CHAPTER 2 : Accounting for Partnership Fundamentals
Name of Exam : CUET UG 2023
SECTION : 2 Domain (commerce)
Subject: Accountancy
Chapter: Accounting for partnership fundamental
Cuet commerce Domain MCQ Test 2023
(Q1) Under what circumstances, a partner can get exemption from sharing losses in a firm?
(a) If he is a senior citizen
(b) If he is a minor
(c) If he is retiring partner
(d) All of the above
(b) If he is a minor
(Q2) Why a partnership firm needs partnership deed?
(a) It acts as a proof in any dispute
(b) It regulates rights of partners
(c) It represents duties and liabilities of partners
(d) All of the above
(d) All of the above
(Q3) Need of profit and loss adjustment account is for
(a) appropriation of profits
(b) charge against profits
(c) rectification of errors or omissions
(d) None of the above
(c) rectification of errors or omissions
(Q4) Loan has been given by wife of a partner to the firm. Now partner wants interest @ 6% per annum as per Partnership Act, 1932 while partnership deed is silent. Solve this issue.
(a) Provide 6% per annum interest as partnership act
says
(b) Provision of interest on loan @ 6% per annum of the partnership act does not apply
(c) Provide 10% interest to solve the issue
(d) None of the above
(b) Provision of interest on loan @ 6% per annum of the partnership act does not apply
(Q5) A partner withdrew 4,000 per month from 1st July,
2020, on beginning of every month. Accounts are
closed at 31st March, 2021. Calculate interest on
drawings while rate of interest is 10% per annum.
(a) Rs 1,600
(b) Rs 1,800
(c) Rs 1,500
(d) Rs 2,200
(c) Rs 1,500
(Q6) In a firm, 10% of net profit after deducting all adjustments, including reserve is transferred to general reserve. The net profit after all adjustments but before transfer to general reserve is Rs 44,000. Calculate the amount which is to be transferred to reserve.
(a) Rs 2,500
(b) Rs 4,000
(c) Rs 4,400
(d) Rs 2,200
(b) Rs 4,000
(Q7) Where a partner is entitled to interest on capital contributed by him, such interest will be payable
(a) only out of profits
(b) only out of capital
(c) Both (a) and (b)
(d) None of the above
(a) only out of profits
(Q8) A charitable dispensary is run by 8 members. A new member wants to join them. The new member is of the opinion that partnership deed must be written while other members refused to do that. They said this is not a partnership. Give reason(s) in favour of other members.
(a) There is no business
(b) There is no sharing of profits
(c) There is no motive of profit making
(d) All of the above
(d) All of the above
(Q9) Virat and Anushka are partners in a firm sharing profits and losses in 2 : 1 ratio. Their capital balance were Rs 10,00,000 and Rs 8,00,000 respectively.
The firm made profits during the year amounting to Rs 3,45,000. Both partners are allowed salary of Rs 2,500 per month. Interest on capital is allowed @ 5% on capital balance. Calculate closing balance of capital for Virat and Anushka.
(a) V = Rs 12,10,000, A = Rs 9,35,000
(b) V = Rs 12,35,000, A = Rs 9,10,000
(c) V = Rs 13,10,000, A = Rs 9,85,000
(d) None of the above
(a) V = Rs 12,10,000, A = Rs 9,35,000
(Q10) The partnership agreement between Mahesh and Ramesh provides that
(i) profits will be shared equally.
(ii) Mahesh will be allowed a salary Rs 400 per month.
(iii) Ramesh is allowed a commission @ 10% on net profits before
adjusting any remuneration.
(iv) 10% per annum interest will be charged on drawings.
(v) their annual drawings were Rs 16,000 and Rs 14,000 respectively.
Net profit before above adjustments are Rs 40,000. Calculate profits to be
distributed between partners.
(a) Rs 34,200
(b) Rs 32,700
(c) Rs 47,300
(d) Rs 29,700
(b) Rs 32,700
(Q11) The capital balance of a partner at the end of the year (after adjusting for his drawings Rs 3,500 and his share in the profit 2,300) is ` 12,000. Interest on capital is payable to him at 5% per annum. What will be the amount of interest on capital?
(a) Rs 660
(b) Rs 600
(c) Rs 540
(d) None of these
(a) Rs 660
(Q12) Aman is a partner of Hindhelp firm with a fixed capital of Rs 9,00,000. He withdrew Rs 60,000 during financial year 2020-21.
What will be the journal entry?
(a) Drawings A/c Dr 60,000
To Aman’s Current A/c 60,000
(b) Drawings A/c Dr 60,000
To Aman’s Capital A/c 60,000
(c) Aman’s Current A/c Dr 60,000
To Drawings A/c 60,000
(d) Aman’s Capital A/c Dr 60,000
To Drawings A/c 60,000
(c) Aman’s Current A/c Dr 60,000
To Drawings A/c 60,000
(Q13) A, B and C are partners sharing profits equally. A drew regularly Rs 4,000 in the beginning of every month for the six months ended 30th September, 2021. Calculate interest on A’s drawings @ 5% p.a.
(a) Rs 200
(b) Rs 1,200
(c) Rs 350
(d) Rs 700
(c) Rs 350
(Q14) If a partner withdraws equal amount at end of each quarter, then ……… are to be considered for interest on total drawings.
(a) 5.5 months
(b) 6 months
(c) 4.5 months
(d) 7.5 months
(c) 4.5 months
(Q15) With context to debit side of partners’ current account, pick the odd one out.
(a) Drawings
(b) Interest on Drawings
(c) Salary
(d) None of these
(c) Salary
(Q16) No interest is to be charged on drawings from the partners in case of ……… .
(a) no interest clause in deed
(b) absence of deed
(c) an oral agreement between partners including interest clause
(d) Both (a) and (b)
(d) Both (a) and (b)
(Q17) In a partnership, commission to partners will be given from
(a) current year’s profit
(b) reserves
(c) goodwill
(d) Any of them
(a) current year’s profit
(Q18) In the context of debit side of profit and loss appropriation account, pick odd one out.
(a) Interest on Capital
(b) Partners’ Salaries
(c) Interest on Drawings
(d) Partner’s Commission
(c) Interest on Drawings
(Q19) If partners’ capitals are fixed, drawings will be recorded in
(a) partners’ capital account
(b) partners’ current account
(c) profit and loss appropriation account
(d) None of the above
(b) partners’ current account
(Q20) In the profit and loss appropriation account, net profit is always taken after
(a) interest on partner’s loan
(b) manager’s commission
(c) Both (a) and (b)
(d) None of the above
(c) Both (a) and (b)
(Q21) Partners’ current account is maintained under
(a) fixed capital method
(b) fluctuating capital method
(c) Both (a) and (b)
(d) cumulative capital method
(a) fixed capital method
(Q22) Which of the following items is not dealt through profit and loss appropriation account?
(a) Interest on Partner’s Loan
(b) Partner’s Salary
(c) Interest on Partner’s Capital
(d) Partner’s Commission
(a) Interest on Partner’s Loan
(Q23) Pick the odd one out
(a) Rent to Partner
(b) Manager’s Commission
(c) Interest on Partner’s Loan
(d) Interest on Partner’s Capital
(d) Interest on Partner’s Capital
(Q24) Features of a partnership firm include
(a) two or more persons are carrying common business under an agreement.
(b) they are sharing profits and losses in the fixed ratio.
(c) business is carried by all or any of them acting for all as an agent.
(d) All of the above
(d) All of the above
(Q25) In case of partnership, the act of any partner is
(a) binding on all partners
(b) binding on that partner only
(c) binding on all partners except that particular partner
(d) None of the above
(a) binding on all partners
(Q26) Following are essential elements of a partnership firm except
(a) atleast two persons
(b) there is an agreement between all partners
(c) equal share of profits and losses
(d) partnership agreement is for some business
(c) equal share of profits and losses
(Q27) The firm of Sonu and Monu earned a profit of Rs 3,25,000 during the year ending on 31st March, 2019. They have decided to donate 10% of this profit to an NGO working for senior citizens. Pass the journal entry.
(a) Profit and Loss Appropriation A/c Dr 2,92,500
To Sonu’s Capital A/c 1,46,250
To Monu’s Capital A/c 1,46,250
(b) Sonu’s Capital A/c Dr 1,46,250
Monu’s Capital A/c Dr 1,46,250
To Profit and Loss Appropriation A/c 2,92,500
(c) Profit and Loss Appropriation A/c Dr 32,500
To Monu’s Capital A/c 16,250
To Sonu’s Capital A/c 16,250
(d) None of the above
(a) Profit and Loss Appropriation A/c Dr 2,92,500
To Sonu’s Capital A/c 1,46,250
To Monu’s Capital A/c 1,46,250
(Q28) Current account of a partner has ……… .
(a) debit balances
(b) credit balances
(c) Either (a) or (b)
(d) None of the above
(c) Either (a) or (b)
(Q29) Pinky and Chinky are partners in a firm. They share their profits in 2 : 3 ratio. The accountant of the firm, finalised the profit and loss and capital account and presented the accounts to them. Pinky disagreed with accounts because Pinky’s capital account showed negative balance. Pinky is in doubt, this cannot happen. Give your opinion.
(a) Pinky is wrong
(b) Pinky is correct
(c) Accountant is defaulter
(d) None of the above
(a) Pinky is wrong
(Q30) Manager’s commission of ABC Ltd. (Partnership) was Rs 33,000. What amount of net profit in manager’s commission was to be charged @10% before charging such commission?
(a) Rs 3,30,000
(b) Rs 3,00,000
(c) Rs 3,000
(d) Rs 3,300
(a) Rs 3,30,000
CUET COMMERCE DOMAIN PDF DOWNLOAD LINK
Hints & Solutions
5. Interest on Drawings =
Amount × No. of Months of Drawings × Rate of Interest/100 × Average Period/12
Where,
∴ Average Period = Time Left after First Drawings +Time Left after Last Drawings /2
6. 10% is to transfer after all adjustments (including such transfer). This can be ascertained using the
following formula.
Net Profit × Rate/100+Rate
= 44 000 × 10/110
= Rs 4 000
7. Interest on capital is an appropriation of profits and is
provided only if there is profit.
8. For partnership, there must be a business but in the
question a member wants to join a charitable
dispensary. Also, they work to provide social service
and not to earn profits.
(Q9)
Particular Virat (Rs) Anushka (Rs )
Opening Capital 10,00,000 8,00,000
(+) Salary to Partners 30,000 30,000
(+) Interest on Capital 50,000 40,000
(+) Divisible Profits
(Total Profits − Salary
− Interest on Capital)
divided in 2 : 1 ratio. 1,30,000 65,000
[3,45,000 −
60,000 −
90,000] = Rs 1,95,000,
(divided in the
ratio of 2 : 1)
Closing Capital 12,10,000 9,35,000
(Q10)
Particulars. Amt (Rs.)
Net Profits as per Profit
and Loss Account. 40000
(+) Interest on Drawings
RAMESH ( 14000×10/100×6/12) 700
MAHESH ( 16000×10/100×6/12) 800. 1500
(−) Salary to Mahesh (12 × 400) (4800)
(-) Commission to Ramesh
(40000 x 10/100) (4000)
Divisible Profits. 32700
11. Capital at the Beginning
= Capital at the End + Drawings − Profit
= 12000 + 3500 - 2300
= Rs 13 200
Interest on Capital = 13200 × 5/100. = 660 Rs
13. Interest on A’s Drawings
= Total Drawings × Rate of Interest /100 × Average Period/12
= 4,000 × 6 × 5/100 × 3.5/12 = Rs 350
14. Time Period
Time Left after First Drawings + Time Left after Last Drawings / 2
= 9 + 0 / 2 = 4 5. months
17. Commission to partner is an appropriation item. Appropriation is done from current year’s profit only.
18. It is income for firm charged against drawings of partners.
22. Interest on partner’s loan is a charge against the profits and not an appropriation out of profits. Thus, it is not dealt through profit and loss appropriation account.
23. Interest on partner’s capital is an appropriation out of profits and rest are charges against profits.
28. Current account can have credit balance in case of profits and other items of appropriation of profits. However, it can also have debit balance in case of over withdrawn amount or too many debit items being charged to it.
29. Pinky is wrong because if debit side of the partner’s capital account is more than its credit side, then it
shows negative balance.
30. Let profit be Z
= Z x 10/100 = 33,000 (Since ‘before’ given)
Z = Rs 3,30,000
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