ceases Multiple Choice Questions (MCQs) Sa toi ed aaa aL Multipl hol itlons (MCQs) Select the correct alternative: 1. Partnership is an association of or more persons. @® two ® seven © ten @ twenty The relationship between persons who have agreed to share profits of a business carried on by all or any of them acting forall is known as @® Partnership. ® Joint Venture © Association of persons. @ Body of Individual. Feature of partnership firm is @® Two or more persons carrying common business under an agreement. © Profits and losses are shared in agreed ratio or as provided in the Partnership Act, 1932 © Business is carried on by all or any of them acting for all. @ Ailof the above. 4, The written agreement among the partners is called ® Partnership Deed. ® Partnership bye-laws. © Partnership Constitution. @® a contract. 5. The liability of the partners in a partnership firm under Indian Partnership Act, 1932 is @ Limited. © Unlimited. : © No tiabilty. @© Depending on the situation 6. Interest on Capital is allowed on @ the opening capital. © the capital at the year end. © average capital of the year. @ the capital for the period capital remains invested in the business 7. Inthe absence of the Partnership Deed, Interest on Capital @ isallowed @ 6% per annum. © is allowed @ 10% per annum. © is allowed at the borrowing rate. @ is not allowed. ‘Scanned with CamScanneeAn Aid to Accountancy —CBSE x1 MCQ.2 Is charged rent, Interest on drawings of a partner 8. Inthe absence of Partnership Agreem icin @ @ 8% per annum. @ No interest is charged. (CBSE; Foreign 2015 © @ 12% per annum. 9. Inthe absence of Partnership Deed, interest on loan of a partner is allowed In @ @ 8% per annum © © 6% per annum © No interest is allowed @ @ 12% per annum 10. In the absence of Partnership Deed, profit ofa firm is distributed among the partners @ inthe ratio of capital. © Equally. © in the ratio of time devoted for the firm's business. according to the managerial abilities of the partners. (CBSE 2015) 9 ‘V1. In the absence of agreement, partners are entitled to @ Salary. ® Commission, © Interest on Loans and Advances. @ Profit Share in Capital Ratio. 12. As per Indian Partnership Act, 1932, if Partnership Deed does not exist Partners get per @ Salary. © Interest on Capital. © Equal Profit share. © Commission. 13. Relationship between the partners is of ® Close relatives, © Agent and Principal Junior-Senior Relationship. Senior-Subordinate Relationship, ip. 14. Inthe absence of specific provision in the partnership deed, as to sak lary and remuneration, amount payable to him as salary and remuneration will be @® %15,000 pm. ® 720,000 pm. © 710,000 p.m. @ Nil. 15. Profit and Loss Appropriation Account s prepared by ® Sole trader firm, ® Partnership firm. © Both (a) and (b). @ None of these. 16. In the absence of an agreement to the contrary, the partners are @ eentitied to interest @ 656 pa. on their capitals, only if there are profits. © entitled to interest @ 9% pa. on their capitals, only if there are Profits, © entitled to interest.on thei Capitals at the bank rate, only if there are profits, @ not entitled to interest on their capitals. 117. Profit and Loss Appropriation Account is prepared to @ Distribute the profit and loss for the year among the partners. © ‘Settle the dispute among the Partners. © Determine the profit remaining for distribution for the year after appropriation. @ Distribute the profit for the year among the partners, 18. Which ofthe following items is not dealt through Profit and Loss ‘Appropriation Account? @ Interest on Partner's Loan © Partner's Salary © Interest on Partner's Capital @ Partner's Commission (CASE Sample Paper 2019) ‘Scanned with CamScanneeMultiple Choice Questions MCO.3 19. The item that will not be shown in the debit of Profit and Loss Appropriation Account Is. @® Interest on Capital ® Commission to a partner © Interest on Drawings @ Salary to partners 20. Pick the odd one out of the following: @® Rent to Partner, ® Manager's Commission. © Interest on Partner's Loan. @ Interest on Partner's Capital, (CBSE Sample Paper 2020) 21, Current Accounts of partners are maintained if ® aapitals are fixed. ® capitals are fluctuating. © capitals are fixed or fluctuating. @ Its decided by the Partners, 22. In case of fixed capitals, partners will have @® credit balances in their Capital Accounts. © debit balances in their Capital Accounts. © credit or debit balances in their Capital Accounts. @ credit balance or nil balance in their Capital Accounts. 23. In case of fixed capitals, interest on capital @ is credited to Partner's Capit © is credited to Partner's Current Account. © may be credited to Partner's Capital or Current Account. @ is debited to Partner's Capital Account. I Account. 24. Which Capital accounts with balances always show a credit balance? @® Fixed ®© Fluctuating © Normal @© Real 25. Vidit and Seema were partners ina firm sharing profits and losses in the ratio of 3:2. Their capitals were % 1,20,000 and Z 2,40,000 respectively. They were entitled to interest on capital @ 10%. The firm earned profit of € 18,000 during the year. The interest on Vidi's capital will be ® 12,000. © % 10,800. © F7,200. @ 76,000. (CBSE 2020) 26. Which of the following is not an essential feature of partnership? @ An agreement, oral or written, should exist among the partners. ® Agreement should be to carry on lawful business, © All the partners should contribute capital in the firm. @ There should be at least two partners. 27. A manager gets 5% commission on net profit after charging such commission. Gross profit & 5,80,000 ‘and expenses of indirect nature other than manager's commission are % 1,60,000. Commission amount will be @® €21,000. ® 720,00. © 715,000. @ % 22,000. ‘Scanned with CamScanner~~ TZ MCQ4 An Aid to Accountancy —CBSE XII 28. X and ¥ are partners sharing profits equally. Z was manager who received the salary of & 8,000 pm, in addition to commission of 5% on net profit after charging such commission. Profit for the year is 2 13,56,000 before charging salary. Find the total remuneration of Z. @® 1.560000. ® %1,76000. © 71,52,000. @ 71,7400. 29. Partners have to pay interest on withdrawals (in cash or kind) only when provided by the @ Partnership Act. © Partnership Deed, © (2) and (b) above. @ None of these. 30. Where is Interest on Drawings shown in the Final Accounts of the firm? @ Debit side of Profit and Loss Appropriation A/c. (6) Credit side of Profit and Loss Appropriation A/c, © Credit side of Profit and Loss A/c. @ Debit side of Capital/Current A/c only. 31. Ram and Mohan are partners. They draw for personal use € 6,000 and % 4,000 respectively. Interest is chargeable @ 6% pa. on Drawings. What is the interest on drawings? ® Ram % 180 and Mohan @ 120. ® Ram T 360 and Mohan & 240, © Ram & 30 and Mohan € 20. @© None of these. 32. Mohan draws % 10,000 p.m. on last day of every month for his personal use. If interest is to be charged @ 5% pa, interest chargeable from him in accounting year will be @® %3,250. ® £2750. © 73,000. @ 73500. 33. Mohan draws € 5,000 regularly on the 15th of every month, for his personal use. Interest is payable for the year on drawings of € 60,000 (at a given rate of interest) for a total period of ® 5 Months. © 6 Months. © 7 Months. @ 6% Months. 34. If equal amount is withdrawn in the beginning of each month for personal use, period for which interest will be charged will be @ 7 Months. ® 6 Months. © 5 Months. @ 65 Months. 35. Partner's Drawing Account is closed ® by transfer to credit side of the Capital Account. ®© by transfer to credit of Current Account. © either (a) or (b). @ by transfer to debit side of Capital or Current Account. 36, Product method is used for calculation of @® Distribution of Profit and Loss. © Distribution of Revaluation profit or loss. © Interest on Drawings. @ Interest on Capital. 37, Interest on Drawings of the partner is a @ Loss to the firm. © Gain (profit) to the firm. © Gain (Profit) to partners. @© boss to bank. ‘Scanned with CamScannerMultiple Choice Questions MCO.5 39. a 42. 43, 45, 46. Interest on Capital of partner is a ©@ Loss to the firm. ® Gain (Profit) to the firm. © Loss to partners @ Loss to tax department. |Fequal amounts are withdrawn in the beginning of each month throughout the year, interest on drawings Is calculated as Rate | 6: ® Total Drawings x ue ® Total Drawings x 700 "12 Rate 5 Total Drawings x Rate Total Drawings x “2° x — © ti ® 8 00 * 12 ‘Mohan, a partner, withdraws & 20,000 on 1st April, 2020 and ¥ 40,000 on 1st October, 2020. Interest on Drawings @ 6% p.a. on 31st March, 2021 will be @ F200. ® 73,600. © 1,800. @ 71,200. Atul, Vipul and Prafful are partners in a firm without a partnership deed. Prafful demands interest on loan Of % 20,000 advanced by him at the market rate of 12%. The amount of interest received by him will be ® F200. ® nit © F 1,200, @ %3,600. Ifthe date of drawing is not given, interest on Total Drawings is calculated for @® 4 Months. © 5 Months. © 6 Months. @ 1 Year. Ram and Shyam are partners sharing profits and losses equally. Financial Statements are prepared for the year ended 31st March, 2021, which show a profit of & 1,50,000 before allowing interest on a loan of 50,000 from Shyam @ 10% pa. Each partner is entitled to salary as follows: Ram %15,000 per annum Shyam % 10,000 per annum What is Ram's total appropriation of profit for the year ended 31st March, 20217 ® 777,500. © 70,000. © 775,000. @© 780,000. A and B are partners with the capital of & 2,00,000 and & 1,00,000 respectively. Interest payable on capital is 10% pa. Determine interest on capital for both the partners when the profit eared by the firm is % 24,000. @® % 20,000 and & 10,000. ® % 15,000 and % 9,000. © No interest will be paid, @ % 16,000 and % 8,000. When guarantee is given to partner by some of the partners, deficiency on such guarantee is borne by @ All of the other partners. © Partnership firm. © Partners who gave the guarantee, @ None of the partners. ‘A,Band Care partners sharing profits in the ratio of 5:4: 1.Cis given guarantee that his share ina year will ‘not be less than ® 5,000. Profit for the year ended 31st March, 2021 is 40,000, Deficiency in the guaranteed profit of Cis to be borne by B. Deficiency to be borne by Bis: @® Deficiency of C % 1,500 met by 8. © Deficiency of € % 1,000 met by 8. © Deficiency of C 4,000 met by 8. @ None of these. ‘Scanned with CamScanner4 McQ An Aid to Accountancy ~ CBSE XIr MCQ.6 47._X.Yand Zare partners sharing pro! H1.Th me Ides forinterest \ fits inthe ratio of 3: 1e partnership agreement provi ea capital @ 8% pe annum and salary for Y of € 8,000 per annum. Net profit for the year 2020-21 was r € 84,000 and balances of partners’ Capital Accounts during the year were: x8 20,000; YR 15,000; 2-8 12,000. (0 Zs share of residual profits for the year 2020-21 will be ® € 12040. ® 2 12,667. © € 13,000. @ 14000, (i) Total amount of the appropriation credited to Y's account in the year 2020-21 will be @® % 24,080. ® % 28000. © 33,280. @ 233,333. 48. A,B, and Cwere partners in a firm sharing profits and losses in the ratio of 4: 3:3. Thelr fixed capitals were © 1,00,000, & 2,00,000, and % 3,00,000 respectively. For the year 2020-21, interest on capital was credited to them @ 10% pa. instead of 9% p.a. Which of the following entry is necessary to rectify the error? @® 85 Capital Ave Dr. % 1,400 To A's Capital A/c % 200 To Cs Capital A/c % 1,200 ® A's Capital Ave Dr. @ 1,400 To B's Capital A/c % 200 To Cs Capital A/c % 1,200 © B's Capital A/c Dr. 2 1,200 Cs Capital A/c Dr. % 200 To A's Capital A/c 1,400 @ 8 Capital A/c % 200 C5 Capital A/c % 1,200 To A’s Capital A/c % 1,400 49. % Y and Z are partners in a firm sharing profits and losses in the ratio of 6 : 4:1. X guaranteed profit of £15,000 to Z. Net profit for the year ending 31st March, 2019 was & 99,000. x's share in the proft of the firm will be ® % 30,000. ® 715,000. © 748,000. @ 745,000. (CBSE 2020 Q 50. Preeti, Mona and Nisha shared Profits in the ratio of 3 : 2: 1. Profits of the last three years were & 1,40,000, 84,000 and & 1,06,000 respectively. These profits were by mistake, shared equally in all the three years. Which of the following entry is necessary to correct the error? z z @ Nisha's Capital A/c Dr. 55,000 To Preeti’s Capital A/c 55,000 © Preeti's Capital A/c Dr. 55,000 To Nisha's Capital A/c 55,000 © Mona's Capital A/c Dr 55,000 To Preeti’s Capital A/c 55,000 @ Preeti’s Capital A/c Dr. 55,000 To Mona's Capital A/c 55,000 ‘Scanned with CamScanner‘Multiple Choice Questions MCQ.7 51. X, Yand Z shared profits of 8 75,000 in the ratio of 2:2: 1 but the Partnership Deed was silent regarding Profit-sharing ratio, Which of the following is necessary adjusting entry? @ Zs Capital Ave Dr. © 10,000 To Xs Capital A/c 7 5,000 To Y's Capital A/c % 5,000 ®© %s Capital Ave Dr. % 5,000 Ys Capital A/c Dr % 5,000 To Zs Capital A/c % 10,000 © Ys Capital ave Dr. 10,000 To Xs Capital A/c @ 5,000 To Zs Capital A/c % 5,000 @ Xs Capital Ave Dr. % 10,000 To Y's Capital A/c % 5,000 To Zs Capital A/c % 5,000 Assertion-Reason Based Questions Given below are two statements (in each question), one labelled as Assertion (A) and other labelled as Reason (R): 1, Assertion (A): Partnership is 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. Reason (Ri: It is defined in the Partnership Act, 1932. {In the context of above two statements, which ofthe following is correct? . . @ Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A). @® Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A). © Assertion (A) is correct but the Reason (R) is not correct. @© Both Assertion (A) and Reason (R) are not correct. 2. Assertion (A): Partnership isa separate and distinct entity from partners from: the viewpoint of accounting. Reason (R): According to Business Entity Concept, transactions of the business are recorded from the viewpoint ofthe firm. Hence, itis a separate and distinct entity from partners from the viewpoint of accounting, In the context of above two statements, which of the following is correct? @ Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A). © Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A). © Assertion (A) is correct but the Reason (R) is not correct. @© Both Assertion (A) and Reason (R) are not correct. 3. Assertion (A): A firm can have minimum 2 with a maximum 50 partners. Reason (R): The limit of two partners flows from the definition in the Partnership Act, 1932. Maximum limit of partners is also prescribed in the Partnership Act, 1932. In the context of above two statements, which of the following is correct? Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A). © Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A), © Assertion (A) is correct but the Reason (R) is not correct. @ Both Assertion (A) and Reason (R) are not correct. ‘Scanned with CamScanneeMCO.8 An Aid to Accountancy —CBSE XII 4. Assertion (A): In a Partnership when profit-sharing ratlo Is agreed, partners share the losses also in the same ratio. Reason (R): Although in the definitio losses also. Inthe context of above two statements, which of he following is correct? ‘Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A). © Both Assertion (A) and Reason (R) are correct and Reason (Ri the correct explanation of Assertion (A). © Only Assertion (A) is correct. © Only Reason (R) is correct. 5, Assertion (A): Business of the partnership should be lawful although not specifically included in the definition. Reason (R): Any unlawful activity cannot be carried in the country. Thus, business should also be lawful tobe carried out. Inthe context of above two statements, which of the following is correct? @ Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A). © Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A). © Assertion (A) is correct but the Reason (R) is not correct. @ Both Assertion (A) and Reason (R) are not correct. 6. Assertion (A): Partners are principals but not the agents of other partners. Reason (R): As per the definition of partnership, business can be carried on by all or any of them acting forall. Thus, they are the principals and also the agents. In the context of above two statements, which ofthe following is correct? ‘Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A). © Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A). © Ony Assertion (A) is correct. @ Assertion (A) is not correct but the Reason (R) is correct. 7. Assertion (A): A partnership deed can have clauses that are different from the provisions of the Partnership ‘Act, 1932 and in such situations, clauses in Partnership Deed prevail over the provisions of the Partnership Act, 1932. }: The provisions of the Partnership Act, 1932 apply when the partners have not agreed on a matter (say, profit-sharing ratio). {In the context of above two statements, which of the following is correct? eaten w and Reason (R) are correct but the Reason (R) is not the correct explanation of Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of the Assertion (A). © Assertion (A) is correct but the Reason (R) is not correct. @ Both Assertion (A) and Reason (R) are not correct 8. Assertion (A): Only Capital Account is maintained for each partner under Fluctuating Capital Accounts Method. Reason (R): Interest on Capital, remuneration (Salary/Commission) and profit share are transferred to the credit of Partners’ Capital Accounts while Interest on Drawings and share of loss are transferred to the debit. nit Is written that profits will be shared. However, profits includes Reason ( ‘Scanned with CamScannee