 24000.
hence, X will pay 4000 to Y.

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

X, a partner of X and Y Associates draw Rs, 4000 every month at the mid of the month for six months. Calculate interest on drawing at 5%.

  1. Rs. 300

  2. Rs. 295

  3. Rs. 285

  4. Rs. 310
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

So here,

4000 per month x 6 month = 24,000
then,
24,000 x 6% = 1,200 for year
then, 1,200 x 6/12 = 600 for 6 month
so, at the mid of month the interest on drawing is Rs.300.

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

Rent paid to a partner is charged to ______.

  1. profit and loss adjustment A/c

  2. revaluation A/c

  3. profit and loss appropriation A/c

  4. profit and loss A/c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

 Rent paid by a firm is such an expenditure which is incurred irrespective of any partner. It is not directly related to the partner. As rent is an expenditure the same is debited to profit and loss account. 

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

Profit and losses of the firm are to be shared equally ____________________.

  1. When the partnership deed is silent about it

  2. As per Partnership Act in the absence of anything in the partnership deed to the contrary

  3. Both the circumstances

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

b'P&L of the firm are to be shared equally as per the partnership act and also in the absence of anything in the partnership deed to the contrary.'

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

Partnership firm is not liable for the acts of the firm done ____________________.

  1. in individual/personal capacity by a partner

  2. without concurrence of all the partners

  3. without concurrence of majority partners

  4. not mentioned in partnership deed
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A partnership firm is only liable for acts done within the scope of partnership business; it is not liable for acts done by a partner in their personal capacity.

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

Interest on advance money provided by the Partner can be paid from ____________.

  1. profits

  2. out of capital

  3. both (a) and (b)

  4. from the money provided by Central Government
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Interest on a partner's loan is a charge against profits, meaning it must be paid even if the firm incurs a loss, and can be paid out of capital if necessary.

Multiple choice book keeping and accountancy partnership accounts (preliminary) adjustment of distributable profits final accounts of partnership firms profit-loss appropriation account

Which of the following statements is not true?

  1. It is not true that all partners can have limited liability in a limited partnership

  2. Capital contributions do not have to be equal from each partner

  3. A minor has a right to access and inspect books of accounts of partnership firm in which he is partner

  4. Interest on capital is a reward for the different amounts of work partners may perform
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Interest will be allowed to each partner on the capital contributed by him . Interest on capital of the partners is calculated for the relevant period for which the amount of capital has been used in the business. Capital introduced or withdrawn by a partner during the accounting year has to be taken for the purpose of calculation and definitely is not a reward for the partners.