CBSE Class 12 Accountancy Partnership Fundamentals VBQs Set 02

Question. According to Accounting Standard -26 (AS-26):
(a) Self-generated goodwill is not accounted as an asset OR goodwill should not be raised in the books of accounts.
(b) Purchased goodwill should not be written off.
(c) Goodwill can be recorded in the books whether money or money’s worth paid for it or not.
(d) Self-generated goodwill is always shown under the fixed assets.
Answer: (a) Self-generated goodwill is not accounted as an asset OR goodwill should not be raised in the books of accounts.

Question. 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
Answer: (a) Interest on Partner’s Loan

Question. One of the partners (Mr. Dev) in a partnership firm has withdrawn Rs. 4,500 at the end of each quarter. Interest on his drawings is to be calculated at the rate of 6% per annum. Interest on his drawings will be:
(a) Rs. 810
(b) Rs. 400
(c) Rs. 405
(d) Rs. 304
Answer: (c) Rs. 405

Question. The written Agreement of Partnership is most commonly referred to as:
(a) Agreement
(b) Partnership deed
(c) Partnership contract
(d) Partnership Act
Answer: (b) Partnership deed

Question. Which one of the following is the method of goodwill valuation?
(a) Average capital method
(b) Super capital method
(c) Capital intensity method
(d) Super profit method
Answer: (d) Super profit method

Question. In the absence of Partnership Deed interest on partner’s loan is calculated at:
(a) 8%
(b) 6%
(c) 5%
(d) 7%
Answer: (b) 6%

Question. If a partner withdraws Rs. 10,000 in the beginning of every month and as per the partnership deed interest on drawings is to be charged @ 10% p.a. interest on his drawings will be:
(a) Rs. 6,500
(b) Rs. 12,000
(c) Rs. 6,000
(d) Rs. 7,500
Answer: (a) Rs. 6,500

Question. Aman and Bobby are partners with a profit-sharing ratio of 2 : 1 and capitals of Rs. 3,00,000 and Rs. 2,00,000 respectively. They are allowed 6% p.a. interest on their capitals and are charged 10% p.a. interest on their drawings. Their drawings during the year were Aman Rs. 60,000 and Bobby Rs. 40,000. Bobby’s share of net profit as per profit and loss appropriation account amounted to Rs. 40,000. Net Prfofit of the firm before any appropriations was:
(a) Rs. 1,22,000
(b) Rs. 1,13,000
(c) Rs. 1,17,000
(d) Rs. 1,45,000
Answer: (d) Rs. 1,45,000

Question. Under Fluctuation Method of Capital, what is the treatment of “Interest on Capital”?
(a) Credited to capital account
(b) Debited to capital account
(c) No treatment or adjustment needed
(d) Credited to current account
Answer: (a) Credited to capital account

Question. Raj and Pritam have capitals of Rs. 2,00,000 and Rs. 1,00,000 respectively. Interest on capital is to be allowed as per partnership deed 6% per annum. Their profit-sharing ratio is 5 : 3. The profit for the year was Rs. 15,000. Actual distribution of profit & loss will be:
(a) A Rs. 12,000 and B Rs. 6,000
(b) A loss Rs. 1,875 and B Rs. 1,125
(c) A Rs. 12,000 and B Rs. 3,000
(d) A Rs. 10,000 and B Rs. 5,000
Answer: (d) A Rs. 10,000 and B Rs. 5,000

Question. 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. 6,000 and Y determined interest @24% p.a. on his loan of Rs. 80,000. There was no agreement on this point. Calculate the amount payable to X, Y and Z respectively:
(a) Rs. 2,000 to each partner.
(b) Loss of Rs. 4,400 for X and Z; Y will take Rs. 14,800
(c) Rs. 400 for X, Rs. 5,200 for Y and Rs. 400 for Z.
(d) None of the options
Answer: (c) Rs. 400 for X, Rs. 5,200 for Y and Rs. 400 for Z.

Question. When Goodwill is not purchased goodwill account can:
(a) Never be raised in the books
(b) Be raised in the books
(c) Be partially raised in the books
(d) Be raised as per the agreement of the partners
Answer: (a) Never be raised in the books

Question. Z is a partner in a firm. He withdrew regularly Rs. 2,000 every month for the six months ending 31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest charged will be:
(a) Rs. 480
(b) Rs. 280
(c) Rs. 200
(d) Rs. 240
Answer: (d) Rs. 240

Question. 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
Answer: (b) Dr. A Rs. 1,200; Cr. B Rs. 800 and Cr. C Rs. 400

Question. A partner withdraw 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
Answer: (b) Rs. 720

Question. Ram and Shyam are partners in the ratio of 3 : 2. Before profit distribution, ‘Ram is entitled to 5% commission of the net profit (after charging such commission). Before charging commission, firm’s profit was Rs. 42,000. Shyam’s share in profit will be:
(a) Rs. 16,000
(b) Rs. 24,000
(c) Rs. 26,000
(d) Rs. 16,400
Answer: (a) Rs. 16,000

Question. X and Y are partners in the ratio of 3 : 2. Their capitals are Rs. 2,00,000 and Rs. 1,00,000 respectively. Interest on capitals is allowed @ 8% p.a. Firm incurred a loss of Rs. 60,000 for the year ended 31st March 2019. Interest on Capital will be:
(a) X Rs. 16,000; Y Rs. 8,000
(b) A Rs. 8,000; Y Rs. 4,000
(c) X Rs. 14,400; Y Rs. 9,600
(d) No Interest will be allowed
Answer: (d) No Interest will be allowed

Question. Identify the factor that affects the valuation of goodwill:
(a) Favorable location
(b) Favorable contracts
(c) Quality of products
(d) All of the options
Answer: (d) All of the options

Question. According to Profit and Loss Account, the net profit for the year is Rs. 1,50,000. The total interest on partner’s capital is Rs. 18,000 and interest on partner’s drawings is Rs. 2,000. The Divisible profit as per Profit and Loss Appropriation Account will be:
(a) Rs. 1,66,000
(b) Rs. 1,70,000
(c) Rs. 1,30,000
(d) Rs. 1,34,000
Answer: (d) Rs. 1,34,000

Question. 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.
Answer: (c) Equal share of profits and losses

Question. Vinod and Anuj are partners sharing profits equally. Vinod get a commission on sales @ 5%. Sales were Rs. 6,00,000 during the year. Commission of Vinod is to be shown in:
(a) Profit and Loss Account
(b) Trading Account
(c) Profit and Loss Appropriation Account
(d) In his capital account only
Answer: (c) Profit and Loss Appropriation Account

Question. Under what circumstances, a partner can get exemption from sharing losses in a firm?
(a) If he is a senior citizen
(b) If he is a minor
(c) If he is retiring partner
(d) All of the options
Answer: (b) If he is a minor

Question. Need of Profit and Loss Adjustment account is for:
(a) Appropriation of profits
(b) Charge against profits
(c) Rectification of errors or omissions
(d) None of the options
Answer: (c) Rectification of errors or omissions

Question. 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
Answer: (b) Rs. 1,800

Question. In a firm, 10% of net profit after deducting all adjustments, including reserve is transferred to general reserve. The net profit after all adjustments but before transfer to general reserve is Rs. 44,000. Calculate the amount which is to be transferred to reserve.
(a) Rs. 2,500
(b) Rs. 4,000
(c) Rs. 4,400
(d) Rs. 2,200
Answer: (b) Rs. 4,000

Question. Virat and Anushka are partners in a firm sharing profit and losses in 2 : 1 ratio. Their capital balance were Rs. 10,00,000 and Rs. 8,00,000 respectively. The firm made profits during the year amounting to Rs. 3,45,000. Both partners are allowed salary of Rs. 2,500 per month. Interest on capital is allowed @ 5% on capital balance. Calculate Closing balance of capital for Virat and Anushka.
(a) V = Rs. 12,10,000, A = Rs. 9,35,000
(b) V = Rs. 12,35,000, a = Rs. 9,10,000
(c) V = Rs. 13,10,000, A = Rs. 9, 85,000
(d) None of the options
Answer: (a) V = Rs. 12,10,000, A = Rs. 9,35,000

Question. The Partnership Agreement between Mahesh and Ramesh provides that:
(i) profits will be shared equally.
(ii) Mahesh will be allowed a salary Rs. 400 per month.
(iii) Ramesh is allowed a commisiion @ 10% on net profits before adjusting any remuneration.
(iv) 10% per annum interest will be charged on drawings.
(v) their annual drawings were Rs. 16,000 and Rs. 14,000 respectively.
Net profit before above adjustments are Rs. 40,0000. Calculate profits to be distributed between partners.
(a) Rs. 34,200
(b) Rs. 32,700
(c) Rs. 47,300
(d) Rs. 29,700
Answer: (b) Rs. 32,700

Question. ‘A’ and ‘B’ were partners in a firm. They share profits in 2 : 3 ratio. They close their accounts on 31st Devermber every year. ‘A’ withdrew a fixed sum of Rs. 2,000 at the beginning of every month starting form 1st July, 2017. You have to calculate interest on drawings while rate of interst is 12%.
(a) Rs. 420
(b) Rs. 720
(c) Rs. 440
(d) Rs. 580
Answer: (a) Rs. 420

Question. The capital balance of a partner at the end of the year (after adjusting for his drawings Rs. 3,500 and his share in the profit Rs. 2,300) is Rs. 12,000. Interest on capital is payable to him at 5% per annum. What will be the amount of interest on capital?
(a) Rs. 660
(b) Rs. 600
(c) Rs. 540
(d) None of the options
Answer: (a) Rs. 660

Question. Find out those situations which create need for valuation of goodwill for a partnership firm?
(a) When existing partners change their profit sharing ratio
(b) When a new partner comes into partnership
(c) When an existing partner retires from partnership
(d) All of the options
Answer: (d) All of the options

Question. The profits for last 3 years were:
1st year = Rs. 6,000 (including abnormal gain Rs. 2,000)
2nd year = Rs. 4,000 (after charging abnormal loss Rs. 3,000)
3rd year = Rs. 2,500 (including abnormal income Rs. 1,500)
Calculate goodwill on the basis of 3 years’ purchase of last 3 years profits and losses.
(a) Rs. 12,500
(b) Rs. 12,000
(c) Rs. 13,000
(d) Rs. 16,000
Answer: (b) Rs. 12,000

Question. 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 the options
Answer: (a) Rs. 54,000

Question. A firm earns Rs. 1,20,000 as its annual profits. The normal rate of profit being 10%. Assets of firm are 14,40,000 and liabilities are Rs. 4,40,000. Find value of goodwill by Capitalisation Method.
(a) Rs. 4,00,000
(b) Rs. 2,80,000
(c) Rs. 2,00,000
(d) Rs. 3,60,000
Answer: (c) Rs. 2,00,000

Question. Average profit of firm is Rs. 3,00,000. Total tangible assets in the firm are Rs. 28,00,000 and outside liabilities are Rs. 8,00,000. In same type of business, normal rate of return is 10% of capital employed. Calculate goodwill by Capitalisation of Super Profit Method.
(a) Rs. 14,00,000
(b) Rs. 16,00,000
(c) Rs. 18,00,000
(d) Rs. 10,00,000
Answer: (d) Rs. 10,00,000

Question. In case of partnership the act of any partner is:
(a) Binding on all partners
(b) Binding on that partner only
(c) Binding on all partners except that particular partner
(d) None of the options
Answer: (a) Binding on all partners

Question. 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 partnr
(d) None of the options
Answer: (b) A minor can be admitted as a partner, only into the benefits of the partnership

Question. Oustensible partners are those who?
(a) do not contribute any capital but get some share of profit for lending their name to the business
(b) contribute very less capital but get equal profit
(c) do not contribute any capital and without having any interest in the business, lend their name to the business
(d) contribute maximum capital of the business
Answer: (c) do not contribute any capital and without having any interest in the business, lend their name to the business

Question. Sleeping partners are those who?
(a) take active part in the conduct of the business but provide no capital. However, salary is paid of them.
(b) do not take any part in the conduct of the business but provide capital and share profits and losses in the agreed ratio.
(c) take active part in the conduct of the business but provide no capital. However, share profits and losses in the agreed ratio.
(d) do not take any part in the conduct of the business and contribute no capital. However, share profits and losses in the agreed ratio.
Answer: (d) do not take any part in the conduct of the business and contribute no capital. However, share profits and losses in the agreed ratio.

Question. Which of the following is not incorporated in the Partnership Act?
(a) profit and loss are to be shared equally
(b) no interest is to be charged on capital
(c) all loans are to be charged interest @ 6% p.a.
(d) all drawings are to be charged interest.
Answer: (d) all drawings are to be charged interest.

Question. The excess amount which the firm can get on selling its assets over and above the saleable value of its assets is called:
(a) Surplus
(b) Super profits
(c) Reserve
(d) Goodwill
Answer: (d) Goodwill