Partnership Questions

A, B and C are partners in a firm. If B is being retired from the firm, what would be its effect?

Based on the passage given for Meena and Tina, answer the question:State the correct Journal entry for the payment of realization expenses of $\text{Rs. }2,000$.

In the Proforma of Partner's Capital Account under the Fluctuating Capital Method, the Credit side includes which of the following items?(A) Balance b/d (in case of credit opening balance)(B) Salaries(C) Interest on drawings(D) Profit and Loss Appropriation (for share of profit)Choose the correct answer from the options given below:

Which of the following is NOT a general feature of a partnership firm?

Match List-I with List-II:List-IList-II(A) On dissolution of a firm, creditors is transferred to:(I) Bank account is credited(B) Unrecorded liabilities when paid:(II) Realization Account(C) When realization expenses are paid by the firm on behalf of a partner, such expenses are(III) Bank account is debited.(D) When unrecorded assets are sold(IV) Partner's Capital AccountChoose the correct answer from the options given below:

On the dissolution of the partnership firm the amount realised from sale of assets shall be applied in following order:(a) Distributing the amount left among the partners in their profit sharing ratio(b) Paying amount due to partner on account of loan advanced by him(c) Paying amount due to the creditors(d) Paying partners' capital account balancesChoose the correct answer from the options given below:

A firm is dissolved compulsorily under Section 41 of the Indian Partnership Act in the following cases:(A) When all the partners or all but one partner, become insolvent.(B) When the business of the firm becomes illegal.(C) Change in existing profit sharing ratio among partners.(D) When some event has taken place which makes it unlawful for the partners to carry on the business of the firm in partnership.Choose the correct answer from the options given below:

According to section _________ of the Indian Partnership Act, 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm.

Which item among the following is NOT listed on the credit side of a Realization Account?

Match List I with List II regarding accounting treatments:List IA. Transfer of accumulated profitsB. Unrecorded asset sold on dissolution of firmC. Manager's commissionD. Partner's commissionList III. Realisation AccountII. Profit and Loss AccountIII. Profit and Loss Appropriation AccountIV. Partner's Capital AccountChoose the correct answer from the options given below:

On dissolution of the firm, partner's capital accounts are closed through:

Hanny, Pammy, and Sunny are partners sharing profits in the ratio of $3:2:1$. Goodwill is appearing in the books at a value of $\text{Rs. }60,000$. Pammy retires and at the time of Pammy's retirement, goodwill is valued at $\text{Rs. }84,000$. Hanny and Sunny decided to share future profits in the ratio of $2:1$. Pammy's share of the current value of goodwill is:

All assets (except cash/bank and fictitious assets) are transferred to the ................... side of ................... Account.

On 1/4/22, X and Y decided to dissolve their firm. On that date of dissolution, Goodwill appeared at Rs. $5,00,000$ in the Balance Sheet. Goodwill will be:

Anupam and Abhishek are partners. Their capital accounts showed balances of Rs. 1,50,000 and Rs. 2,00,000 respectively on April 01, 2019. Show the interest on capital for the year ending March 31, 2020 allowed, if the partnership deed provides for interest on capital @ 8% p.a. and the firm earned a profit of Rs. 14,000 during the year:

When realization expenses are paid by the firm on behalf of a partner (who was explicitly given the responsibility to bear them), which account must be debited in the firm's books?

Which of the following is not a feature of partnership?

On $R$ 's retirement, the amount payable to him after all adjustments works out to be $\text{Rs. }60,000$ but the remaining partners $P$ and $Q$ agreed to pay him $\text{Rs. }75,000$ in full settlement of his claim. Identify the term which represents the $\text{Rs. }15,000$ extra that is paid to $R$.

The minimum guaranteed amount shall be paid to the new partner when his share of profit as per the profit sharing ratio:

Arrange the following in a sequence, in which they will be utilize for the payment of losses:(A) Out of capital of partners.(B) Out of profits.(C) By the partners individually in their profit sharing ratio.Choose the correct answer from the options given below:

Rohit and Mohit are partners in a firm sharing profits in the ratio of $5:3$. They admitted Bijoy as a new partner for $\frac{1}{7}\text{th}$ share in the profit. The new profit sharing ratio will be $4:2:1$. What will be the sacrificing ratio of Rohit and Mohit?

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 realisation expenses are paid by the firm on behalf of a partner, which account will be debited?

According to which section of the partnership Act 1932, the dissolution of a partnership between all the partners of a firm is called the dissolution of the firm?

Which combination of statements is true about dissolution?(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 dissolved when all partners give consent to it.(D). A firm is compulsorily dissolved when a partner decides to retire.Choose the correct answer from the options given below:

Complete the sequence where interest on capital has to be provided as per partnership deed, but available profits are not sufficient to provide full amount of Interest on capital.A. If it is appropriation, calculate interest on capital for all partners at given rateB. Divide the available amount in the capital ratio among the partnersC. Calculate ratio between capital of partnersD. Consider the partnership deed and decide whether interest on capital is a charge or an appropriationE. Consider the available profit Choose the correct answer from the options given below:

Mohan and Shyam are partners in a firm. Which statement among the below can be claimed valid if the Partnership Agreement is silent regarding the same?

A and B are partners sharing profits in the ratio of 2:1. C is admitted into the firm for 1/4 share of profits. C brings in Rs. 20,000 in respect of his capital. The capitals of old partners A and B, after all adjustments relating to goodwill, revaluation of assets and liabilities, etc., are Rs. 45,000 and Rs. 15,000 respectively. It is agreed that partners' capitals should be according to the new profit sharing ratio. Determine the new profit sharing ratio

A business has earned average profits of Rs. 1,00,000 during the last few years and the normal rate of return for a similar business is 10%. Ascertain the value of goodwill by capitalization of average profits method, given that the value of net assets of the business is Rs. 8,20,000.

Journal entry to be passed for unrecorded assets for preparing Revaluation A/C at the time of Retirement of a partner will be ____

The books of a business showed that the firm's capital employed on December 31, 2015, is Rs. 5,00,000 and the profits for the last five years were: 2011–Rs. 40,000; 2012–Rs. 50,000; 2013–Rs. 55,000; 2014–Rs. 70,000 and 2015–Rs. 85,000. Find out the normal profits of the business, given that the normal rate of return is 10%.

Rana, Sana and Kamana are partners, sharing profits in the ratio 4:3:2. Rana retires; Sana and Kamana decided to share profits in the future in the ratio of 5:3. The Gaining Ratio of Sana and Kamana will be

Aashish withdrew Rs. 10,000 per month from the firm for his personal use during the year ending March 31, 2017. What will be the amount of interest if the amount is withdrawn at the beginning of each month and rate of interest on drawings is 8% per annum?

Based on the following passage, answer questions from 46 to 50:Meena and Tina are partners in a firm sharing profits in the ratio $3:2$. They decided to dissolve their firm on March 31, 2017 when their Balance Sheet was as follows:Balance Sheet of Meena and Tina as on March 31, 2017LiabilitiesAmount (Rs.)AssetsAmount (Rs.)Capital Accounts:Machinery$70,000$ Meena: $90,000$ Investments$50,000$ Tina: $80,000$$1,70,000$ Stock$22,000$ Sundry Creditors$60,000$ Sundry Debtors$1,03,000$ Bills Payable$20,000$ Cash at bank$5,000$ Total$2,50,000$ Total$2,50,000$ The assets and liabilities were disposed of as follows:a. Machinery was given to creditors in full settlement of their account and stock was given to bills payable in full settlement.b. Investments were taken over by Tina at book value. Sundry debtors of book value $\text{Rs. }50,000$ were taken over by Meena at $10\%$ less and remaining debtors realized $\text{Rs. }51,000$.c. Realisation expenses amounted to $\text{Rs. }2,000$.Question: When a creditor accepts an asset whose value is more than the amount due to him in full settlement, he will _______ the excess amount which will be credited to _______ Account.

Which among the following is not a feature of the fixed capital method by which the capital accounts of partners can be maintained?

A, V and T were partners of a law firm sharing profits in the ratio of 5:3:2. Their partnership deed provided the following:(i) Interest on partners’ capital @ 5% p.a.(ii) A guaranteed that he would earn a minimum annual fee of Rs. 6,00,000 for the firm.(iii) T was guaranteed a profit of Rs. 2,50,000 (excluding interest on capital) and any deficiency on account of this was to be borne by A and V in the ratio of 2:3.During the year ending March 31, 2019, A earned a fee of Rs. 3,20,000 and net profits earned by the firm were Rs. 8,60,000. Partner’s capital on April 01, 2018 were A - Rs. 3,00,000; V - Rs. 3,00,000 and T - Rs. 2,00,000.In which ratio the deficiency of T will be borne by A & V.

To secure the right to receive a share in the future profits of a partnership firm, a newly admitted partner must bring:

Plant and Machinery in the balance sheet is Rs. 1,00,000. Plant is to be appreciated to Rs. 1,20,000. Amount to be shown in Revaluation Account:

Arrange the sequence of steps to be followed in the preparation of a Realisation Account during the dissolution of a partnership firm:(A) Realisation of the assets.(B) Transfer assets and liabilities to realisation account.(C) Ascertainment of profit or loss on realisation.(D) Payment of liabilities.Choose the correct answer from the options given below:

Arrange the following in the sequence in which they shall be applied in payment at the time of dissolution of a firm:(A) The debts of the firm to the third parties.(B) Partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner's loan).(C) Each partner proportionately what is due to him on account of capital.(D) Divided among the partners in their profit sharing ratio.Choose the correct answer from the options given below:

When an unrecorded asset is taken over by a creditor in full settlement of their claim during dissolution, the transaction is:

In a partnership firm, partners share profit and loss in the ratio of $3:2$. If the firm incurred a loss of $\text{Rs. }10,000$ during the year, then calculate the amount of loss to be shared by partners.

Arrange the steps for accounting for a guarantee of profit to a partner in the correct sequence:(A) Divide the profit in the given ratio.(B) Prepare profit and loss appropriation account as usual.(C) Deduct the deficiency from the guaranteeing partner's share and add it to the guaranteed partner's share.(D) Find the deficiency.Choose the correct answer from the options given below:

The steps involved in calculation of Goodwill under Super Profit method are:(A) Calculate the super profits by deducting normal profit from the average profits.(B) Calculate the normal profit on the firm's capital on the basis of the normal rate of return.(C) Calculate the average profit.(D) Calculate goodwill by multiplying the super profits by the given number of years' purchase.Choose the correct sequence of steps from the options given below:

The past average profits of a business work out to $\text{Rs. }20,000$ and it is expected that such profits are likely to continue for another three years. The value of goodwill based on the average profit method will be:

If the total income earned by Saket Club, a Not-for-Profit organisation is Rs. $2,60,000$ and surplus earned is Rs. $85,000$, then total expenditure incurred will be:

Match List-I with List-II:List-I (Events)List-II (Result)(A) Termination of business(I) Not Possible In Dissolution Of Partnership.(B) Continuation Of Business(II) Not possible in the dissolution of a firm.(C) Intervention of court(III) Dissolution of firm(D) Continuation of books of accounts(IV) Dissolution of partnership.Choose the correct answer from the options given below:

Which of the following is correct?The important provision affecting partnership accounting, in the absence of a partnership deed is:

Reconstitution of a partnership firm does not involve:

Based on the passage given for Meena and Tina, answer the question:Identify the exact final total amount realized in cash from Sundry Debtors.

A and B are partners in a firm sharing profits in the ratio of $3:2$. They admit C as a partner for a $\frac{1}{3}$ share. The sacrificing ratio between A and B is:

Stock at the time of dissolution was appearing in books at Rs 50,000. Half of the stock was sold at a discount of 20% and the remaining was taken over by one of the partners at a 10% discount. What amount was received in cash at the time of realization of stock.

Upon the dissolution of a partnership firm, the amount of a loan taken from a partner by the firm is transferred directly to:

Arrange the following steps to calculate the value of Goodwill by the capitalization method of super profit in a proper sequence:A. Calculate normal profit on capital employedB. Actual Profits - Normal Profits = Super ProfitC. $\text{Value of Goodwill}=\frac{\text{Super Profit}\times 100}{\text{Normal Rate of Return}}$ D. Calculate actual profits on capital employedChoose the correct answer from the given options:

When the exact date of a partner's drawings is not specified in the records, interest on drawings is calculated for an average period of:

Which of the following is not the main factors affecting the value of Goodwill?

In case of a Fixed Capital Account framework, Interest on Drawings is:

Deepali, Nimisha and Sonam were partners in a firm sharing profits in the ratio of $5:3:2$. Nimisha retired and the new profit sharing ratio between Deepali and Sonam was $2:3$. On Nimisha's retirement, the goodwill of the firm was valued at Rs. $1,20,000$. Using the information given in the case study, calculate Deepali's amount of sacrifice or gain in Goodwill.

Rent payable to a partner is a/an:

A business has earned average profits of Rs. 1,00,000 during the last few years and the normal rate of return in a similar business is 25%. Ascertain the value of goodwill by capitalisation of average profits method, given that the value of net assets of the business is Rs. 3,20,000.

Match List-I with List-II:List-I (Different accounts)List-II (Related transaction)(A) Profit and loss account(I) Dissolution of partnership.(B) Profit and loss appropriation account(II) Dissolution of firm.(C) Revaluation account(III) Interest on loan to partner.(D) Realization account(IV) Transfer to reserve.Choose the correct answer from the options given below:

A, B and C are partner's sharing profits and losses in the ratio of $\frac{3}{8}:\frac{1}{2}:\frac{1}{8}$.If A dies, then the new ratio of B and C will be :

Identify the correct statement regarding a Partner's Current Account:

Match List-I with List-IIList-IList-II(A) Payment of loans due to partners(I) Realisation A/c Dr To Bank A/c(B) For settlement of partners' accounts, in case their capital account shows a debit balance(II) Bank A/c Dr. To loan to partners(C) For settlement of loan by a firm to a partner(III) Bank A/c Dr. To Partner's Capital A/c(D) For settlement of any unrecorded liability(IV) Partner's Loan A/c Dr. To Bank A/cChoose the correct answer from the options given below:

After transferring liabilities like creditors and bills payables in the Realization Account, in the absence of any information regarding their payment, such liabilities are treated as:

Realisation A/c is debited with __________ on the dissolution of firm.

Match List-I with List-IIList–IList–II(A) Existing Goodwill(I) no entry passed.(B) Goodwill premium(II) Calculated on the basis of capital of partners.(C) Goodwill paid privately(III) Written off.(D) Hidden goodwill(IV) credited to sacrificing partner.Choose the correct answer from the options given below:

L, N and T are partners sharing profits in the ratio of $5:3:2$. If N retires, what would be the gaining ratio of L & T?

The capital of the firm is $\text{Rs. }1,00,000$ and normal rate of return is $8\%$. If the average profits for last 5 years are $\text{Rs. }12,000$ then find goodwill of the firm based on 3 years' purchase of super profits.

Revaluation Account is a/an:

Arrange the following steps which involve the Super Profits Method of valuation of goodwill in the correct sequence:(A) Calculate the average profit.(B) Calculate the normal profit on the firm's capital on the basis of the normal rate of return.(C) Calculate goodwill by multiplying the super profits by the given number of years' purchase(D) Calculate the super profits by deducting normal profit from the average profits.Choose the correct answer from the options given below:

Accounting treatment for a partnership firm is similar to that of a sole proprietorship business except the following aspects:(A) Distribution of Profit and Loss among the partners(B) Dissolution of Partnership Firm(C) Raising Capital through public offering(D) Adjustments for Wrong Appropriation of Profits in the PastChoose the correct answer from the options given below:

In the case of the Dissolution of partnership firm, which accounts are opened:(A) Realization Account(B) Revaluation Account(C) Partners Capital Account(D) Bank AccountChoose the correct answer from the options given below:

Select the entry that is to be made when a creditor accepts an asset in full and final settlement of his account.

In the case of a re-constitution of a partnership firm, if the value of decrease in investment exceeds the Investment Fluctuation Fund, the :-

Match List-I with List-II if the partnership deed is silent regarding the items provided in List-I:List-IList-II(A) Interest on Capital(I) to be shared equally(B) Interest on Loan(II) not charged(C) Interest on Drawings(III) not payable(D) Sharing of Profits(IV) @6% p.a.Choose the correct answer from the options given below:

Unrecorded assets when taken over by a partner are shown in :

For computing Goodwill by capitalisation of Average Profit method, the following sequence would be followed:A. Capitalise the average profit on the basis of Normal Rate of ReturnB. Ascertain the firm's Capital - Total Assets - Outside LiabilitiesC. Ascertain the average profits based on past years' performanceD. Compute the volume of GoodwillChoose the correct answer from the options given below:

Match List-I with List-IIList–I (Events)List–II (Result)(A) Profit share(I) Gaining ratio.(B) Admission of Partners(II) Different concept(C) Retirement of a partner.(III) Equally among partners(D) Dissolution of firm and partnership.(IV) Sacrifice ratio.Choose the correct answer from the options given below:

Neil, Kapil, and Sunil started a furniture business in partnership. After one year of operations, they began exporting contraband items hidden inside blank spaces within the furniture. As authorities found out about the illegal business operations of the firm, the legal system will compel them for:

According to section _________ of the Partnership Act, 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm.

Arrange the following in sequence of the final Accounts for a Partnership firm.(A) Profit and Loss Account(B) Partner's Capital Account(C) Trading Account(D) Balance Sheet(E) Profit and Loss Appropriation AccountChoose the correct answer from the options given below:

Romesh took over stock at $\text{Rs. }8,100$, which is $10\%$ less than its book value. The book value of the stock was _________

In line with what is prescribed by Accounting Standards, existing goodwill appearing in the balance sheet is written off at the time of:

Naveen, Suresh and Tarun are partners, sharing profits and losses in the ratio of $5:3:2$. Suresh retires from the firm and his share was acquired by Naveen and Tarun in the ratio of $2:1$. Calculate the new share of profit :

At the time of dissolution of their firm, Ahmed and Subhash, who are partners of that firm, agreed that Ahmed will pay realization expenses for a fixed remuneration of ₹12,000. The actual expenses were ₹16,000. The Journal entry to be passed is:

In case of dissolution of a firm, the firm ceases to conduct business and has to settle its accounts. The assets of the firm, including any sum contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order:(A) In paying to each partner proportionately what is due to him on account of capital.(B) The residue, if any, shall be divided among the partners in their profit sharing ratio.(C) In paying the debts of the firm to third parties.(D) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner loan).Choose the correct answer from the options given below:

Which of the following entries correctly records the withdrawal of excess capital by a partner?

Naveen and Ghanshyam are partners in a firm sharing profits in the ratio of $3:2$. They admitted Daniel as a new partner for $\frac{1}{4}$ share. The new profit sharing ratio between Naveen and Ghanshyam will be $2:1$. Calculate the New profit sharing ratio of Naveen, Ghanshyam and Daniel :

In the absence of a partnership deed which of the following are correct.(A) Profit sharing ratio will be on the basis of capital contributed by the partners(B) No interest on capital will be provided(C) No interest on Drawing will be charged(D) $6\%$ p.a. interest on partner's loan will be provided(E) Partner will get salary for extra time devoted for the firmChoose the correct answer from the options given below:

The dues of Kabir are to be paid in 4 yearly installments. The principal amount of each installment will be:

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:

On retirement of a partner, the retiring partner's capital account will be credited with _____

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:

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.What would be the new Profit Sharing Ratio :

Identify the right combination of type of Account in making Final Accounts of Partnership Firm.(a) Profit and Loss A/C(b) Profit and Loss Suspense A/C(c) Profit and Loss Appropriation A/C(d) Profit and Loss Adjustment A/C(e) Partners' Capital A/CsChoose the correct answer from the options given below:

Calculate the interest on drawings if Ram withdrew $\text{Rs. }3,000$ per month at the beginning of each month for the whole year, with interest charged @ $9\%$ per annum.

Under the fixed capital method of a partnership concern, which two accounts are maintained for each partner?

Choose the combination of statements that are true about dissolution:(A) Dissolution of partnership can not take place without intervention of the court.(B) Court can order a firm to be dissolved when a partner becomes insane.(C) A firm is compulsorily dissolved when a partner decides to retire.(D) A partnership is dissolved when there is a death of a partner.Choose the correct answer from the options given below: