MULTIPLE CHOICE QUESTION:-

1. Rani and Shyam is partner in a firm. They are entitled to interest on their capital but the net profit
was not sufficient for paying his interest, then the net profit will be disturbed among partner in
(a) 1 : 2
(b) Profit Sharing Ratio
(c) Capital Ratio
(d) Equally
2. Which one of the following items is recorded in the Profit and Loss Appropriation account:-
(a) Interest on Loan
(b) Partner salary
(c) Rent paid to Partner’s
(d) Managers Commission
3. A, B and C were partner in a firm sharing Profit in the ratio of 3:2:1during the year the firm
earned profit of ₹ 84,000.Calculate the amount of Profit or Loss transferred to the Capital A/c of B.
(a) Loss ₹ 87,000 (b) Profit ₹ 87,000
(c) Profit ₹ 28,000 (d) Profit ₹14,000
4. Closing entry for interest on loan allowed to partners
(a) Interest on Partner’s loan ... Dr.
To Profit and Loss A/c
(b) Interest on loan ... Dr.
To Profit and Loss Appropriation A/c
(c) Profit and Loss Appropriation A/c ...Dr
To Interest on Partners loan A/c
(d) Profit and Loss Appropriation A/c ...Dr.
To Interest on loan A/c
5. Salary to a partner under fixed capital account is credited to
(a) Partner’s Capital A/c
(b) Partners current A/C
(c) Profit & Loss A/c
(d) Partner’s Loan A/c
6. In the absence of partnership deed partner share profit and loss in
(a) Ratio of capital Employed (b) Equal Ratio
(c) 2 : 1 (d) 1 : 2
7. As per section a minor may be admitted for the benefit of the partnership if:-
(a) One partner agree
(b) More than one agree
(c) All Partners agree
(d) Both (a) or (b)
8. If the partner carries on the business that is similar to firm competition with the firm and
profit earned from it, the profit
(a) Shall be retained by the partner
(b) Shall be paid to firm
(c) Can be retained or gained to the firm
(d) Both (a) or (b)
9. The relation of the partner with the firm is that of
(a) An owner
(b) An agent and a Principal
(c) An agent
(d) Manager
10. A, B, and C are partner’s sharing profits in the ratio of 5:3:2 According to the partnership
agreement C is to get a minimum amount of ₹ 10,000 as his share of profits every year. The net
profit for the year ended 31st March, 2021 amounted to ₹ 40,000. How much amount contributed by
A?
(a)₹ 1,350 (b) ₹ 1,250
(c) ₹ 750 (d) ₹ 1,225

Case based questions

1. On 1st September 2020, twenty students of Modern College started their Partnership Firm in
the name of “Be Safe” for selling sanitisers on digital mode. Since they were good friends of
 each other, they were not having any explicit agreement in place. All of them have agreed to
invest ₹15,000/- each as capital. The books were closed on 31st March 2021, on which date
the following information was provided by the firm:

PARTICULARS AMOUNT (₹)

Sale of Sanitisers 1,20,000
Cost of goods sold 50,000
Total Remuneration to partners 2,000 per month
Rent to a partner 1,000 per month
Manager’s Commission 5,000
Closing Stock as on March 31,2021 9,000
6% Fixed Deposit (made on 31.3.2021) 20,000

1. . Calculate the amount of profits to be transferred to Profit and Loss Appropriation

Account.
- (A) Profit ₹58,000 (B) Profit ₹44,000 (C) Profit ₹59,200 (D) Profit ₹58,700
2. On 31st March 2021, Remuneration to Partners will be provided to the partners of
“Be Safe” but only out of:
(A) Profits for the accounting year (B) Reserves (C) Accumulated Profits (D)
Goodwill

3. On 01st December 2020 one of the partners of the firm introduced additional
capital of ₹30,000 and also advanced a loan of ₹40,000 to the firm. Calculate the amount of
interest that Partner will receive for the current accounting period-
(A) ₹4,200 (B) ₹1,400 (C) ₹ 1575 (D) ₹ 800

III)
1.Mukesh and Ramesh are partners sharing profits and losses in the ratio of 2 : 1
respectively. They admit Rupesh as partner with 1/4 share in profits with guarantee that
his share of profit shall be at least Rs.55,000. The net profit of the firm for the year
ending 31 st March, 2013 was Rs.1,60,000. Prepare Profit and Loss Appropriation Account.
2. 2. A and B are partners. The net divisible profit as per Profit and Loss Appropriation A/c is
`2,50,000. The total interest on partner’s drawing is `4,000. A’s salary is `4,000 per quarter
and B’s salary is `40,000 per annum. Calculate the net profit/loss earned during this year.

3. Kavita, Meenakshi and Gauri are partners doing a paper business in Ludhiana. After the
accounts of partnership have been drawn up and closed, it was discovered that for the years
ending 31st March 2013 and 2014, interest on capital has been allowed to partners @ 6% p.a.
although there is no provision for interest on capital in the partnership deed. Their fixed
capitals were 2,00,000; 1,60,000 and 1,20,000 respectively. During the last two years they
 had shared the profits as under: Year Ratio 31 March 2013 3:2:1 31 March 2014 5:3:2 You
are required to give necessary adjusting entry on April 1, 2014.

4. Mudit, Sudhir and Uday are partners in a firm sharing profits in the ratio of 3:1:1. Their fixed
capital balances are ₹ 4,00,000, ₹ 1,60,000 and ₹1,20,000 respectively.Net profit for the year
ended 31st March, 2018 distributed amongst the partners was ₹1,00,000, without taking into
account the following adjustments:
a) Interest on capitals @ 2.5% p.a.; b) Salary to Mudit ₹ 18,000 p.a. and commission to
Uday ₹ 12,000 c) Mudit was allowed a commission of 6% of divisible profit after
charging such commission.
b) Pass a rectifying journal entry in the books of the firm. Show workings clearly
5. Ravi and Mohan were partners in a firm sharing profits in the ratio of 7:5. Their
respective fixed capitals were Ravi Rs 10,00,000 and
Mohan Rs 7,00,000. The partnership deed provided for the following:
(i) Interest on Capital @12% p.a.
(ii) Ravi’s salary Rs 6,000 per months and Mohan’s salary Rs 60,000 per year.
The profit for the year ended 31.3.2007 was Rs 5,04,000 which was distributed equally,
without providing for the above. Pass an adjustment entry.
6. Anand, Bhaskar and Dinkar are partners in a firm. On 1 st April 2011 the balance in their
capital accounts stood at Rs 10,00,000, Rs 8,00,000 and Rs 6,00,000 respectively. They
shared profits in the proportion of 5 : 4 : 3 respectively. Partners are entitled to interest on
capital @ 10% per annum and salary to Bhaskar @ Rs 4,000 per month and a
commission of Rs 16,000 per quarter to Dinkar as per the provisions of the partnership
deed.
Anand’s share of profit (excluding interest on capital) is guaranteed at not less than Rs
1,90,000 p.a. Bhaskar’s share of profit (including interest on capital but excluding salary)
is guaranteed at not less than Rs 2,45,000 p.a. Any deficiency arising on that account
shall be met by Dinkar. The profits of the firm for the year ended 31 st March 2012
amounted to Rs 8,32,000. Prepare ‘Profit and Loss Appropriation Account’ for the year
ended 31 st March 2012.