Partnership Questions

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

A and B are partners without any partnership deed. B has given a loan of $\text{Rs. }2,00,000$ to the firm on 1st July 2023. B claims interest on loan @ $10\%\text{ p.a.}$ How much interest on loan will be paid to B for the year ending on 31st March 2024?

If the partnership deed is silent on interest on capital, then:

In case of dissolution, a Machine costing $\text{Rs. }20,000$, along with cash of $\text{Rs. }5,000$ were given to creditors of $\text{Rs. }30,000$ in full settlement of their claim.In this case, Realisation A/c will be Debited with:

When a new partner brings his share of goodwill in cash, the amount brought in is credited to:

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

A and B are partners sharing profits in the ratio of $3:2$. They admit C for a $\frac{1}{5}\text{th}$ share in future profits, which he acquires equally from both A and B. What will be the new profit-sharing ratio?

Murli, Naveen and Omprakash are partners sharing profits in the ratio of $\frac{3}{8}$, $\frac{1}{2}$ and $\frac{1}{8}$. Murli retires and surrenders $\frac{2}{3}\text{rd}$ of his share in favour of Naveen and the remaining share in favour of Omprakash. The gaining ratio of the remaining partners is:

Ram, a partner, has been assigned the responsibility for realization of assets and settlement of liability for which he will be given remuneration of ₹ 10,000. He has to bear all the realization expenses. Actual realization expenses are ₹ 12,000. The Journal Entry will be:

On the admission of a new partner, an increase in the value of assets is debited to:

If an asset is taken over by a creditor in full lieu of the amount due to him, then the journal entry will be:

Goodwill can also be ascertained by capitalising the super profit directly under which method?

$R$ and $S$ are partners in a firm sharing profits in the ratio of $5:3$. They admitted $B$ as a new partner for $\frac{1}{7}\text{th}$ share in the profit. The new profit sharing ratio among $R$, $S$, and $B$ becomes $4:2:1$. The sacrificing ratio of $R$ and $S$ is:

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. $4,00,000$.

Partner's current accounts are transferred to respective ________ partner's accounts.

Which of the following is not a part of the capital account under the Fixed Capital Method?

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

The Partnership Deed usually contains the following details:(A) Amount of capital to be contributed by each partner(B) The accounting period of the firm(C) Profit and loss sharing ratio(D) The rights, duties and liabilities of each partnerChoose the correct answer from the options given below:

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

When the business of a partnership firm becomes illegal due to changes in regulations or laws, it leads to dissolution under which category?

Arrange the various accounting aspects involved on retirement or death of a partner in logical sequence:(A) Ascertainment of share of profit or loss up to the date of retirement/death(B) Ascertainment of new profit sharing ratio and gaining ratio(C) Distribution of accumulated profits and losses(D) Settlement of the amounts due to retired/deceased partnerChoose the correct answer from the options given below:

In case of dissolution of partnership firm, any liability assumed/paid by a partner is shown on ________?

$L$ and $M$ are partners sharing profits in the ratio $3:2$. $N$ is admitted as a partner for $\frac{1}{5}\text{th}$ of the share which is acquired entirely from $L$. Goodwill of the firm is valued at Rs. $40,000$ on $N$ 's admission. $N$ will have to pay for Goodwill:

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.

Which of the following items is not shown in the Profit and Loss Appropriation Account?

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

$P$, $Q$ and $R$ are partners in a firm. If $S$ is admitted as a new partner then:

Which of the following statements truly makes the distinction between Dissolution of Partnership and Dissolution of Firm:(A) In dissolution of partnership, business is not terminated, while in dissolution of firm business is terminated.(B) The Court intervenes in dissolution of Partnership because a partnership is not dissolved by mutual agreement. A firm can not be dissolved by court order.(C) Economic relationships between partners continue in a changed form in dissolution of partnership. Economic relationships between the partners come to an end at the dissolution of the Firm.(D) Dissolution of Partnership doesn't require permanent closure of books, while in Dissolution of firm books are closed.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 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:

Excess value of net assets over purchase consideration at the time of purchase of business is credited to:

When the deceased partner's share in the estimated loss is calculated for a period from the date of the latest Balance Sheet to the date of death of the partner, then:

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:

If the partnership deed is silent, at what rate, the interest would be charged on the drawings made by the partner:

The total sum due to a retiring partner or to the legal executors (in case of death) includes which of the following, along with their capital account balance, share of goodwill, and revaluation profit?

Gobind, Hari and Pratap are partners. On the retirement of Gobind, goodwill already appears in the Balance Sheet at $\text{Rs. }24,000$. This existing goodwill will be written-off by:

Dissolution of a firm takes place on the happening of certain contingencies under Section 42 of the Indian Partnership Act. Choose them from the following:(A) By the death of a partner(B) By the adjudication of a partner as an insolvent(C) When the business of the firm becomes illegal(D) If constituted for a fixed term, by the expiry of that termChoose 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.

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:

Opening capital balances of partners under the fluctuating capital system will be calculated by using which of the following formulas?

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:

Under the fixed capital method, the capital of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement between the partners. Which among the following is NOT a feature of the fixed capital method?

Unrecorded assets when taken over by a partner are shown on the:

Which of the following is NOT a valid method for the valuation of goodwill?

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.

In partnership, a minor can be partner:

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

Sameer and Yasmin are partners with capitals of $\text{Rs. }15,00,000$ and $\text{Rs. }10,00,000$ respectively, sharing profits in the ratio of $3:2$. They admit Ravi on October 1, 2019. Ravi brings $\text{Rs. }12,00,000$ as capital, and Sameer introduces an additional capital of $\text{Rs. }3,00,000$ on that same date. Interest on partner's capital is provided @ $5\%$ p.a. The amount of interest on the capital of Sameer for the financial year 2019-20 is:

Which section of the Indian Partnership Act, 1932 defines the term "Partnership"?

Arrange the following steps in the correct accounting sequence in the case of dissolution of a partnership:(A) Preparing a Bank account(B) Realizing assets and payments of liabilities.(C) Transferring of assets and liabilities in realization account.(D) Preparation of capital account of partners.Choose the correct answer from the options given below:

Sameer and Yasmin are partners with capitals of $\text{Rs }15,00,000$ and $\text{Rs }10,00,000$ respectively, sharing profits in the ratio of $3:2$. The financial year closes on March 31 every year. They admit Ravi on October 1, 2019. On that same date, Sameer introduces additional capital of $\text{Rs }3,00,000$. If interest on capital is provided at $@5\%\text{ p.a.}$, calculate the amount of interest on Sameer's capital for the financial year 2019–20.

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

John Ibrahim, a partner in Ancient Tours and Travels, withdrew money during the year ending March 31, 2020, from his capital account for personal use. He withdrew $\text{Rs. }3,000$ per month at the beginning of every month. Calculate the interest on drawings that should be charged from John Ibrahim if the rate of interest on drawings is $9\%$ per annum.

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:

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.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 :

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

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.

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 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?

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:

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?

Which of the following is NOT a recognized method for the valuation of goodwill?

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

Ravi, one of the partners, provided a loan of $\text{Rs. }1,00,000$ to the firm. In the absence of a partnership deed, interest on this partner's loan is allowed at what rate?

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.

Based on Case Study 2, what is the value of the Average Profit?

Arrange the steps involved under the super profit method of calculating goodwill in the correct sequence:(A) Calculate the normal profit on the firm's capital on the basis of the normal rate of return(B) Calculate the average profit(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 profitsChoose the correct answer from the options given below:

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.

A and B are partners sharing profits equally with capitals of $\text{Rs. }45,000$ each. They admit C as a new partner for a $\frac{1}{3}\text{rd}$ share in profits. C brings in $\text{Rs. }60,000$ as his capital. Find the value of the firm's total Goodwill based on this transaction.

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

Which combination of statements are false about partnership?(A) Interest on partner's loan is to be given @ 12% p.a. if the deed is silent about the rate.(B) If the deed is silent, interest at the rate of 6% p.a. would be charged on the drawings made by the partner.(C) Methods of settlement of dispute among the partners can't be part of the partnership deed.(D) Each partner carrying on the business is the principal as well as the agent for all the other partners.Choose the correct answer from the options given below:

Which account is credited if the net assets taken over exceed the agreed purchase consideration at the time of purchasing a business?

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

Based on Case Study 2, calculate the final value of Goodwill.

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:

Based on Case Study 2, what is the specific value of the Super Profit?

Dissolution by Court happens when:

"The business of a partnership concern may be carried on by all the partners or any one of them acting for all." Which core feature of partnership does this statement indicate?

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

Which of the following is not included in the Contents of the Partnership Deed?

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

Match List-I with List-II:List-IList-II(A) Compulsory Dissolution(I) A partner persistently commits breach of partnership agreement.(B) Happening of contingencies(II) Death of a partner(C) Dissolution by Court(III) According to contract between the partners.(D) Dissolution by agreement(IV) Business becomes illegalChoose the correct answer from the options given below:

Lalit, Pankaj and Rahul are partners sharing profits in the ratio of $4:3:3$. After all adjustments on Lalit's retirement with respect to general reserve, goodwill, and revaluation etc., the balances in their capital accounts stood at $\text{Rs. }70,000$, $\text{Rs. }60,000$ and $\text{Rs. }50,000$ respectively. It was decided that the amount payable to Lalit will be brought by Pankaj and Rahul in such a way as to make their capitals proportionate to their new profit sharing ratio. After Lalit's retirement, the new profit sharing ratio between Pankaj and Rahul is $1:1$. The new capital of the firm will be:

A and B are partners in a firm with fixed capitals of $\text{Rs. }4,00,000$ and $\text{Rs. }5,00,000$ respectively. After preparing the final accounts, it was discovered that interest on capital @ $10\%\text{ p.a.}$ as provided in the partnership deed was omitted. To rectify this error through an adjustment entry, A's Current Account should be:

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 :

Based on Case Study 2 data, if the normal profit were instead given as $\text{Rs. }60,000$, what would be the revised calculated Normal Rate of Return?

Which Factor does not Affect the Value of Goodwill:

The correct journal entry for transferring interest on capital to the Profit and Loss Appropriation Account is:

Based on Case Study 2, find the value of Normal Profit.

At the time of admission of a partner, undistributed profits appearing in the balance sheet of the old firm are transferred to the capital account of:

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:

Keshav, Nirmal and Pankaj are partners sharing profits and losses in the ratio of $4:3:2$. Nirmal retires and the goodwill is valued at $\text{Rs. }72,000$. Keshav and Pankaj decided to share future profits and losses in the ratio of $5:3$. Gaining Ratio of Keshav and Pankaj is:

Arrange the following steps for calculating Goodwill under Capitalisation of Average Profits Method in correct sequence-(A) Ascertain the actual firm's capital (net assets) by deducting outside liabilities from the total assets.(B) Compute the value of goodwill by deducting net assets from the capitalised value of average profits.(C) Ascertain the average profits based on the past few years' performance.(D) Capitalize the average profits on the basis of the normal rate of return to ascertain the capitalised value of average profits.Choose the correct answer from the options given below: