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

Topics in this test

Difficulty: 3 easy · 9 medium · 18 hard

Sample questions with answers

The first 5 questions of this free test.

1. Q1. Identify the 'odd one out' among the following items appearing in the Profit and Loss Appropriation Account:

   • A. Interest on capital
   • B. Partner's salary
   • C. Partner's commission
   • D. Interest on partner's loan
   Solution

   Interest on partner's loan is a charge against profit and appears in the Profit and Loss Account, not the Appropriation Account; the other three are appropriations of profit.

2. Q2. The firm earned a net profit of $\textsf{₹}50,000$. The deed allows interest on capital at $10\%$ p.a., and the partners' capitals are $\textsf{₹}3,00,000$ and $\textsf{₹}2,00,000$. Interest on capital is treated as an appropriation. How much interest on capital will actually be allowed to the partners in total?

   • A. $\textsf{₹}25,000$
   • B. $\textsf{₹}50,000$
   • C. $\textsf{₹}30,000$
   • D. $\textsf{₹}40,000$
   Solution

   Full interest would be $30{,}000+20{,}000=50{,}000$, which exactly equals the available profit of $\textsf{₹}50{,}000$, so the full interest is allowed (profit is just sufficient, no restriction needed).

3. Q3. Consider the following statements about the Partnership Deed: (i) It may be oral or written. (ii) If silent on profit sharing, partners share profits in the ratio of their capitals. (iii) It can be altered with the mutual consent of all partners. Which of the statements are correct?

   • A. (i), (ii) and (iii)
   • B. (ii) and (iii) only
   • C. (i) and (ii) only
   • D. (i) and (iii) only
   Solution

   A deed may be oral or written (i) and can be changed with mutual consent (iii); but if silent on profit sharing, partners share equally, not in capital ratio, so (ii) is wrong.

4. Q4. Assertion (A): Interest on a partner's loan to the firm is credited to his Capital/Current Account even when the firm incurs a loss. Reason (R): Interest on partner's loan is a charge against profits and not an appropriation of profits. Choose the correct option:

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

   Interest on partner's loan is a charge (an expense), so it is allowed whether or not the firm earns profit; both statements are true and R correctly explains A.

5. Q5. X and Y are partners sharing profits in the ratio $3:2$. Y is guaranteed a minimum profit of $\textsf{₹}40,000$, and any deficiency is borne by X. The firm's profit for the year is $\textsf{₹}80,000$. How much will X finally get?

   • A. $\textsf{₹}32,000$
   • B. $\textsf{₹}40,000$
   • C. $\textsf{₹}48,000$
   • D. $\textsf{₹}56,000$
   Solution

   Normal shares: X $=80{,}000\times\frac{3}{5}=48{,}000$, Y $=32{,}000$; Y's deficiency is $40{,}000-32{,}000=8{,}000$ borne by X, so X gets $48{,}000-8{,}000=\textsf{₹}40{,}000$.

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