New Accounts

CHAPTER 1 – FUNDAMENTALS OF
PARTNERSHIP FIRM
I.MULTIPLE CHOICE QUESTIONS
Sr.No Question:
1. For which one of the following, the balance in the Securities premium Reserve
Account cannot be used?
(A) To write off the preliminary expenses of the company

(B) To pay a premium on the redemption of preference shares of the company.
(C) To pay interest on the debentures of the company
(D) To pay for buyback of its own shares.
2. Capital employed in a business is Rs. 2,00,000. Normal Rate of Return on capital

employed is 15%. During the year, the firm earned a profit of Rs. 48,000. Calculate
goodwill on the basis of 3 years’ purchase of Supper Profit.
(A) Rs. 54,000
(B) Rs. 60,000
(C) Rs. 50,000
(D) None of these
3. Galib&Jakib are partners in a firm. Galib is to get commission of 10% of net profit
before charging any commission. Jakib is to get a commission of 10% on net profit
after charging all commissions. Net Profit for the year ended 31st March, 2021 was
Rs 55,000. What will be amount of Profit to be distributed to each?
(A) Rs. 5,500 to Galib& Rs. 4,500 to Jakib.
(B) Rs. 27,500 each.
(C) Rs. 22,500 each.
(D) None of the above
4. If the guarantee is given to the partner by some partners, deficiency on such will
be borne by
(A) Partnership firm.
(D) All of the other partners.
Tuesday, July 18, 2023

(C) Partners who had given the guarantee.
5. If the Partners are maintaining the capital account on Fixed basis, partner’s capital
account will have:
(A) Credit balance.
(B) Debit balance.
(C) Credit or Debit balance.
(D) May have Nil balance
6. If the partnership deed is silent interest on drawings will be charged @

(A) 6% P.a
(B) 6% P.m
(C) Any other Rate.
(D) Will not be charged
7. Which is not the clause of the Partnership Deed?

(A) Business can be carried on by all or any of the partner’s acting for all.
(B) Commencement of business.
(C) Rights & Duties of Partner.
8. The Net profits of Kamini were Rs. 20,000. Gulafsa the manager was to be given
the commission of Rs 6,000; the distribution of profits will be done as:
(A) Rs. 10,000 to each.
(B) Rs. 7,000 to each.
(C) Rs. 13,000 to each.
9. Shalu, Shan& Julie are partners sharing profits in the ratio of 6 : 4 : 1. Julie is
guaranteed a minimum profit of Rs. 20,000. The firm incurred a loss of Rs.
2,20,000 for the year ended 31st March, 2021. What amount of deficiency will be
borne by Shaluand Shan.
(A) Rs. 10,000 each.

(B) Rs. 20,000 each.
(C) Rs. 24,000 by Shalu& Rs. 16,000 by Shan.
(D) Rs. 12,000 by Shalu& Rs. 8,000 by Shan.
10. Om& Prakash were partner’s without any deed where Prakash invested the total
capital and Om had the complete hold on the business as Prakash was the sleeping
partner, but as Prakash invested complete capital demanded to share the profits in
the Ratio of 5 : 1 and Om object’s to this.
Om’s objection is correct.
Prakash’s demand is correct.
Both are wrong.
As investment is of Prakash he should be given interest on capital.
11. Following are essential elements of a partnership firm except:

(A) At least two persons.
(B) There is an agreement between all partners.
(C) Equal share of profits and losses.
(D) Partnership agreement is for some business.
12. Which of the following items is not dealt through Profit and Loss Appropriation
Account?
(A) Interest on Partner’s Loan

(B) Partner’s Salary
(C) Interest on Partner’s Capital
(D) Partner’s Commission
13. A partner withdrew Rs. 4,000 per month from 1st July, 2016, on beginning of every
month. Accounts are closed at 31st March, 2017. Calculate interest on drawings
while rate of interest is 10% per annum.
(A) Rs. 1,600
(B) Rs. 1,800
(C) Rs. 1,500

(D) Rs. 2,200
14. A, B and C sharing profits in the ratio of 2: 2: 1 have fixed capitals of Rs. 3,00,000,
Rs. 2,00,000 and Rs. 1,00,000 respectively. After closing the accounts for the year
ending 31st March 2019 it was discovered that interest on capitals was provided @
12% instead of 10% p.a. In the adjusting entry:
(A) Cr. A Rs. 1,200; Dr. B Rs. 800 and Dr. C Rs. 400
(B) Dr. A Rs. 1,200; Cr. B Rs. 800 and Cr. C Rs. 400
(C) Cr. A Rs. 800; Cr. B Rs. 400 and Dr. C Rs. 1,200
(D) Dr. A Rs. 800; Dr. B Rs. 400 and Cr. C Rs. 1,200
15. A partner withdraws Rs.8,000 each on 1st April and 1st Oct. Interest on his
drawings @ 6% p.a. on 31st March will be:
(A) Rs. 480

(B) Rs.720
(C) Rs. 240
(D) Rs. 960
16. (U)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 netprofit will be disturbed
among partner in

a. 1:2
b. profit sharing ratio
c. capital ratio
d. equally
17 [ U ] 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
d. Managers commission
18 [ R ] Salary to a partner under fixed capital account is credited to
Partner’s Capital A/c

Partner’s current A/c
Profit & Loss A/c
Partner’s Loan A/c
19 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
20 (A&E) A, B, and C are partner’s sharing profits in the ratio of 5:3:2According to
the partnership agreement C is to get a minimum amount of Rs. 10,000 as his
share of profits every year. The net profit for the year ended 31st March, 2019
amounted to Rs. 40,000. How much amount contributed by A?
a. Rs. 1.350
b. Rs . 1,250
c. Rs. 750
d. Rs. 1,225
21 [ R ] The relation of the partner with the firm is that of
An owner
An agent and A Principal
An agent
Manager
22 [ R ] 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) and (B).

23 [U ] Closing entry for interest on loan allowed to partners
Interest on partner’s loan …Dr.

To Profit and Loss A/c
Interest on loan …Dr.
To Profit and Loss Appropriation A/c
Profit and Loss Appropriation A/c …Dr.
To interest on partner’s loan A/c
Profit and Loss Appropriation A/c …Dr.
To interest on loan A/c
Features of a partnership firm are :

(A) Two or more persons are carrying common business under an agreement.
(B) They are sharing profits and losses in the fixed ratio.
(C) Business is carried by all or any of them acting tor all as an agent.
(D) All of the above.
Which of the following statement is true?

(A) a minor cannot be admitted as a partner
(B) a minor can be admitted as a partner, only into the benefits of the partnership
(C) a minor can be admitted as a partner but his rights and liabilities are same of
adult partner
(D) none of the above
The relation of partner with the firm is that of:

(A) An Owner
(B) An Agent
(C) An Owner and an Agent
(D) Manager
What should be the minimum number of persons to form a Partnership :

(A) 2
(B) 7
(C) 10
(D) 20
Number of partners in a partnership firm may be :

(A) Maximum Two
(B) Maximum Ten
(C) Maximum One Hundred
(D) Maximum Fifty

Liability of partner is :
(A) Limited
(B) Unlimited
(C) Determined by Court

(D) Determined by Partnership Act
In the absence of Partnership Deed, the interest is allowed on partner’s capital:

(A) @ 5% p.a.
(B) @ 6% p.a.
(C) @ 12% p.a.
(D) No interest is allowed
A and B are partners in partnership firm without any agreement. A has given a
loan of ₹50,000 to the firm. At the end of year loss was incurred in the business.
Following interest may be paid to A by the firm :
(A) @5% Per Annum
(B) @ 6% Per Annum
(C) @ 6% Per Month
(D) As there is a loss in the business, interest can’t be paid
A and B are partners in a partnership firm without any agreement. A has
withdrawn Rs.50,000 out of his Capital as drawings. Interest on drawings may be
charged from A by the firm :
(A) @ 5% Per Annum
(B) @ 6% Per Annum
(C) @ 6% Per Month
(D) No interest can be charged

33 method to value the goodwill.
(a) Rs.1,50,000
(b) Rs. 2,00,000
(c) Rs.2,25,000
(d) Rs.2,50,000
Ans:- (b) Rs. 2,00,000
34 X and Y shared profits and losses in the ratio of 3:2 with effect from 1st April,
2019; they decided to share profits equally. Goodwill of the firm was valued at
Rs.60,000. The adjustment entry for Goodwill will be:
(a) Dr. Y’s Capital A/c and Cr. X’s Capital A/c with Rs.6,000.
(b) Dr. X’s Capital A/c and Cr. Y’s Capital A/c with Rs.6,000.
(c) Dr. X’s Capital A/c and Cr. Y’s Capital A/c with Rs.600.
(d) Dr. Y’s Capital A/c and Cr. X’s Capital A/c with Rs.600.
Ans:- a) Dr. Y’s Capital A/c and Cr. X’s Capital A/c with Rs.6,000
35 Following are the factors affecting goodwill except:

(a) Efficiency of Management

35 X,Y and Z are partners in a firm. At the time of division of profit for the year there
was dispute between the partners. Profit before interest on partner’s capital was
Rs. 6,00,000 and Z demanded minimum profit of Rs. 5,00,000 as his financial
position was not good. However, there was no written agreement on this point.
How will the profit be distributed?
(a) Other partners will pay Z the minimum profit and will share the loss equally
(b) Other partners will pay Z the minimum profit and will share the loss in capital
ratio.
(c) X and Y will take Rs. 50,000 each and Z will take Rs. 5,00,000.
(d) Rs. 2,00,000 to each of the partners.
Ans:- (d) Rs. 2,00,000 to each of the partners.
36 A, B and C are partners sharing profits in the ratio of capitals (old 5:3:2 and new
2:3:5). Their capital after adjustment in the new capital ratio is Rs 20,000, Rs
30000, Rs 50000. Who will bring the amount of actual cash for adjustment?
(a) None of these

(b) C
(c) B
(d) A
Ans:- (b) C
37 In absence of partnership deed, partners are entitled to:
a) Salary b) Commission c) Interest on capital d) None of the above

38 If drawings are made at the beginning of each month , then interest is
calculated for:
a) 6 months b) 5.5 months c) 6.5 months d) 12 months

39 In the absence of partnership deed, interest on loan of a partner is allowed:
a) At 8% p.a b) At 6% p.a c) No interest is allowed

d) At 12% p.a
40 Which of the following is not an appropriation of profits?
a) Interest on capital b) Interest on loan c) Commission of partner d) None

of the above
41 Interest on partners loan is treated as:
a) Charge against profit b) Appropriation out of profits

c) Either (a) or (b) d) None of the above
42 Which of the following can be claimed by a partner even in case of no partnership

deed?
a) Profit in equal ratio b) Commission c) Salary

d)Interest on loan
43 In case of fixed capital, interest on drawings:
a) Debited to partners capital account b)Debited to partners current account

c)Either (a) or (b) d) None of the above
44 Interest on capital is allowed on the:
a) Capital at the end of the year b) Opening capital c) Average capital d)

Capital employed

ANSWER KEY

d)None of the above

c)6.5 months
b) At 6% p.a
b) Interest on loan
a)Charge against profit
a)Profit in equal ratio
b)Debited to partners current account
b) Opening capital

CASE STUDY BASED QUESTIONS
CASE STUDY-I
Sl.No. Read the passage given below and answer the following questions:
Arav and Bhart are partners in a firm sharing profits and losses. Their capitals on 1 April, 2015
were Rs.4,80,000 and Rs.5,40,000. On 1 October, 2015, they decided that the total capital of
the firm should be Rs.10,00,000 to be contributed equally by both of them.According to the
Partnerhip Deed, interest on capital is allowed to the partners @6% p.a.
1. You are required to compute interest on capital for the year ending 31 March, 2016.
(A) Rs.29,400, Rs.31,200
(B) Rs.14,400, Rs.16,200
(C) Rs.15,000, Rs.15,000
(D) None of these
2. What would be the profit sharing ratio of Arun and Barun?
(A) 1 : 1
(B) 2 : 3
(C) 3 : 2
(D) 3 : 4
CASE Anu and Baatish started a new business in partnership and decided to share profits and
STUDY 2 losses in the ratio of 3 : 1. They contributed Capitals of rs. 50,000 and rs.30,000
respectively on April 1 , 2018 .Anu is a sleeping partner whereas Baatish is a full time
working partner.During the year ended 31st March, 2019 they earned a net profit of rs.
50,000. The terms of partnership are:

(a) Interest on capital is to allowed @ 6% p.a.
(b) Anu will get a commission @ 2% on turnover.
(c) Baatish will get a salary of rs. 500 per month.
(d) Baatish will get commission of 5% on profits after deduction of all expenses including
such commission.
Partners’ drawings for the year were: Anurs. 8,000 and Baatishrs. 6,000. Turnover for the
year was rs. 3,00,000.
On the basis of the information given above , answer the following questions -
Q1. What will be Anu’sandBaatish’sCommission ?
a. Anurs.6,000 ,Baatish- rs.1,660
b. Anurs.30,000 ,Baatish- rs.1,660
c. Anurs.6,000 ,Baatish- rs.1,660
d. Anurs.6,000 ,Baatish- rs.1,581
Q2. How much share of profits will be given to Anu and Baatish?
a. Anurs.23714 , Baatishrs.7,905
b. Anurs.15809.5 ,Baatishrs. 15,809.5
c. Anurs.22,000 , Baatishrs.7,000
d. None of the above
Q3. What will be the balance in Partners’ Capital Account at the end of the year?
a. Anurs.74,000 ,Baatishrs. 43,000
b. Anurs.74,714 ,Baatishrs. 41,286
c. Anurs.74,147 ,Baatishrs. 41,826
d. Anurs.70,714 ,Baatishrs. 41,286
Q4. Baatish wants that his share in profits should be higher than Anu as he is putting
more efforts to carry on the business. Is he correct in saying so?
a. Yes
b. No
c. Can’t say
d. May or may not be

CASE Rohit and Ronit are two partners into firm sharing profits equally. On 1st January 2020,
STUDY-3 they decided to admit Ajay as a new partner into the firm for 1/5 th share. Ajay brings
10,00,000 for his share to capital and premium of goodwill in cash. Half goodwill is
withdrawn by the old partners. Goodwill of the firm is valued on the basis of one year
purchase of profits or losses of preceding last 3 years. Profits of last four years are
₹6,00,000 in 2016, ₹7,00,000 in 2017, ₹8,00,000 in 2018 and ₹15,00,000 in 2019.
1) Which of the following is a right of Ajay?
(a) All of these
(b) Share profits of firm
(c) Inspect books of accounts
(d) Share assets in the firm
Ans:- (A) All of these
2) What was the value of goodwill of the firm?

(a) ₹9,00,000
(b) ₹8,00,000
(c) ₹7,00,000
(d) ₹10,00,000
Ans:- (d) ₹10,00,000
3) What was the amount of capital brought in by Ajay?

(a) ₹22,00,000
(b) ₹10,00,000
(c) ₹8,00,000
(d) Can't be determined
(e) Ans:- ₹8,00,000
CASE Abhishek and Aishwarya were partners in a fast food corner. They sold fast food items
STUDY 4 across the counter and did home delivery too. For this purpose they needed a delivery
van, a few scooties and an additional person to support. Their initial fixed capital
contribution was 3,50,000 and 2,00,000 respectively.
Abhishek spends twice time that of Aishwarya to the business. He wants a salary of Rs.
10,000 per month for extra time spend by him. Aishwarya has advanced 1,00,000 to the
firm and want 6% interest per annum. They both have withdrawn 20,000 from the
business for personal use for which Abhishek was asking to interest on drawing @ 5% to
the business. They earned annual profit of Rs. 2,00,000.

1.Interest on drawing charged to Abhishek and Aishwarya are :
A) 5%
B) 6%
C) 1000 each
D) No interest on drawing will be charged
2. Profit shared by Abhishek and Aishwarya are :
A) 1,00,000 each
B) Equally
C) 50,000 each
D) None of these
3. “Abhishek spends twice time that of Aishwarya to the business”, for this purpose
Abhishek will be given a salary of :
A) 10,000 per month

B) Equal for both of them
C) No salary will be given
D) 5,000 per month
4. “Aishwarya has advanced 1,00,000 to the firm and want 6% interest per annum”,
interest received by Aishwarya on advances will be :
A) 6,000
B) 7,000
C) 8,000
D) 9,000
CASE Amar, Akbar and Anthony entered into partnership business on 1st April 2020 with capital
STUDY 5 of Rs 3,00,000 , 2,00,000 and 1,00,000 respectively. In addition to capital Anthony has
advanced a loan of rs 1,00,000. Since they were good friends, they were not having any
explicit agreement of partnership. Akbar has worked hard to establish the business and
Amar was looking after the office work.

At the end of the year , they earned a profit of Rs. 1,80,000. Amar and Akbar wanted
remuneration of their work for five thousand per month and Anthony ask for interest on
advance @ 10% per annum. Since Amar has given maximum capital so he wants interest
on capital @12%. You are required to help them.
1. What is amount of the profit distributed to Amar, Akbar and Anthony respectively?
A) 50,000: 30,000: 20,0000

B) 80,000: 50,000: 20,0000
C) Profit will be distributed equally
D) None of these
2. Interest on advance given by Anthony to firm is:
A) 6%
B) 8%
C) 12%
D) 10%
3. Amar and Akbar will be given a remuneration of :
A) 5,000 per month each
B) 10,000 per month each
C) No remuneration will be given
D) Amar :5000 per month, Akbar :4000 per month
4. What will be the interest on capital given to Amar ?
A) 36,000
B) 46,000
C) 24,000
D) No interest on capital will be given

ANSWER KEY
CASE STUDY NO. Q.NO ANSWER
C.S-I 1 A
2 A
1 D
2 A
C.S-2
3 B
4 B
1 A
C.S-3 2 D
3 C
1 D
2 B
C.S-4
3 C
4 A
1 C
2 A
C.S-5
3 C
4 D

ASSERTION REASONING QUESTIONS
Sr.No Question
1. Assertion: Ram spends thrice the time that Yami devoted to business. Ram claims that he
should get salary of Rs.5,000/- p.m. for extra time spent.
Reason: As there is no partnership deed Partnership Act 1932 applies and as per the Act
partners will not be allowed any salary or remuneration.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
2. Assertion: In case of losses interest on capital will not be provided.

Reason: As interest on capital is treated as the appropriation of the profits and there are no
profits but interest on capital can be provided in case of losses if it is to be treated as
charge.
3. Assertion: Y wants that profits should be distributed in the ratio of capitals as he has
invested more capital than X this dispute arises as the partnership deed was not there.
Reason: As there is no partnership deed Indian Partnership Act, 1932 applies and as per
the Act, Profits are to be distributed equally.
4. Assertion: Average Normal Profit as Calculated is multiplied by number of years' purchase
to determine the value of goodwill.
Reason: Number of years' purchase means the number of years for which the firm is likely
to earn same amount of profit after change in ownership becomes of the efforts put in the
past.

5. Assertion: Rent paid to the partner is not to be shown in Profit & Loss Appropriation A/c .
Reason: Rent paid to the partner is treated as the charge against profit and not the
appropriation of the profits.

6 Assertion(A): Goodwill is the good name or reputation of the Business which brings benefit
to the business.
Reason(R): It is an intangible asset as it has no physical existence.
(a) Both A and R are true and R is the Correct explanation of A
(b) Both A and R are true and R is not the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
7 Assertion (A) : In order to compensate a partner for contributing capital to the firm in excess
of the profit sharing ratio , firm pays such interest on Partners’ Capital. Reason (R) :
Interest on Capital is treated as a charge against profits.
8 Assertion (A) : Fixed Capital Accounts of a partner never shows a debit balance inspite of
regular and consistent losses year after year.
Reason (R) : When Capital Accounts are fixed , losses are recorded in Partners’ Current
Account.
9 Assertion(A): Both purchase and shelf generated goodwill are accounted in the books of
account
Reason( R ): According to AS-26 only purchase goodwill is accounted in the books of
account. Shelf generated goodwill is not accounted in the books of account (
10 Assertion (A): A Firm should have a Partnership Deed.

Reason (R) : In case of dispute or any misunderstanding among partners , partnership deed
acts as an evidence in the court of law.

Read the following statements – Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of
Assertion (A).
(c) Assertion (A) is true and Reason (R) is false
(d) Assertion (A) is false and Reason (R) is true
11. Assertion (A): In the absence of Partnership deed profits and losses are divided equally
among the partners.
Reason (B) : This rule is applicable according to Indian Partnership Act,1932
Assertion (A) :Personal properties of a partner may also be used to pay off the firms debts.
12. Reason (R) : All partner are limited liability in the firm.
Assertion (A) : Partnership firm is a form of Organization where two or more persons carry
13. on business activity on the basis of agreement among them.
Reason (R ) : The profit or loss arising from the partnership business is shared by the
partners in the agreed ratio.
Assertion(A): Maximum number of partners in a partnership firm is 50.

Reason (R ) : Maximum number of partner in a partnership firm is prescribed in Companies
14. Act,2013.
15 Assertion (A): Average Normal Profit as Calculated is multiplied by number of years'

purchase to determine the value of goodwill.
Reason (R): Number of years' purchase means the number of years for which the firm is
likely to earn same amount of profit after change in ownership becomes of the efforts put in
the past
(a) R is correct but A is not correct
(b) Both A and R are incorrect
(c) A is correct R is not correct
(d) Both A and R are correct
Ans (d) Both A and R are correct
16 Assertion (A): Goodwill is the good name or reputation of the business which brings
benefit to the business.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true
Ans:- (b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
18
Reason(R): If a customer is large in size then they demand more of goods and ultimately
goodwill of that product increases
(a) Both A and R are true and R is correct explanation of A
(b) Both A and R are true and R is not correct explanation of A
(c) A is true but R is not correct
(d) R is true but A is not true

Ans:- (a) Both A and R are true and R is correct explanation of A
19 Assertion: Partnership is the relation between persons who have agreed to share the
profit of a business carried on by all or any one of them acting for all.
Reason: It is defined in the Partnership act 1932.
Alternatives:
a) Both assertion(A) and reason(R) are true and reason (R) Is the correct explanation
of Assertion(A)
b) Both assertion(A) and reason(R) are true and reason (R) Is not the correct
explanation of Assertion(A)
c) Assertion(A) is true but Reasoning(R) is false
d) Both Assertion(A) is true but Reasons(R) is not correct
20 Assertion: In a partnership when profit sharing ratio is agreed, partners share the losses
also in the same ratio.
Reason: Although in the definition it is written that profit will be shared, it include losses
also
Alternatives:
of Assertion(A)
c) Only Assertion(A) is correct
d) Only Reasoning(R) is correct
21 Assertion: Rent to a partner is transferred to debit of profit and loss account but not
transferred to profit and loss appropriation account
Reason: Rent to partner is a charge against profit, not an appropriation of profit. Hence it is
transferred to debit of profit and loss account
Alternatives:
of Assertion(A)
c) Assertion(A) is correct but reason(R) is false
d) Assertion(A) is false but reason(R) is correct
22 Assertion: Only capital account is maintained for each partner under fluctuating capital
account method.
Reason: Interest on capital. Salary, commission and profit transferred to the credit of
partners capital account while interest on drawings and share of losses are transferred to the
debit.
Alternatives:
of Assertion(A)
c) Assertion(A) is correct but reason(R) is false
d) Assertion(A) is false but reason(R) is correct
ANSWER KEY
Q.NO. ANSWER
1. D
2. A
3. D
4. D
5. A
6 D
7 C
8 B
9 B
10 D
11 A
12 B
13 C
14 D
15 D
16 B
17 A
18 B
19 B
20 B
21 A

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CHAPTER 1 – FUNDAMENTALS OF

I.MULTIPLE CHOICE QUESTIONS

(A) To write off the preliminary expenses of the company

2. Capital employed in a business is Rs. 2,00,000. Normal Rate of Return on capital

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6. If the partnership deed is silent interest on drawings will be charged @

7. Which is not the clause of the Partnership Deed?

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Om’s objection is correct.

Prakash’s demand is correct.

Both are wrong.

As investment is of Prakash he should be given interest on capital.

11. Following are essential elements of a partnership firm except:

(A) Interest on Partner’s Loan

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(A) Rs. 480

(D) Rs. 960

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b. profit sharing ratio

Partner’s Capital A/c

a. Ratio of Capital Employed

a. Shall be retained by the partner

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Interest on partner’s loan …Dr.

Features of a partnership firm are :

Which of the following statement is true?

The relation of partner with the firm is that of:

What should be the minimum number of persons to form a Partnership :

Number of partners in a partnership firm may be :

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(C) Determined by Court

In the absence of Partnership Deed, the interest is allowed on partner’s capital:

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35 Following are the factors affecting goodwill except:

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(d) Rs. 2,00,000 to each of the partners.

Ans:- (d) Rs. 2,00,000 to each of the partners.

(a) None of these

37 In absence of partnership deed, partners are entitled to:

a) Salary b) Commission c) Interest on capital d) None of the above

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a) At 8% p.a b) At 6% p.a c) No interest is allowed

40 Which of the following is not an appropriation of profits?

a) Interest on capital b) Interest on loan c) Commission of partner d) None

a) Charge against profit b) Appropriation out of profits

42 Which of the following can be claimed by a partner even in case of no partnership

a) Profit in equal ratio b) Commission c) Salary

43 In case of fixed capital, interest on drawings:

a) Debited to partners capital account b)Debited to partners current account

44 Interest on capital is allowed on the:

a) Capital at the end of the year b) Opening capital c) Average capital d)

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a)Charge against profit

a)Profit in equal ratio

b)Debited to partners current account