Tag: accounting for partnership

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Questions Related to accounting for partnership

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

C, D and E are partners sharing profits and losses in the proportion of 3 :2 :1. D retired and the new profit sharing ratio between C and E is 3 :2 and the Reserve of Rs. 24,000 will be divided among the partners.

  1. 4,000, 8,000 12,0000

  2. 10,000, 10,000 4,000

  3. 8,000 12,000 4,000

  4. 12,000 8,000 4,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Reserves are distributed in the old profit sharing ratio (3:2:1). Total reserve = 24,000. C: 24,000 * 3/6 = 12,000; D: 24,000 * 2/6 = 8,000; E: 24,000 * 1/6 = 4,000.

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

Cost of abnormal wastage is _________________.

  1. Charged to the product cost

  2. Charged to the profit & loss account

  3. charged partly to the product and partly profit & loss account

  4. not charged at all
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Abnormal wastage is not part of normal production costs and is therefore charged directly to the Profit and Loss account.

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 liability of a partner in profit is ________.

  1. limited.

  2. unlimited.

  3. limited to his capital.

  4. limited to his share of interest in the firm assets.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In a general partnership, the liability of each partner for the debts and obligations of the firm is unlimited.

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

In the case of loss to any party caused by a partner due to negligence or tort the loss shall be borne by ___________________.

  1. All the partners in their capital ratio

  2. All the partners in their profit sharing ratio

  3. By defaulting partner only

  4. Managing partner only
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In the case of loss to any party caused by a partnerdue to negligence or tort the loss shallbe borne by all the partners in theie profit sharing ratio.

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

In the case of loss caused by fraud or misrepresentation made by a partner the same shall be borne by ______________.

  1. All the partners in their capital ratio

  2. All the partners in their profit sharing ratio

  3. Defaulting partner only

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

In the case of loss caused by fraud or misrepresentation made by a  partner the same shall be borne by defaulting partner only.

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.