Tag: book keeping and accountancy

Quizzes (126) Questions (1524)

Questions Related to book keeping and accountancy

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

Which of these is not an implied authority of a partner in the absence of any specific provisions in the partnership deed _____________________.

  1. To buy or sell goods on behalf of the firm

  2. To receive payment on behalf of the firm

  3. To sue on behalf of the firm and defend suit in the name of the firm

  4. to submit a dispute relating to the firm for arbitration
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under the Indian Partnership Act, a partner does not have the implied authority to submit a dispute relating to the business of the firm to arbitration.

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

Partner share profit or loss _______________.

  1. Equally

  2. Proportionate to their capital

  3. As agreed in the partnership deed

  4. Based on qualification and experience
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Partners share profits and losses according to the terms specified in the partnership deed.

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

Which of these provisions are found in Partnership Act regarding sharing of profit and loss by partners ? 

  1. share the profits and losses in the ratio of their capital contributions

  2. share the profits and losses equally irrespective of any agreement between them to the contrary

  3. share the profits and losses equally in the absence of any agreement to the contrary between them

  4. share the profits and losses in the ratio of their personal effoks input
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to the Indian Partnership Act, in the absence of an agreement, partners share profits and losses equally.

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

The right to indemnity is lost on ___________________.

  1. the dissolution of the partnership

  2. the death of the partner

  3. the retirement of the partner

  4. neither (a) nor (b) nor (c)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The right to indemnity is a fundamental right of a partner to be reimbursed for expenses incurred on behalf of the firm; it is not lost upon dissolution, death, or 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

P and Q are two partners sharing profit and loss equally. P draws Rs. 2,000 at the end of each month for 6 months whereas Q draws Rs. 1,000 at the beginning of each month for six months. Assuming that interest on drawing is to be charged at 6% p.a. Interest on drawing of Q will be.

  1. Rs.105

  2. Rs.100

  3. Rs.110

  4. Rs.101
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Q draws 1,000 at the beginning of each month for 6 months. Total drawings = 6,000. Average period = (6 + 1) / 2 = 3.5 months. Interest = 6,000 * 6% * 3.5 / 12 = 105.

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

P and Q are two partners sharing profit and loss equally. P draws Rs. 2000 at the end of each month for 6 months whereas Q draws Rs. 1,000 at the beginning of each month for six months. Assuming that interest on drawing is to be charged at 6% p.a. Interest on drawing of P will be __________.

  1. Rs. 150

  2. Rs. 80

  3. Rs. 86

  4. Rs. 90
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

P draws 2,000 at the end of each month for 6 months. Total drawings = 12,000. Average period = (5 + 0) / 2 = 2.5 months. Interest = 12,000 * 6% * 2.5 / 12 = 150.

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

State with reasons whether the following statement is true or false:
Loss of stock is said to be abnormal loss when such loss is due to inherent characteristics of the commodities.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Losses due to inherent characteristics (like evaporation or shrinkage) are considered normal losses, not abnormal losses.

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

Interest on capital is given from profit and loss appropriation account to a partner __________________.

  1. Only if allowed as per agreement

  2. Only if there are any profits in P&L appropriation account

  3. Both a & b

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

Interest on capital is that amount which any partner receives at the end of financial year beacuse of his capital being invested in business. Moreover, interest on capital is not charge on profits, that is, interest is based on the profits earned by business in that year.

Interest on capital is given to partners only when it is mentioned in the partnership deed or agreement and if the company has earned any profit in the respective year.
If there is any loss in the business, interest on capital will not be provided to partners.

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 $Rs3,000$