MCQS (c) Current A/c (T)

EACH QUESTIONS HAS FOUR POSSIBLE ANSWERS CHOOSE THE CORRECT ANSWER: (T) (d) Profit & Loss
Means TRUE Answer (11)
(1) An ordinary partnership business can have: Partnership business in Pakistan is government by partnership Act of:
(a) Not more than 50 partners.
(b) Not more than 20 partners. (T) (a) 1913
(c) Any number of partners. (b) 1932 (T)
(d) Any number than 2 partners. (c) 1984
(d) 1928
(2)A banking partnership business can have: (12)
(a) Not more than 10 partners. (T) The members of partnership firm are individually called as:
(b) Not more than 20 partners.
(c) Not more than 50 partners. (a) Director
(d) Any number of partners. (b) Investor
(c) Partner (T)
(3)In the absence of an agreement profit and loss are divided by partners in the ratio of: (d) Manager
(a) Capital (13)
(b) Equally (T) The object of partnership is to:
(c) Time devoted by each partners.
(d) None of these. (a) Earn profit (T)
(b) Not to earn profit
(4)In the absence of an agreement, Interest on loan advanced by the partner to the firm is allowed at the rate of: (c) Welfare of members
(a) 6% (T) (d) None of these
(b) 5% (14)
(c) 12% Liability of partners in a partnership business is:
(d) 9%
(a) Limited
(5) Current accounts of the partners should be opened when the capitals are: (b) Un-limited (T)
(a) Fluctuating (c) Limited & unlimited
(b) Fixed (T) (d) None of these
(c) Either fixed or fluctuating (15)
(d) None of these Capital of the partners are maintained by:

(6) Investment in partnership is made by introducing: (a) Fixed capital method.

(a) Cash (b) Fluctuating capital methods.
(b) None – cash assets (c) By any two above methods. (T)
(c) Cash or non – cash assets (T) (d) None of them.
(d) None of these. (16)
Drawings of the partners are:
(7) Partnership is formed by the partners by:
(a) Written agreement (a) Debited to profit & loss A/c
(b) Oral agreement (b) Credited to profit & loss A/c
(c) Written or oral (T) (c) Credited to capital A/c
(d) None of these (d) Debited to capital A/c (T)
(8) (17)
Any partner who investments in the business but does not take active part in the business is: A partners has to pay interest on drawings what is the entry in the personal A/c of the partner?

(a) Secret partner (a) Credit partners capital A/c

(b) Sleeping partner (T) (b) Credit partners current A/c
(c) Active partner (c) Debit the partners current A/c
(d) Nominal partner (d) Debit partners current A/c (T)
(9) (18)
The written agreement of partnership is called: Salary paid to partner should be:

(a) Partnership deed (T) (a) Debited to his current A/c

(b) Articles of association (b) Credited to his current A/c
(c) Memorandum of association (c) Credited to profit & loss appropriation A/c
(d) Certificate of incorporation (d) None of above (T)
(10) (19)
Under fixed capital methods, profit will be credited to: Interest on capital Account:

(a) Capital Account (a) Debited to profit & loss A/c

(b) Drawings (b) Credit to profit & loss A/c
(c) Debit to profit & loss and credited to partners capital A/c. (T) (c) With the consent of any one of the partners
(d) Only credited to partners capital A/c. (d) Without consent of old partners
(28)
ADMISSION OF PARTNER At the time of a new partner Good will:
(20)
At the time of admission of a new partner the firm is: (a) Belongs to all partners, new and old
(b) Belongs only to the new partners who is going to be admitted.
(a) Dissolved (T) (c) Belongs only to the old partner who have credited it (T)
(b) Continued (d) None of the above.
(c) Not effected (29)
(d) RE-organized In the revaluation account a decrease in the value of plant and machinery:
(21)
At the time of admission an incoming partner contributes as goodwill: (a) Appears on the debit side. (T)
(b) Appears on the credit side.
(a) In cash (c) Appears on the debit side of good will account
(b) Does not pay cash (d) Does not appear at all
(c) May or may not pay cash for good will (T) (30)
(d) None of these. In the revaluation account an increase in the value of land and building:
(22)
Good will is valued as two years purchase of the average profits of three previous years are Rs. 15000, the value (a) Appears on the debit side
of good-will be: (b) Appears on the credit side (T)
(c) Appears on the credit side of good will account
(a) Rs. 15000 (d) Does not appear at all
(b) Rs. 30000 (T)
(c) Rs. 20000
(d) Rs. 50000
(23) RETIREMENT OF PARTNERS
Value of good will agreed upon Rs. 30000 on C,S admission and allowing him ¼ share of total profit Good will (31)
is brought in cash, the amount of good-will be as: The partnership may come to an end due to the:

(a) Rs. 30000 (a) Death of a partner

(b) Rs. 7500 (T) (b) Insolvency of partner
(c) Rs. 150000 (c) By giving notice
(d) Rs. 120000 (d) All of the above (T)
(24) (32)
Good will of the firm is valued Rs. 30000. C an incoming partner purchase ¼ share of total profit Good will be In case of retirement of a partner full good will is credited to the accounts of:
raised in the books.
(a) All partners (T)
(a) Rs. 30000 (T) (b) Only retiring partner
(b) Rs. 7500 (c) Only remaining partner
(c) Rs. 120000 (d) None of the above
(d) Rs. 7000 (33)
(25) Revaluation account is operated to find out gain or loss at the time of:
An incoming partner pays his share of good will in cash, and profit sharing ration of old partner is changed,
Good – will be distributed among old partners: (a) Admission of a partner
(b) Retirement of a partner
(a) As their old profit ratio (c) Death of a partner
(b) According to new ration (d) All of above (T)
(c) According to sacrifice ratio (T) (34)
(d) None of these Partners equity is effected due to:
(26)
At the time of admission of a new partner, general reserve is: (a) Retirement of a partner
(b) Admission of a partner
(a) Debited to capital of old partners (c) Death of a partner
(b) Credited to capital of old partners. (T) (d) All of above (T)
(c) Allowed to remain is balance sheet (35)
(d) Debited to current account The accounting procedure at the retirement of partner is valued:
(27)
A new partner may be admitted to a partnership: (a) Revaluation of assets and liabilities
(b) Ascertaining his share of good will
(a) With the consent of all partners (T) (c) Finding the amount due to him
(b) With the consent of two third of old partners (d) All of above (T)
(36)
If the remaining partner want to continue the business, after the retirement of a partner, a new partnership (c) Non cash assets are transferred to realization A/c (T)
agreement: (d) Only liquid and current asset are transferred to realization A/c
(45)
(a) Necessary (T) At the time of dissolution non – cash assets are credited with:
(b) Not necessary
(c) Optioned (a) Market value
(d) None of above (b) Book value (T)
(37) (c) As the agreed amount among the partners
An account operated to ascertain the loss or gain at the death of a partner is called: (d) Cost or market which ever is low
(46)
(a) Realization account If a partner takes over an asset of the firm, his capital account:
(b) Revaluation account (T)
(c) Execution account (a) Will be debited with the amount as agreed (T)
(d) Deceased partner A/c (b) Will be credited with the market value of the asset
(38) (c) Will be debited with book value of the asset
Amount due to out going partner is shown in the balance sheet as his: (d) None of above
(47)
(a) Liability Loss on realization is distributed among partners:
(b) Asset
(c) Capital (a) According to profit and loss ratio (T)
(d) Loan (T) (b) According to capital ratio
(39) (c) As decided among them
The loss or gain an account of revaluation at the time of retirement of a partner is shared by: (d) None of above
(48)
(a) Remaining partners Loss on realization is:
(b) Retiring partner
(c) All partners (T) (a) Debited to partners capital A/c (T)
(d) None of above (b) Credited to partners capital A/c
(40) (c) Debited to realization A/c
On the retirement of a partner any reserve being should be transferred to the capital account of: (d) Credited to realization A/c
(49)
(a) All partners in the old profit sharing ratio (T) When all partners are insolvent creditors will be:
(b) Remaining partners in the new profit sharing ratio
(c) Neither the retiring partner, nor the remaining partner (a) Paid fully
(d) None of above (b) Paid rate ably (T)
DISSOLUTION OF PARTNERSHIP (c) Taken over by the partners
(41) (d) Paid by government
Retirement or death of a partner. (50)
The persons who have entered into a partnership business are individually called:
(a) Is dissolution of partnership agreement (T)
(b) Is dissolution of a firm (a) Realization A/c (T)
(c) May or may not be a dissolution of partnership agreement (b) Partners capital A/c
(d) None of above (c) Sundry debtors
(42) (d) Provision for bad debts A/c
If all the partners, but one are insolvent it is: (51)
The persons who have entered into a partnership business are individually called:
(a) Dissolution of an agreement
(b) Dissolution of firm (T) (a) Vender
(c) May or may not cause dissolution (b) Agents
(d) None of above (c) Partners (T)
(43) (d) A firm
If all the partners, but one, are solvent it is: (52)
If no provision is made in agreement regarding the duration of the partnership:
(a) Dissolution of partnership agreement
(b) Dissolution of firm (T) (a) Limited partnership
(c) May or may not cause dissolution (b) Partnership at – will (T)
(d) None of above (c) None
(44) (d) Particular partnership
At the time of dissolution: (53)
A person who declares by word of mouth as partner of the firm is called:
(a) All the assets are transferred to realization A/c
(b) Only current assets are transferred to realization A/c (a) Active partner
(b) Estople partner (T)
(c) Dormant partner (c) Both (Cr.) & (Dr.)
(d) Nominal partner (d) Neither (Dr.) & (Cr.)
(54)
A person who receives a share of profits from one of the regular partner is called:

(a) Secret partner

(b) Quasi (63)
(c) partner in profit only Revolution A/c is a:
(d) Sub – partner (T)
(55) (a) Real A/c
The agreement among partners which set out the terms on which they had agreed to form a partnership is called: (b) Personal A/c
(c) Cash A/c
(a) Partnership deed (T) (d) Nominal A/c (T)
(b) Partnership at – will (64)
(c) None of these When good will is brought in cash by new partner, method is known as:
(d) Arbitration clause
(56) (a) Premium method (T)
Every partner has a right to be consulted in all matters affecting the business of: (b) Revolution method
(c) Memorandum revolution method.
(a) Sole – tradership (d) None
(b) Partnership (T) (65)
(c) JSC Section 37 of partnership act provided interest on the amount left by retiring or decreased partner at:
(d) Both (a) and (b)
(57) (a) 5%
For the firm interest on drawing is: (b) 10%
(c) 6% (T)
(a) Expense (d) bank rate
(b) Income (T) (66)
(c) Liability When a partner dies, firm will receive the:
(d) None
(58) (a) 1/2 amount of policy
A credit balance on a partner’s current A/c is. (b) 1/4 amount of policy
(c) 3/4 amount of policy
(a) Fixed capital (d) Full amount of policy (T)
(b) Part of capital (T) (67)
(c) A current asset At the time of dissolution all the assets of firm are transferred to the realization A/c:
(d) Long – term liability
(59) (a) Market value
Upon the sale of an established business its good will: (b) Book value (T)
(c) Cost value
(a) Marketable value (T) (d) Bale value
(b) Not marketable value (68)
(c) (b) and (c) Balance of realization A/c is transferred to the capital A/c of the partners in:
(60)
Old profit sharing ratio minus new profit sharing ration is equal to: (a) Capital ratio
(b) Profit sharing ratio (T)
(a) Sacrificing ratio (T) (c) Interest ratio
(b) Ratio of gain (d) Equally
(c) Capital ratio (69)
(d) None The decision is Garner Vs Murray was given in:
(61)
A is drawing Rs. 500 regularly on the 16th of every month, he will have to pay interest in a year on Rs. 6000 for (a) 1904 (T)
the total period of @ given rate of interest): (b) 1905
(c) 1933
(a) 5 months (d) 1804
(b) 6 months (T)
(c) 7 months
(d) 12 months
(62)
For any decrease in the value of liability, revolution A/c is to be:

(a) Debited
(b) Credited (T)