Partnership Questions

On the date of admission of a partner, there was a balance of $\text{₹ }45,000$ in the account of machinery. It was found undervalued by $10\%$. The value of machinery will appear in the new Balance Sheet at:

When a firm is dissolved with the consent of all the partners, it is called:

Arrange the following steps in the correct sequence for the application of assets during the settlement of accounts upon the dissolution of a partnership firm (as per Section 48 of the Indian Partnership Act, 1932):(A) The balance should be applied to repay loans made by partners to the firm.(B) The assets of the firm should be used in paying the debts of the firm to third parties.(C) The balance assets may be used for paying partners proportionately on account of capital.(D) The asset residue, if any, shall be divided among the partners in their profit-sharing ratio.Choose the correct answer from the options given below:

M and N are partners in a firm and agree that an interest $@12\%$ per annum should be charged on drawings. M draws $\text{Rs. }20,000$ per month at the beginning of each month. The amount of interest to be charged from M is:

If there is no claim against Workmen Compensation Reserve, it is _______________ at the time of admission of a partner.Fill in the blank with the correct answer from the options given below.

At the time of admission of a new partner general reserve appearing in the old balance sheet is transferred to _______

Match List-I with List-II:List-IList-II(A) Admission of a partner(I) Executor Accounts(B) Retirement of a partner(II) Sacrificing Ratio(C) Death of a partner(III) Realisation Account(D) Dissolution of a firm(IV) Gaining RatioChoose the correct answer from the options given below:

Which of the following events result in the reconstitution of a partnership firm?(A) Change in the profit-sharing ratio among existing partners.(B) Admission of a new partner.(C) Dissolution of a partnership firm.(D) Dissolution of a partnership due to death or retirement.Choose the correct answer from the options given below:

Abhiram and Ragini are partners sharing profits in the ratio of $3:2$. They admit Arun as a new partner for $\frac{1}{5}\text{th}$ share in the future profits of the firm which he gets equally from Abhiram and Ragini. Calculate the new profit sharing ratio of Abhiram, Ragini and Arun.

Match List-I with List-II and choose the correct answer from the options given below:List-I (Equal amount of drawings made)(A) At the end of each half year(B) At the beginning of each quarter(C) At the beginning of each month(D) At the end of each quarterList-II (Number of month for which interest calculated)(I) $4.5$ months(II) $6.5$ months(III) $7.5$ months(IV) $3$ months

When a partnership firm is dissolved, final payment made to partners is transferred to:

'The business of a partnership concern may be carried on by all the partners or any of them acting for all.'Which feature of partnership is indicated by the above statement?

Anshu and Nitu are partners, sharing profits in the ratio of $3:2$. They admitted Jyoti as a new partner for $3/10\text{th}$ share which she acquired $2/10\text{th}$ from Anshu and $1/10\text{th}$ from Nitu. Calculate the new profit-sharing ratio of Anshu, Nitu, and Jyoti:

What will be the share of deceased partner, whose ratio was $\frac{1}{4}$, if the turnover in year of death till the date of death was Rs. $8,00,000$ and in previous year was Rs. $20,00,000$? Profit in previous year was Rs. $4,00,000$.

Which of the following accounts is NOT transferred to the Realisation Account at the time of dissolution of a firm?

The major difference between Retirement and Death of a partner is:

On dissolution of a firm, bank overdraft is transferred to:

Which of the following are the ways for the dissolution of a firm?(A) Dissolution by Notice(B) Dissolution by agreement(C) Dissolution by court(D) Dissolution by not terminating businessChoose the correct answer from the options given below:

Which of the following statements are TRUE?(A) Dissolution of a partnership is completely different from the dissolution of a firm.(B) A partnership is broken up/dissolved when a partner passes away.(C) A firm can be dissolved if all partners give their consent to it.(D) A firm is compulsorily dissolved whenever any single partner decides to retire.Choose the correct answer from the options given below:

Comprehension:A partner withdrew money during the financial year ending March 31, 2020 from his capital account for personal use.The individual amounts withdrawn were:Rs. $12,000$ on June 01, 2019Rs. $8,000$ on August 31, 2019Rs. $3,000$ on September 30, 2019Rs. $7,000$ on November 30, 2019Rs. $6,000$ on January 31, 2020The rate of interest on drawings is $9\%$ per annum.Question: Calculate the interest on drawings specifically for the amount of Rs. $12,000$ drawn on June 01, 2019.

Sindhu, Neha, and Priya are partners sharing profits in the ratio of $5:3:2$. If Neha retires from the firm, calculate the new profit-sharing ratio and the gaining ratio between Sindhu and Priya, assuming no other modifications are specified.

The assets of the firm, including any sum contributed by the partners to make up deficiencies of capital, shall be applied first for paying _____________.

Read the following case study carefully and answer the question:G, K, and B were partners running a partnership for the last 10 years, sharing profit and loss in the ratio of $5:3:2$. Post-Covid, their firm was affected badly and started incurring losses. On 31st March 2023, they all decided to dissolve the firm due to continuous losses. Their capital balances were $\text{₹ }4,00,000$, $\text{₹ }3,00,000$, and $\text{₹ }2,00,000$ respectively. The firm had liabilities of $\text{₹ }80,000$, Cash balance $\text{₹ }40,000$, other Sundry Assets $\text{₹ }8,50,000$, and P&L A/c constituted the rest. Assets were realised at $80\%$, and liabilities were paid in full. There was an unrecorded liability of $\text{₹ }50,000$, which was settled at $\text{₹ }40,000$. Realisation expenses amounted to $\text{₹ }30,000$, being paid by G on behalf of the firm. What is the mode of dissolution of the firm followed by G, K, and B?

M and R are partners sharing profits and losses in the ratio of $3:2$. Their capital A/c's showed the balance of Rs. $4,00,000$ and Rs. $3,00,000$ respectively on 1 April, 2021. M introduced additional capital on 1 August, 2021. Interest on capital is allowed @ $6\%$ p.a. Total interest on capital of both the partners is Rs. $50,000$.Calculate additional capital introduced by M on 1 August, 2021 and interest on capital earned on additional capital. Books are closed on 31 March.

A and B are partners in a firm with their fixed capitals of $\text{Rs. }4,00,000$ and $\text{Rs. }5,00,000$ respectively. After preparation of accounts, it was found that interest on capital @ $10\%\text{ p.a.}$ as provided by the partnership deed was omitted. In order to rectify the mistake, A's current account will be:

Read the following case study carefully and answer the question:G, K, and B were partners running a partnership for the last 10 years, sharing profit and loss in the ratio of $5:3:2$. Post-Covid, their firm was affected badly and started incurring losses. On 31st March 2023, they all decided to dissolve the firm due to continuous losses. Their capital balances were $\text{₹ }4,00,000$, $\text{₹ }3,00,000$, and $\text{₹ }2,00,000$ respectively. The firm had liabilities of $\text{₹ }80,000$, Cash balance $\text{₹ }40,000$, other Sundry Assets $\text{₹ }8,50,000$, and P&L A/c constituted the rest. Assets were realised at $80\%$, and liabilities were paid in full. There was an unrecorded liability of $\text{₹ }50,000$, which was settled at $\text{₹ }40,000$. Realisation expenses amounted to $\text{₹ }30,000$, being paid by G on behalf of the firm. Determine the overall Gain/Loss on Realisation.

Which of the following is not a feature of a partnership deed?

When realisation expenses are paid by the firm on behalf of a partner, such expenses are debited to:

Read the following case study carefully and answer the question:G, K, and B were partners running a partnership for the last 10 years, sharing profit and loss in the ratio of $5:3:2$. Post-Covid, their firm was affected badly and started incurring losses. On 31st March 2023, they all decided to dissolve the firm due to continuous losses. Their capital balances were $\text{₹ }4,00,000$, $\text{₹ }3,00,000$, and $\text{₹ }2,00,000$ respectively. The firm had liabilities of $\text{₹ }80,000$, Cash balance $\text{₹ }40,000$, other Sundry Assets $\text{₹ }8,50,000$, and P&L A/c constituted the rest. Assets were realised at $80\%$, and liabilities were paid in full. There was an unrecorded liability of $\text{₹ }50,000$, which was settled at $\text{₹ }40,000$. Realisation expenses amounted to $\text{₹ }30,000$, being paid by G on behalf of the firm. The existing Profit and Loss Account balance in the books of the firm will be shared/borne by partners in the ratio:

Which among the following are the modes of dissolution?A. Dissolution by NatureB. Compulsory DissolutionC. Dissolution by AgreementD. Dissolution by NoticeChoose the correct answer from the options given below:

The Profit and Loss Appropriation Account is an extension of the Profit and Loss Account of the firm. Which of the following items is NOT shown in the Profit and Loss Appropriation Account?

In the case of the fixed capital method, which two accounts are maintained for each partner?

Identify the correct sequence to be followed while preparing the final accounts of a partnership firm:(A) Profit and Loss Appropriation Account(B) Profit and Loss Account(C) Trading Account(D) Balance SheetChoose the correct answer from the options given below:

Match List-I with List-II:At the time of retirement, the following transactions took place. Choose the correct treatment.List-I (Particulars)List-II (Treatment)(A) Asset taken over by the partner(I) Debit side of Revaluation A/C(B) Increase in Assets(II) Written off amongst old partners in old ratio(C) Unrecorded Liability(III) Debit side of Partners Capital A/C(D) Goodwill Appearing in books(IV) Credit side of Revaluation A/CChoose the correct answer from the options given below:

Comprehension:A partner withdrew money during the financial year ending March 31, 2020 from his capital account for personal use.The individual amounts withdrawn were:Rs. $12,000$ on June 01, 2019Rs. $8,000$ on August 31, 2019Rs. $3,000$ on September 30, 2019Rs. $7,000$ on November 30, 2019Rs. $6,000$ on January 31, 2020The rate of interest on drawings is $9\%$ per annum.Question: The total cumulative amount of interest on drawings charged to the partner for the year will be:

As per Section 48 of the Indian Partnership Act, 1932, which of the following sources will be systematically utilized, and in what sequence, to pay off firm losses, including capital deficiencies?(A) Out of accumulated Profits(B) Out of the Capital of Partners(C) By partners individually in their profit-sharing ratio(D) Out of Creditors' Personal AssetsChoose the correct answer from the options given below:

Which of the following are charges against profits?(A) Rent paid to partners(B) Interest on loan, paid to partners(C) Interest on Capital(D) Manager's commissionChoose the correct answer from the options given below:

Which of the following would affect the Revaluation Account at the time of admission of a partner?(A) Increase in assets(B) Drawings against capital(C) Recording of unrecorded assets(D) Decrease in liabilities Choose the correct answer from the options given below:

Case studyA and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm. The position of Assets and Liabilities on the date of dissolution was:

It was agreed that following transactions will take place :A. A wanted to start the business in sole proprietorship So he took Building and Furniture at $10\%$ less than book value.B. All the debtors proved good except a person C who did not pay Rs. $10,000$.The treatment of Goodwill appearing in the balance sheet will be:

On retirement or death of a partner, the remaining partners who have gained due to change in the profit sharing ratio should compensate the:

On the Death of a Partner, which account is debited for his/her share of profit for the intervening period, i.e., the period from the date of the last balance sheet till the date of the partner's death:

Choose the correct statement in respect of the Fixed Capital Method for a Partnership Firm:

Which of the following is NOT an essential feature of a partnership?

Arjun and Vaibhav are partners sharing profits in the ratio of $3:2$. They admitted Rahul as a new partner for $\frac{1}{5}$ share in the future profits of the firm. The new partner acquired his share from the old partners in the old ratio. Calculate the new profit sharing ratio of Arjun, Vaibhav and Rahul.

Which statements are true about the dissolution of a partnership-(A) Dissolution of a partnership is different from dissolution of a firm.(B) A partnership is dissolved when there is a death of a partner.(C) A firm is compulsorily dissolved when a partner decides to retire.(D) Dissolution of partnership cannot take place without intervention of the court.Choose the correct answer from the options given below:

In partnership, a minor can be partner:

At the time a new partner is admitted, revaluation of assets and liabilities is made for the:

Which of the following statements regarding partnership rules is NOT true?

Comprehension:A partner withdrew money during the financial year ending March 31, 2020 from his capital account for personal use.The individual amounts withdrawn were:Rs. $12,000$ on June 01, 2019Rs. $8,000$ on August 31, 2019Rs. $3,000$ on September 30, 2019Rs. $7,000$ on November 30, 2019Rs. $6,000$ on January 31, 2020The rate of interest on drawings is $9\%$ per annum.Question: Calculate interest on drawings specifically for the amount of Rs. $7,000$ withdrawn on November 30, 2019.

R, S, and K are partners sharing profits in the ratio of $4:3:2$. R retires, and S and K decide to share future profits in the ratio of $5:3$. Calculate their gaining ratio.

All assets except cash/bank and fictitious assets are transferred to the Debit side of the ______ Account during dissolution.

On the dissolution of a firm, external creditors' accounts are transferred to:

In the absence of any information, it is assumed that the remaining partners acquire the share of profit of the retiring/deceased partner in:

Sumit, a partner in Tours and Travels, withdrew $\text{Rs. }4,000$ per month at the end of each month during the year ending March 31, 2020 for his personal use. Calculate the interest on drawings at a simple rate of interest of $10\%$ per annum.

Which of the following indicates a situation of compulsory dissolution of a partnership firm?

Match List - I with List - II.List - I ||| List - II(A) Interest on loan ||| (I) Current Account(B) Fixed capital ||| (II) Charge Against Profit(C) Fluctuating capital ||| (III) Capital Account(D) Interest on capital ||| (IV) Appropriation of ProfitChoose the correct answer from the options given below :

Ram, Karan and Shyam are partners. On retirement of Ram, the goodwill already appears in the Balance Sheet at $\text{Rs. }32,000$. This existing goodwill will be written-off:

Which statements are true about partnership operations under Indian framework?(A) Each partner carrying on the business is the principal as well as the agent for all the other partners.(B) A valid partnership can be formulated even without a written agreement between the partners.(C) Interest on partner's loan is to be given @ 12% p.a., if the deed is silent about the rate.(D) The maximum number of partners can be 50 in a firm.Choose the correct answer from the options given below:

Which of the following is NOT a fundamental feature of a partnership?

$A$, $B$ and $C$ are partners in a firm. On retirement/death of $C$, his capital account will be credited with:

$X$, $Y$ and $Z$ are partners in a firm. If $M$ is admitted as a new partner, what would be its primary legal implication?

X, Y and Z are partners in the ratio of $\frac{1}{2}:\frac{2}{5}:\frac{1}{10}$. What will be the new ratio of the remaining partner if X retires?

Das and Sinha are partners in a firm sharing profits in a $4:1$ ratio. They admit Pal as a new partner for a $\frac{1}{4}$ share in the profits, which he acquires entirely from Das. Calculate the new profit-sharing ratio of all three partners.

Partners' current accounts are transferred to respective Partners' ______ Accounts at the time of dissolution of a firm.

The old Profit Sharing ratio among $M$, $N$ and $P$ is $2:2:1$. The New profit sharing ratio after $N$ 's retirement is set at $3:2$. The gaining ratio between $M$ and $P$ will be:

Neha contributed $\text{Rs. }30,000$ and Saloni $\text{Rs. }90,000$ as capital. What will be Saloni's share in profits if the partnership agreement is silent regarding profit-sharing?

In which of the following cases does the economic relationship between the partners come to an end?

Vijay and Manohar share profits and losses in the ratio of $2:1$. They admit Prakash as a partner with a $\frac{1}{4}$ share in profits, guaranteeing that his annual share of profit will be at least $\text{Rs. }50,000$. The net profit of the firm for the financial year ending March 31, 2015, was $\text{Rs. }1,60,000$. Calculate the final amount of profit Vijay will receive.

Which of the following statements are correct about a partnership?(A) Each partner carrying on the business is the principal as well as the agent for all the other partners.(B) If the deed is silent, interest at the rate of $6\%\text{ p.a.}$ would be charged on the drawings made by the partner.(C) If the partnership deed is silent about the profit sharing ratio, the profits and losses of the firm are to be shared equally by partners.(D) Interest on partner's loan is to be given @ $12\%\text{ p.a.}$, if the deed is silent about the rate.Choose the correct answer from the options given below:

$A$ and $N$ are partners sharing profits in the ratio $2:1$. $A$ 's son $Ashu$ was admitted as a partner for $\frac{1}{4}\text{th}$ share, half of which was gifted by $A$ to her son. The remaining portion was contributed by $N$. The goodwill of the firm is valued at Rs. $40,000$. How much amount will be credited to the old partners' capital accounts respectively for goodwill?

It is the amount-paid to the person who is not the regular employee of the institution.

Which of the following is the correct journal entry to transfer a net profit (credit balance of the Profit and Loss Account) to the Profit and Loss Appropriation Account?

In the absence of any structural information regarding how the remaining partners acquire the share of a retiring or deceased partner, it is assumed that they will acquire it in their:

The profits of a partnership firm over five years are recorded as follows:YearProfit (Rs.)2012–1320,0002013–1424,0002014–1520,0002015–1620,0002016–1716,000Calculate the value of goodwill on the basis of three years' purchase of average profits.

Which of the following factors leads to a higher goodwill for firms?(A) Firms having long term contracts for supply of materials(B) Firms with efficient management(C) Firms which are highly profitable(D) Firms which do not have competitive advantagesChoose the correct answer from the options given below:

Match List-I with List-II regarding the modes of dissolution of a partnership firm:List-IList-II(A) Dissolution of firm by agreement(I) When a partner becomes insane(B) Compulsory dissolution of firm(II) With the consent of all partners(C) Dissolution of firm by notice(III) When business of a firm becomes illegal(D) Dissolution of firm by Court(IV) At the request of any one partnerChoose the correct answer from the options given below:

P, Q and R share profits equally. At the time of P's retirement, goodwill appears in the books at $\text{Rs. }3000$. P will be debited with what amount for his share of existing Goodwill?

Match List-I with List-II (under the Fixed Capital Method):List-IList-II(A) Bank (fresh capital introduced)(I) Debit side of Partner's Current Account(B) Interest on drawings(II) Debit side of Partner's Capital Account(C) Bank (permanent withdrawal of capital)(III) Credit side of Partner's Current Account(D) Commission(IV) Credit side of Partner's Capital AccountChoose the correct answer from the options given below:

Arrange the sequential accounting processing steps required at the time of the death of a partner in the correct logical order:(A) Preparation of deceased partner's capital account(B) Ascertainment of new profit sharing ratio and gaining ratio(C) Preparation of revaluation account, if required(D) Settlement by making payment to the deceased partner's executorChoose the correct answer from the options given below:

Which from the following is not a feature of a partnership firm?

Upon the admission of a new partner, any upward revaluation adjustment (increase in the value of assets) is directly debited to:

Comprehension:A partner withdrew money during the financial year ending March 31, 2020 from his capital account for personal use.The individual amounts withdrawn were:Rs. $12,000$ on June 01, 2019Rs. $8,000$ on August 31, 2019Rs. $3,000$ on September 30, 2019Rs. $7,000$ on November 30, 2019Rs. $6,000$ on January 31, 2020The rate of interest on drawings is $9\%$ per annum.Question: Calculate the interest on drawings specifically for the amount of Rs. $3,000$ drawn on September 30, 2019.

A and B are partners in a firm sharing profits in the ratio of $3:2$. They admit M as a new partner for a $\frac{1}{4}$ share. The new profit-sharing ratio between A and B is set to be $2:1$. Calculate their sacrificing ratio.

Arrange the following steps in the correct logical sequence to calculate Goodwill using the Super Profits Method:(A) Calculate the normal profit on the firm's capital based on the normal rate of return.(B) Calculate the average historical maintainable profit.(C) Calculate the super profits by deducting normal profit from the average profit.(D) Calculate goodwill by multiplying the super profit by the specified number of years' purchase.Choose the correct answer from the options given below:

Comprehension:A partner withdrew money during the financial year ending March 31, 2020 from his capital account for personal use.The individual amounts withdrawn were:Rs. $12,000$ on June 01, 2019Rs. $8,000$ on August 31, 2019Rs. $3,000$ on September 30, 2019Rs. $7,000$ on November 30, 2019Rs. $6,000$ on January 31, 2020The rate of interest on drawings is $9\%$ per annum.Question: Calculate the interest on drawings specifically for the amount of Rs. $6,000$ drawn on January 31, 2020.

A, B and C were partner's in a firm sharing profit and losses in the Ratio of $5:3:2$. They admitted D into partnership for $1/5$ share of profit which he takes equally from A and B. D brought sufficient amount of goodwill in cash. Capital brought in by is Rs. $50,000$. On the date of admission the Balance Sheet of A, B and C was as follows :Balance Sheet as on 31st March, 2021

Goodwill is to be valued at $3$ years purchase of average profit of last $4$ years which were Rs. $60,000$ (2017-18), Rs. $60,000$ (18-19), Rs. $30,000$ (19-20). On revaluation it was found that all debtors are good.What would be the new Profit Sharing Ratio :

Arrange the following accounting procedures in the correct chronological sequence followed at the time of admission of a new partner:(A) Adjustments of capital accounts.(B) Valuation of goodwill.(C) Calculation of new profit sharing ratio and sacrificing ratio.Choose the correct answer from the options given below:

The value of goodwill calculated based on the capitalization of average profit method is $\text{Rs. }1,80,000$. If the Net Assets of the firm are valued at $\text{Rs. }8,20,000$, find the capitalized value of average profits.

When a partnership firm is dissolved, any accumulated losses (such as a debit balance in the Profit and Loss Account) are transferred directly to the:

Arrange the following in correct order in which assets of the firm can be used in their settlement upon dissolution.(A) Residue shall be divided between the partners in their profit sharing ratio.(B) In paying the partners proportionately what is due to him/her on account of capital.(C) In paying the partners proportionately what is due to him/her from the firm for advances/loans.(D) In paying the debts of the firm to the third parties.Choose the correct answer from the options given below:

Rohan, Bharti, and Leela are partners. Upon Rohan's retirement, it is noted that goodwill already appears in the balance sheet valued at $\text{Rs. }24,000$. This existing goodwill must be written off by:

Sundry Creditors in the balance sheet are Rs. 58,000. Creditors were unrecorded to the extent of Rs. 1,000. Creditors to be shown in Balance sheet after admission of partner will be:

Match List I with List II in context of not having partnership deed.LIST IA. Interest on loanB. Interest on drawingsC. SalaryD. Profit sharing ratioLIST III. EqualII. Will not be chargedIII. @ $6\%$ p.a.IV. Will not be allowed/providedChoose the correct answer from the options given below:

As per Receipts and Payments Account for the year ended on March 31, 2020, subscriptions received were Rs. $2,50,000$, subscriptions outstanding on 1-04-2019 Rs. $50,000$, Subscriptions received in advance as on 31-3-2020 are Rs. $30,000$. Subscriptions for the year 2019-20 will be:

The capital accounts of partners will always show a ____ balance under fixed capital account method

Case studyA and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm. The position of Assets and Liabilities on the date of dissolution was:

It was agreed that following transactions will take place :A. A wanted to start the business in sole proprietorship So he took Building and Furniture at $10\%$ less than book value.B. All the debtors proved good except a person C who did not pay Rs. $10,000$.The amount recovered from the debtors is:

A, B and C were partner's in a firm sharing profit and losses in the Ratio of $5:3:2$. They admitted D into partnership for $1/5$ share of profit which he takes equally from A and B. D brought sufficient amount of goodwill in cash. Capital brought in by is Rs. $50,000$. On the date of admission the Balance Sheet of A, B and C was as follows :Balance Sheet as on 31st March, 2021

Goodwill is to be valued at $3$ years purchase of average profit of last $4$ years which were Rs. $60,000$ (2017-18), Rs. $60,000$ (18-19), Rs. $30,000$ (19-20). On revaluation it was found that all debtors are good.From the above calculate amount of Goodwill :

A provision for doubtful debts is to be created at 5% of debtors. Debtors in the balance sheet are Rs. 60,000. Provision for Doubtful debts to be shown in Revaluation Account:

When unrecorded liabilities are settled and paid at the time of dissolution of a partnership firm, they are recorded on the:

Match List-I with List-II:List-IList-II(A) Gaining Ratio(I) An advantage of good name, reputation and wide business connections.(B) New Profit Sharing Ratio(II) The ratio in which the continuing partners have acquired the share from the retiring/deceased partner.(C) Sacrificing Ratio(III) The ratio in which the remaining partners will share future profits after the retirement or death of any partner.(D) Goodwill(IV) The ratio in which the old partners agree to sacrifice their share of profit in favour of the incoming partner.Choose the correct answer from the options given below: