Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

Which of these is not an implied authority of a partner in the absence of any specific provisions in the partnership deed _____________________.

book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

  1. To buy or sell goods on behalf of the firm

  2. To receive payment on behalf of the firm

  3. To sue on behalf of the firm and defend suit in the name of the firm

  4. to submit a dispute relating to the firm for arbitration

Show answer
Correct Option: D

Partner share profit or loss _______________.

book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

  1. Equally

  2. Proportionate to their capital

  3. As agreed in the partnership deed

  4. Based on qualification and experience

Show answer
Correct Option: C

Which of these provisions are found in Partnership Act regarding sharing of profit and loss by partners ? 

book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

  1. share the profits and losses in the ratio of their capital contributions

  2. share the profits and losses equally irrespective of any agreement between them to the contrary

  3. share the profits and losses equally in the absence of any agreement to the contrary between them

  4. share the profits and losses in the ratio of their personal effoks input

Show answer
Correct Option: C

The right to indemnity is lost on ___________________.

book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

  1. the dissolution of the partnership

  2. the death of the partner

  3. the retirement of the partner

  4. neither (a) nor (b) nor (c)

Show answer
Correct Option: D

P and Q are two partners sharing profit and loss equally. P draws Rs. 2,000 at the end of each month for 6 months whereas Q draws Rs. 1,000 at the beginning of each month for six months. Assuming that interest on drawing is to be charged at 6% p.a. Interest on drawing of Q will be.

book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

  1. Rs.105

  2. Rs.100

  3. Rs.110

  4. Rs.101

Show answer
Correct Option: A

P and Q are two partners sharing profit and loss equally. P draws Rs. 2000 at the end of each month for 6 months whereas Q draws Rs. 1,000 at the beginning of each month for six months. Assuming that interest on drawing is to be charged at 6% p.a. Interest on drawing of P will be __________.

book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

  1. Rs. 150

  2. Rs. 80

  3. Rs. 86

  4. Rs. 90

Show answer
Correct Option: A

Bill and Monica are partners sharing profits and losses in the ratio of $3:2$ having the capital of Rs. $80,000$ and Rs. $50,000$ respectively. They are entitled to $9\%$ p.a. interest on capital before distributing the profits. During the year firm earned Rs. $7,800$ before allowing any interest on capital. Profits apportioned among Bill and Monica is?

book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

  1. $4,680$ and $3,120$

  2. $4,800$ and $3,000$

  3. $5,000$ and $2,800$

  4. None of these

Show answer
Correct Option: D

State with reasons whether the following statement is true or false:
Loss of stock is said to be abnormal loss when such loss is due to inherent characteristics of the commodities.

book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

  1. True

  2. False

Show answer
Correct Option: B

Interest on capital is given from profit and loss appropriation account to a partner __________________.

book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

  1. Only if allowed as per agreement

  2. Only if there are any profits in P&L appropriation account

  3. Both a & b

  4. None of the above

Show answer
Correct Option: C
Explanation:

Interest on capital is that amount which any partner receives at the end of financial year beacuse of his capital being invested in business. Moreover, interest on capital is not charge on profits, that is, interest is based on the profits earned by business in that year.

Interest on capital is given to partners only when it is mentioned in the partnership deed or agreement and if the company has earned any profit in the respective year.
If there is any loss in the business, interest on capital will not be provided to partners.

X and Y are partners sharing profit and loss at the ratio of 1/3 and 2/3 respectively. The net income for this accounting period is Rs 10,000 while salary of X = Rs 2,000, interest on Y's drawings = Rs 3,000 and interest on X's capital = Rs 2,000. What is the X's share of profit or loss after the adjustment for partner's salary, interest on capital and interest on drawings?

book keeping and accountancy accounting for partnership preparation of profit and loss appropriation account profit and loss appropriation account profit and loss appropriation account and distribution of profits among partners

  1. 3,000

  2. 6,000

  3. 9,000

  4. 2,000

Show answer
Correct Option: A
Explanation:


X and Y share profit & loss in a 1:2 ratio. Salary of X is Rs2,000 along with interest on his capital of Rs2,000. Y has to pay interest on drawings of Rs3,000 and firm earned Rs10,000 ass profits.

                                     Profit & Loss Appropriation a/c

 Particulars (Dr.)  Amount  Particulars (Cr.)  Amount
To Interest on capital a/c (X)To salary a/c (X)To profit on appropriationX's capital a/c      3,000Y's capital a/c      6,000  2,0002,0009,000  By p/l a/cBy interest on drawings a/c (Y) 10,0003,000

Thus, X's share of profit after all appropriations is $Rs3,000$