THE TEACHING HUB

CLASS XII ACCOUNTANCY

CHAPTER 2: THE FUNDAMENTAL OF PARTNERSHIP FIRM

1- Sony and Romy are equal partners with fixed capital’s of Rs. 4,00,000 and Rs.
3,00,000 respectively.After the closing the accounts for the year ending 31st
March, 2021 it was discovered that interest on capital was provided @8%
instead of 10%p.a. in the adjusting entry:
• Sony will be credited by Rs.8,000 and Romy will be credited by Rs. 6,000.
• Sony Will be debited by Rs. 8,000 and Romy will be debited by Rs. 6,000.
• Sony will be debited by Rs.1,000 and Romy will be credited byRs. 1,000
• Sony will be credited by Rs 1,000 and Romy will be debited by Rs 1,000
2- P and Q sharing profits in the ratio of 2:1 have fixed capital’s of Rs. 90,000 and
Rs.60,000 respectively.After the closing the accounts for the year ended 31st
march,2021 it was discovered that interest on capital was provided @6%
instead of 8%p.a.in the adjusting entry:
• P will be credited by Rs 1,800 and will be credited by Rs 1,200;
• P will be debited by Rs 200 and Q will be credited by Rs 200;
• P will be credited by Rs 200 and Q will be debited by Rs 200;
• P will be debited by Rs 1,800 and Q will be debited by Rs 1,200
3- A and B sharing in the ratio of 7:3 have fixed capital’sof Rs 2,00,000 and Rs
1,00,000 respectively.After closing the accounts for the year ending 31st
,march,2021 it was discovered that interest on capital was provided@12%
instead of 10%p.a.In the adjusting entry
• A will be debited by Rs 4,000 and B will be debited by Rs 2,000
• A will be credited by Rs 4,000 and B will be credited by Rs 2,000
• A will be debited by Rs 200 and B will be credited by Rs 200
• A will be credited by Rs 200 and B will be debited by Rs 200
4- A and B are partners in the ratio of 3:2 . Their fixed capital’s are Rs 4,00,000 and
Rs 2,00,000 respectively. After closing the accounts for the year ending 31st
March ,2021 .it was discovered that interest on capital was allowed@12%
instead of 10% per annum .By how much amount A will be debited/credited in
the adjustment entry:
• Rs 1200 (debit)
• Rs 800(credit)
• Rs 800(debit)
• Rs 1200.
5- P,Q and R are equal partners with fixed capital’s of Rs 5,00,000, Rs 4,00,000 and
Rs 3,00,000 respectively.After the closing of the accounts for the year ending
31st March 2021.it was discovered that interest on capitals was provided@7%
instead of 9%p.a. In the adjusting entry:
• P will be credited by Rs 2,000 and Q will be debited by Rs 2,000
• P will be debited by Rs 2,000 and Q will be credited by Rs 2,000
 • P will be debited by Rs 2,000 and R will be credited by Rs 2,000
• P will be credited by Rs 2,000 and R will be debited by Rs 2,000
6- X,Y and Z are partner’s in the ratio of 4:3:2. Salary to X Rs. 30,000 and to Z Rs.
6000 omitted and Profits distributed. For the rectification,now X will be
credited:
• Rs 30,000
• Rs 2,000
• Rs 24,000
• Rs 14,000

True/False

Remembering

1. The nature of Profit and Loss Account is real.

2. Registration of partnership is optional.

3. A body corporate can be a partner in partnership firm.

4. Sleeping partner are those who do not take part in conduct of

the business.

Understanding

5. When the Partnership agreement is silent about the

treatment of interest on capital then it will be

Treated as charge on profit.

6. Fixed capital always shows Debit balance.

7. When a partnership firm gives loan to its partner then interest

on loan will be debited in profit and Loss account.

8. In case of fixed capital account method drawing out of capital

is shown in partner current Account.
 9. Manager’s commission is shown in Profit and Loss
Appropriation Account.

10. Interest as a charge means interest on capital is to be allowed

whether the firm has earned profit Or incurred loss.

11. In the absence of partnership deed mutual relations are

governed by the Indian partnership act 2013.

12. Capital in the beginning is calculated by subtracting drawing

and adding profit distributed.

Application

13. Drawing against capital means drawing by a partner out of

his/her expected share in the profit of The current year.

14. The net profit of the firm is Rs. 8,00,000 partners are entitled
to salary Rs. 1,00,000 p.a. if 10% of Divisible profit to be
transferred to general reserve then amount will be Rs. 80,000.