Partnership Questions

$A$ and $B$ are partners sharing profits in the ratio of $2:1$. $C$ is admitted for a $\frac{1}{4}\text{th}$ share of profits, bringing $\text{Rs. }20,000$ as capital. After all adjustments related to goodwill, revaluation of assets, and reassessment of liabilities, the adjusted capitals of $A$ and $B$ are $\text{Rs. }45,000$ and $\text{Rs. }15,000$ respectively. It is agreed that the partners' capitals should be arranged in proportion to the new profit-sharing ratio. Determine the required new capital of partner $B$.

In the case of the Dissolution of a 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:

Find the right chronological sequence of the appropriation of profits in a partnership firm:A. Profits transferred to P and L appropriation A/c.B. Interest on capitalC. Profits distributed to partners after appropriationD. Interest on partner's loan A/cChoose the correct answer from the options given below:

K, N and P are partners sharing profits and losses in the ratio of $4:3:2$. N retires and the goodwill is valued at $\text{Rs. }72,000$. K and P decided to share future profits and losses in the ratio of $5:3$. Find which of the following statements is not correct?

The contents of a Partnership Deed include which of the following?A. Names and addresses of all partnersB. Method for settlement of disputes among partnersC. A mandate stating the deed once made cannot be altered under any scenarioD. Rules regarding the operation of the firm's Bank accountE. A rule that only verbal agreements between partners qualify as a formal deedChoose the correct answer from the options given below:

When the total amount withdrawn is given but the date of withdrawal is not given then interest on drawings is charged for a period of:

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

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:

Match List-I with List-II:List-IList-II(A) Admission of a New Partner(I) Realisation Account(B) Retirement of a Partner(II) Sacrificing ratio(C) Dissolution of Partnership(III) Executors Account(D) Death of A Partner(IV) Gaining RatioChoose the correct answer from the options given below:

A partnership can have maximum $50$ partners. This limit has been set by the:

One of the partners took-over furniture at the time of dissolution of the firm, which account will be debited?

When the date of drawing is not specified, interest on drawings is calculated for:

The journal entry for treatment of goodwill, when a new partner brings his share of goodwill in cash and one of the old partners gains, involves the following:(A) Gaining Partner’s Capital Account is debited(B) Premium for Goodwill Account is debited(C) Sacrificing Partner’s Capital Account is credited(D) Gaining Partner’s Capital Account is credited Choose the correct answer from the options given below:

X, Y, Z are partners who decided to dissolve their firm. Realisation expenses were to be borne by Y for which he was to be given remuneration of Rs. $10,000$. Actual expenses were Rs. $12,000$. How much amount will be transferred to Y's Capital A/c for it?

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

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.

The adjustment required for overvaluation of closing stock, while calculating adjusted profit for calculating goodwill is:(A) Reduction from concerned year's profit.(B) Reduction from next year's profit.(C) Addition to next year's profit.(D) Addition to previous year's profit. Choose the correct answer from the options given below:

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

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

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:

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

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

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:

Gitansh withdrew Rs. $5000$ pm at the end of every month for ten months. Interest on drawing is charged @ $10\%$ p.a. Gitansh's interest on drawings is :

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 $\text{Rs. }40,000$ on N's admission. N will have to pay for Goodwill:

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:

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

Section 49 of the Indian Partnership Act, 1932 deals with:

$A$, $B$ and $C$ are partners sharing profits in the ratio of $3:2:1$. $C$ died on 1st July, 2023. On this date, final accounts were prepared to ascertain profits for the period. It resulted in a profit of $\text{₹ }1,75,000$ to the firm. To give effect to the above:

Case StudyRead the following information to answer.Arun and Ram are partners in a restaurant business sharing profits and losses in capital ratio. Their fixed capital from the beginning of the firm was Rs. $2,00,000$ and Rs. $1,50,000$ respectively.The profit for the year ended 31 March 2022 before the appropriation of Salary and Interest on Capital was Rs. $2,20,000$. Ram is allowed a salary of Rs. $2,000$ per quarter and interest on capital @ $10\%$ p.a.Due to the further expansion of the business, they decided to enter Sanjeev as a new partner for $\frac{1}{5}$ share in profits. It was agreed that Sanjeev will bring Rs. $1,00,000$ as capital and Rs. $50,000$ as his share of Goodwill. It was decided that he will give Rs. $1,00,000$ as loan to the firm for 3 years.Interest on capital will be shown on the Dr. side of Profit and Loss Appropriation A/c and ________ side of Partner's ________ A/c.

By virtue of which section of the Indian Partnership Act 1932, partnership is defined as 'the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all'.

Naveen, Suresh and Tarun are partners sharing profits and losses in the ratio of $5:3:2$. Tarun retires from the firm and his share was taken over by Naveen and Suresh in the ratio $2:1$. In such a case, the new profit sharing ratio will be:

$A$, $B$ and $C$ are partners sharing profits in the ratio of $3:3:4$. They decide to share the future profits equally. The sacrifice or gain of partners are:

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:

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:

In case there is no information regarding the acquisition of a share in profit of the retiring/deceased partner by the remaining partners, the assumption is that they will acquire his/her share in the:

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:

At the time of retirement of a Partner the remaining gaining partners should compensate the ______

For distribution of profits among the partners, the following account is debited to allocate profits to the partners:

Kavita and Lalita are partners, sharing profits in the ratio of $2:1$. They decide to admit Mohan for $1/4\text{th}$ share in future profits with a guaranteed amount of $\text{₹ }25,000$. Both Kavita and Lalita undertake to meet the liability arising due to the guaranteed amount to Mohan in their respective profit-sharing ratio. The firm earned profits of $\text{₹ }76,000$ for the year 2022–23. The deficiency borne by Kavita is:

Match List-I with List-II:List-I (Transaction)List-II (Relevant account)(A) Settlement of Partners Loan(I) Credit side of Realization A/c(B) Transfer of liabilities(II) Partner's Capital will be credited(C) Transfer of Assets(III) Credit Side of Bank A/c(D) Remuneration payable to partner(IV) Debit Side of Realization A/cChoose the correct answer from the options given below:

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:

Which of the following indicates a situation of compulsory dissolution?

The Deceased Partner’s Capital Account includes which of the following amounts/balances prior to final settlement?(A) Opening balance of his capital(B) His share of profit/loss till the date of death(C) His share of General Reserve(D) His drawings till the date of death(E) Amount paid to his executors Choose the correct answer from the options given below:

Case StudyRead the following information to answer.Arun and Ram are partners in a restaurant business sharing profits and losses in capital ratio. Their fixed capital from the beginning of the firm was Rs. $2,00,000$ and Rs. $1,50,000$ respectively.The profit for the year ended 31 March 2022 before the appropriation of Salary and Interest on Capital was Rs. $2,20,000$. Ram is allowed a salary of Rs. $2,000$ per quarter and interest on capital @ $10\%$ p.a.Due to the further expansion of the business, they decided to enter Sanjeev as a new partner for $\frac{1}{5}$ share in profits. It was agreed that Sanjeev will bring Rs. $1,00,000$ as capital and Rs. $50,000$ as his share of Goodwill. It was decided that he will give Rs. $1,00,000$ as loan to the firm for 3 years.The amount of distributed profits of both the partner's will be:

Case StudyRead the following information to answer.Arun and Ram are partners in a restaurant business sharing profits and losses in capital ratio. Their fixed capital from the beginning of the firm was Rs. $2,00,000$ and Rs. $1,50,000$ respectively.The profit for the year ended 31 March 2022 before the appropriation of Salary and Interest on Capital was Rs. $2,20,000$. Ram is allowed a salary of Rs. $2,000$ per quarter and interest on capital @ $10\%$ p.a.Due to the further expansion of the business, they decided to enter Sanjeev as a new partner for $\frac{1}{5}$ share in profits. It was agreed that Sanjeev will bring Rs. $1,00,000$ as capital and Rs. $50,000$ as his share of Goodwill. It was decided that he will give Rs. $1,00,000$ as loan to the firm for 3 years.The new profit sharing ratio of Arun, Ram and Sanjeev will be:

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.

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

Which of the following characteristics is highlighted in the statement: "He can bind other partners by his acts and also is bound by the acts of other partners with regard to the business of the firm."

The accumulated profits and reserves existing at the time of admission of a new partner are transferred to:

Which of the following would affect the Revaluation Account at the time of reconstitution of a partnership firm?

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

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:

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

The central government has prescribed the maximum number of partners in a firm to be _________ under Rule 10 of the companies (Miscellaneous) Rules, 2014.

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:

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:

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

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

$A$ 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?

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

Match List-I with List-IIList-I (Revaluation Event)List-II (Journal Entry)(A) For increase in the value of an asset(I) Revaluation A/c Dr. To Asset A/c(B) For reduction in the amount of a liability(II) Revaluation A/c Dr. To Liability A/c(C) For reduction in the value of an asset(III) Asset A/c Dr. To Revaluation A/c(D) For appreciation in the amount of a liability(IV) Liability A/c Dr. To Revaluation A/cChoose the correct answer from the options given below:

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

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

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

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

$R$ 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:

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

$A$, $B$ and $C$ are partners sharing profits in the ratio of $3:2:1$. $A$ retires and his share is taken up by $B$ and $C$ in the ratio of $3:2$. Calculate the new profit sharing ratio.

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.

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:

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

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.

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:

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

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:

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.

Rani, Sandhya and Kangana are partners sharing profits in the ratio of $4:3:2$. Rani retires. Sandhya and Kangana decided to share profits in future in the ratio of $5:3$. Gaining ratio of Sandhya and Kangana will be

Which of the following statement is true ?

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

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

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

When a new partner is admitted, the increase in the value of the assets is debited to which account?

Torsha started a business with ₹ 2250 while Trisha invested ₹ 2880 after a few months. If the end-of-12-months (from Torsha's investment) profit is shared by Torsha and Trisha in the ratio 25: 24, for how many months did Trisha stay invested?

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

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?

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:

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:

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.

The clauses of a partnership deed can be altered with the consent of ______

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:

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.

In partnership, a minor can be partner:

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?

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:

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

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 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:

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.