Worksheet 1.

(Term 1 Revision)
Ch 1- Fundamentals of Partnership firm
Multiple choice Questions:
1. Profit and Loss Appropriation account is prepared to_________
(a) Create a Reserve Fund
(b) Find out the Net profit
(c) Find out the divisible profit
(d) None of the above
2. Which of the following is an appropriation of profits:
(a) Interest on loan (b) salary to the manager (c) rent (d) interest on partner’s capital.
3. What is the meaning of mutual agency in a partnership firm?
(a) The firm will carry on a lawful business
(b) The partners will share the profit/ losses of the business
(c) Business may be carried on by all the partners by all the partners or by any one acting for all
(d) None of these
4. A and B are partners in a firm. The net divisible profit as per Profit and loss appropriation account is
Rs. 2,50,000. The total interest on Partners drawings were Rs. 4,000. A is entitled to a salary of Rs.
4,000 per quarter and B Rs. 40,000 per annum. The net profit / loss earned during the year is:
(a) Rs. 2,90,000 (b) Rs. 3,02,000 (c) Rs. 2,10,000 (d) Rs. 3,08,000
5. Z is a manager in a partnership firm and is entitled to receive a salary of Rs. 8,000 per month and a
commission on 5% on Net profit after charging such commission. Profit for the year is Rs.13,56,000
before charging salary and commission. The total remuneration of Z is
(a) Rs. 1,50,000 (b) Rs. 96,000 (c) Rs. 1,66,000 (d) Rs. 1,56,000
6. Devansh, a partner withdrew Rs. 24,000 during the year. The deed provides for interest on drawings
to be charged at 10%. The interest on Devansh drawings will be
(a) Rs. 1500 (b) Rs. 900 (c) Rs. 1200 (d) Rs. 1800
7. Pick the odd one out, with respect to Fixed capital account:
(a) Capital introduced (b) Capital withdrawn (c) Interest on capital (d) None of these

Note: In the given questions, (Q no. 8 to Q no. 11) a statement of Assertion followed by a
statement of Reason is given. Chooose the correct answer out of the following choices.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explaination of
Assertion (A)
(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explaination of
Assertion (A)
(c) Assertion (A) is true but Reason (R) is False.
(d) Assertion (A) is false but Reason (R) is true.

8. Assertion (A): Partnership deed is a legal document signed by all the partner.
Reason (R) : Any type of charitable institution running as a Not for profit organization will not be
considered as a business.

9. Assertion (A): The Capital account of the partner, in Case of fixed Capital method , always shows a
credit balance inspite of consistent losses.
Reason (R) : All losses are debited to current account of the partners ,so capital account do not
show debit balance.

10. Assertion (A): Partnership comes into existence a s a result of agreement among the partners.
Reason (R) : The partnership act lays that the agreement must be in writing.

11. Assertion (A): The firms profit and losses are to be shared equally by all the partners.
Reason (R) : The partners must share profits and losses of the business.
 Read the following hypothetical text and answer the following questions.
Amit and Mahesh were partners in a fast food corner, sharing profits and losses in the ratio 3:2. They
sold fast food items across the counter and did home delivery too. The initial fixed capital
contribution was Rs. 1,20,000 and Rs. 80,000 respectively. At the end of the first year their profit
was Rs. 1,20,000 before allowing the remuneration of Rs. 3000 per quarter to Amit and Rs. 2000 per
half year to Mahesh. Such a promising performance was encouraging, therefore they decided to
expand the area of operations.
For this purpose they need a delivery van, a few scooty’s and an additional person to support. Six
months of the accounting year they decided to admit Sundaram as a new partner and offered him 20
% as a share of profits along with a monthly remuneration of Rs.2,500.
Sundaram was asked to introduce Rs. 1,30,000 for Capital and Rs. 70,000 for Premium of Goodwill.
Besides this Sundaram was required to provide Rs. 1,00,000 as loan for 2 years., Sundaram readily
excepted the offer. The terms of the offer were duly executed and he was admitted as a partner.
12. Remuneration will be transferred to __________ of Amit and Mahesh at the end of the accounting
period.
(a) Capital account (b) Loan account (c) Current account (d) None
13. Upon the admission of Sundaram the sacrifice for providing his share of profit is done:
(a) By Amit only. (b) By Mahesh only (c) By Amit and Mahesh equally (d) by Amit and Mahesh
in the ratio 3:2
14. Sundaram will be entitled to a remuneration of ____ at the end of the year.
(a) Rs. 15,000 (b) Rs. 18,000 (c) Rs. 24,000 (d) Rs. 30,000
15. While taking up the accounting procedure for this reconstitution the accountant of the firm, Mr. Suraj
faced a difficulty. Solve it by answering the following.For the amount of loan that Sundaram had
agreed to provide , he is entitled to interest at the rate of
(a) 5% p.a (b) 6% p.a (c) 6.5% p.a (d) nil

Read the hypothetical text and answer the questions:

Sonia and Rajiv are partners sharing profits in the ratio 3:2 with Capital of Rs. 5,00,000 and Rs.
3,00,000 respectively. Interest on capital is agreed at 6% p.a. Rajiv is to be allowed an annual salary
of Rs. 25,000. During the year 2021 , the profits prior to the calculation of interest on capital but
after charging Rajiv’s salary amounted to Rs. 1,25,000. A provision of 5% of the profit is to be made
in respect of commission to the manager .
16. The net profit to be credited to the profit and loss appropriation account is
(a) Rs. 1,20,000 (b) Rs. 1,60,000 (c) Rs. 1,50,000 (d) Rs. 2,40,000
17. The total interest on capital due to the partners is
(a) Rs. 48,000 (b) Rs. 52,000 (c) Rs. 58,000 (d) Rs. 39,000
18. The manager is entitled a commission of
((a) Rs. 8,000 (b) Rs. 7,500 (c) Rs. 8,200 (d) Rs,6,400
19. The share of profit transferred to Sonia’s Capital account is
(a) Rs. 48,000 (b) Rs. 41,700 (c) Rs. 38,200 (d) Rs. 36,000
20. The Share of profit transferred to Rajiv’s capital account is
(a) Rs. 8,000 (b) Rs. 27,800 (c) Rs. 28,200 (d) Rs. 6,400

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