Bihar Board Class 12 Commerce Accountancy · Ch 1: Accounting for Partnership: Basic Concepts

Topics in this test

Difficulty: 3 easy · 8 medium · 19 hard

Sample questions with answers

The first 5 questions of this free test.

1. Q1. Which one of the following is the ODD ONE OUT with respect to the contents normally written in a Partnership Deed?

   • A. Market price of goods sold by the firm
   • B. Profit-sharing ratio of the partners
   • C. Salary or commission payable to partners
   • D. Rate of interest on capital
   Solution

   A Partnership Deed records terms like the profit-sharing ratio, interest on capital and salaries, but the market price of the firm's goods is not a deed term.

2. Q2. Match the items in List I with List II and choose the correct option. List I: (i) Rent paid to a partner (ii) Interest on capital (iii) Partner's salary. List II: (P) Appropriation of profit (Q) Charge against profit.

   • A. (i)-Q, (ii)-Q, (iii)-P
   • B. (i)-P, (ii)-P, (iii)-Q
   • C. (i)-Q, (ii)-P, (iii)-P
   • D. (i)-P, (ii)-Q, (iii)-P
   Solution

   Rent to a partner is a charge debited to the Profit and Loss Account, while interest on capital and salary are appropriations of profit.

3. Q3. The net profit of a firm is ₹50,000. Partners X and Y are entitled to interest on capital of ₹30,000 and ₹25,000 respectively, with no provision that interest is a charge. In this case the interest on capital will be allowed:

   • A. Not at all, because profit is less than the total interest
   • B. In the ratio 30 : 25, limited to the available profit of ₹50,000
   • C. Equally as ₹25,000 to each partner
   • D. Fully as ₹30,000 and ₹25,000, with the loss borne by partners
   Solution

   When interest on capital is an appropriation and profit is insufficient, it is allowed only up to the available profit and shared in the ratio of the interest amounts (30:25).

4. Q4. Assertion (A): Interest on a partner's drawings is credited to the Profit and Loss Appropriation Account. Reason (R): Interest on drawings is a gain to the firm and a charge against the partner. Choose the correct option.

   • A. Both A and R are true but R is not the correct explanation of A
   • B. A is false but R is true
   • C. A is true but R is false
   • D. Both A and R are true and R is the correct explanation of A
   Solution

   Interest on drawings is income for the firm, so it is credited to the Appropriation Account and the reason correctly explains it.

5. Q5. Read the two statements and choose the correct option. Statement I: Under the Fluctuating Capital method, only one account, the Capital Account, is maintained for each partner. Statement II: Under the Fixed Capital method, the Capital Account balance can never show a debit balance.

   • A. Both Statement I and Statement II are incorrect
   • B. Only Statement I is correct
   • C. Both Statement I and Statement II are correct
   • D. Only Statement II is correct
   Solution

   Under fluctuating capitals only the Capital Account is kept, and under fixed capitals the capital stays unchanged so it cannot go to a debit balance — both statements are correct.

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