Ch:2 – Partnership Basic Concepts – Previous year Questions

Ch.2 Partnership Basic Concepts

  1. The written agreement of partnership is called ______.
    (a) Articles of Association (b) Memorandum of Association (c) Partnership Deed (d) None of these
    Ans : partnership deed
  2. _______ account shows how profit is distributed among partners.
    (a) Partners’ Current Account
    (b) Profit and Loss Appropriation Account
    (c) Partners’ Capital Account
    (d) Profit and Loss Account
    Ans : (b) Profit and Loss Appropriation Account
  3. A Partnership firm incurs a loss of Rs. 28,000 during the year 2018-19. Which among the following is admissible to Partners at the end of this year ?
    (a) Interest on Partners Loan
    (b) Interest on Partners Capital
    (c) Commission to Partners
    (d) Salary to Partners
    Ans : (a) Interest on Partners Loan
  4. Identify the name of the account which is prepared to show, how the profits are distributed among partners.
    (a) Income & Expenditure A/c.
    (b) Profit & Loss A/c.
    (c) Profit & Loss Appropriation A/c.
    (d) None of these
    Ans : (c) Profit & Loss Appropriation A/c.
  5. Under fixed capital method of maintaining capital accounts, yearly adjustment are transferred to partner’s ______.
    (a) Capital Account       (b) Current Account
    (c) Loan Account          (d) Cash Account
    Ans :  Current Account
  6. Partners are entitled to get _____ in the absence of an agreement.
    (a) Salary (b) Share of Profit in capital ratio (c) Interest on Partners loan @ 6% p.a. (d) Commission
    Ans : Interest on Partners loan @ 6% p.a
  7. Under fixed capital method, the interest on drawings is :
    (a) credited to capital account (b) debited to capital account   (c) credited to current account (d) debited to current account
    Ans : (d) debited to current account
  8. A Partnership firm incurs a loss of Rs. 28,000 during the year 2018-19. Which among the following is admissible to Partners at the end of this year ?(a) Interest on Partners Loan

    (b) Interest on Partners Capital

    (c) Commission to Partners

    (d) Salary to Partners
                  Ans : (a) Interest on Partners Loan

  9. Siva is a partner in United Tours and Travels. He withdrawsRs. 4,000 per month regularly in the middle of every month during the year 2019. The rate of interest on drawings is 8%. Calculate Interest on drawings for the year 2019.                          (2 score)

    Ans: Total drawings = 4000*12=48,000
      Interest on drawing = 48000*8/100*6/12 = 1920
  10. Rejth is a partner in a firm. On 1st January 2017, his capital account balance was Rs:2,20,000. As per partnership agreement a partner is entitled to 6% interest per annum on his capital. Rejith introduced additional capital Rs. 80,000 on 01-07-2017 and withdrew Rs: 50,000 on 1-10-2017. Calculate the interest on capital for the year ending 31st December 2017.                                                                                                                              (3 score)
    Ans : Interest on capital
            For 220000×6/100×6/12 = 6600   (220000 for 6 month, 1-1-17 to 1-7-17)
                  300000×6/100×3/12 = 4500  (300000 for 3 months ,1-7-17 to 1-10-17)
                  250000×6/100×3/12 = 3750  (250000 for 3 months ,1-10-17 to 31-12-17)
            Interest on capital          14,850
                                                                                                                        To watch video : Click here
  11. Madhu, a partner withdrewRs. 1,100 per month for his personal use during the year ending 31st December, 2017. Calculate interest on his drawings at 10% p.a. when the amount is withdrawn on the first day of every month.
    Ans : Total drawings =1100*12=13200
            Interest on drawings = 13200*10/100*6.5/12=715.00
  12. Chaithanya and Sandra are partners in a firm, sharing profits and losses equally. During the financial year 2017-18, Sandra withdrew Rs.20,000 quarterly at the beginning of each quarter. Find out the interest on drawings @ 8% p.a.
    Ans : Total Drawings = 20000*4 =80,000
            Interest on drawings = 80000*8/100*7.5/12 =4000
  13. Rajan and Gopan are partners in a firm. If they do not have any partnership agreement, what should be done in the following cases ?
    (a) Rajan demands a salary of Rs.2,000 per month for his service in business.
    (b) Gopan wants that profit should be distributed in the ratio of Capitals, but Rajan wants that it should be distributed equally.
  14. How will you treat the following items in partnership accounts in the absence of partnership deed ?                                                                                                                                (2 Marks)
    (a) Profit Sharing Ratio(b) Interest on Drawings

    Ans :Rules applicable in the absence of partnership deed
    1. Profit sharing ratio – equally
    2. Interest on capital – not entitled
    3. Interest on drawings – not entitled
    4. Remuneration to partners – not entitled
    5. Interest on loan –@ 6%
  15. Write any 4 differences between fixed capital and fluctuating capital methods.      (3Marks)
  16. What are the two methods of maintaining Capital Accounts of partners ? Give any four differences between these two methods.Ans :     Fixed capital method and Fluctuating capital method
    Difference between Fixed capital method and Fluctuating capital method

    Fixed Capital Method Fluctuating Capital Method
    1-Number of Accounts Two accounts,Capital a/c and current a/c One account- Capital a/c(all items included in capital a/c itself)
    2-Nature Remain un altered Fluctuates
    3-Adjustments Made in Current a/c Adjustment made in current a/c
    4-Appearance in the B/S Both Capital and Current a/c Only capital a/c
    5-Specifically mentioned in Partnership deed It should be mentioned in the Partnership Deed Not necessary
  17. Calculate interest on drawings from the following :
    Month & Year Amount  Rs.
    Jan.-1, 2018  12,000
    Feb.- 28, 2018 6,000
    April -1, 2018 8,000
    Aug.-1, 2018  6,000
    Nov.-30, 2018 4,000
    Dec.-31, 2018 2,000

    Accounting year closes on Dec. 31st every year and interest on drawings charged at 6% p.a.

    Ans:

    Date Amount Period (Months) Product

    Jan 1,2018

    Feb 28,2018

    April 1,2018

    Aug 1,2018

    Nov 30,2018

    Dec 31,2018

    12,000

    6,000

    8,000

    6,000

    40,000

    2,000

    12 

    10

    9

    5

    1

    0

    14,400

    60,000

    72,000

    30,000

    4000

     ___0___

    3,10,000

    Interest on Drawings = 3,10,000×6/100×1/12 = Rs.1550                                             (5 Marks)
                                                                                                                  To watch video : Click here

  18. Prya is a partner in a firm, her capital at the end of the financial year 2016-17 was 2,00,000. During the year she had withdrawn Rs.30,000. Her share of profit before charging interest on capital for the year wasRs. 8,000.     Calculate interest on capital @ 10% p.a.
    Ans  :
    Closing capital Balance – 200,000
    Add : Drawings                – 30000
                                              2,30,000
    Less : Share of profit           8000
    Opening capital              2,22,000
    Interest on capital = 2,22,000×10/100=22,200
  19. List out any four items to be credited to a Partner’s current account ,when capitals are fixed.                                  (2 marks)
  20. Mr. Rajeev, a partner in a firm withdrew Rs .2,000 each every month from the firm. Calculate the amount of interest on drawings @ 8% per annum, assuming that he withdraws the amount :
    (a) at the beginning of each month.
    (b) at the end of each month.
  21. Jeeja and Rekha are partners in a firm. Their capital balances as on 01-04-2020 were Jeeja Rs. 1,50,000 and Rekha Rs. 2,00,000. On 1-10-2020 Jeeja introduced additional capital ofRs. 50,000. Calculate the interest on capital @ 10% per annum assuming that they close their books of account on 31st March every year.
  22. A & B are partners in a firm sharing profits and losses in the ratio of 2:1. They admit C as a partner for 1/4 share in profit with a guaranteed minimum profit of Rs.10,000. The net profit of the firm after C’s admission isRs. 30,000. C will get a profit of _______.
    (a)Rs. 7,500       (b)Rs. 10,000      (c)Rs. 5,000        (d)Rs. 15,000
    Ans :10,000
    1. Akhil, a partner in a firm, withdrew the following amounts during the year ended March 31, 2021 for his personal use. Date of Withdrawal Amount

    April 30, 2020 –  7,000
    Sept. 30, 2020  – 4,000
    Dec. 1, 2020  – 5,000

    Calculate the amount of interest on drawings to be charged from Akhil, if the rate of interest is at 8% p.a.
    Ans : Product method ,806.66 or 807

  23. Santhosh and Suresh are partners in a firm. Their capital accounts showed a balance ofRs. 50,000 andRs. 40,000 as on 01/04/2020. Santhosh introduced an additional capital ofRs. 10,000 on 01/07/2020 and SureshRs. 5,000 on 01/01/2021. Calculate partners interest on capital @ 6% p.a. for the year ended 31/03/2021.
    Ans : Santhosh – 3450, Suresh – 2475
  24. Reena and Rehna are partners in a firm sharing profits and losses in the ratio of 3 : 2 with capitals ofRs. 5,00,000 andRs. 4,00,000 respectively. The profit of the firm for the year ended March 31, 2021 wasRs. 1,00,000. Interest on capital is to be allowed at 5% p.a. Reena is to be paid a salary ofRs. 2,500 per month. Prepare the Profit and Loss Appropriation Account to show the distribution of profit among the partners.
    Ans : Profit Reena – 15000, Rehna – 10000
  25. Complete the following table with regard to the provisions applicable in the absence of partnership deed on the basis of the hint given :
    Hint : Interest on capital No.
    (a) Sharing of Profits and Losses ……………………..
    (b) Interest on drawings …………………….
    (c) Interest on loan from a partner ………………………
    (d) Remuneration to partner …………………..
  26. Mohan is a partner in a firm. On 1st April, 2017 his capital account showed a balance of 5,00,000. He had withdrawn 50,000 from his capital on 1st July,2017. Calculate the amount of interest on capital @ 6%p.a. for the year ending 31 st March, 2018.
    Ans:27750
  27. Roy and Sara are partners sharing profits and losses in the ratio of 2:1.The following details also available.
    Roy Sara
    Capital

    Salary (Per month)

    Interest on capital

    Drawings

    Interest on drawings

    1,00,000

    800

    8%

    8000

    500

    70,000

    700

    8%

    4500

    350

    Profit during the year amounts to Rs.60,000

    Prepare partners capital accounts, assuming that capitals are fluctuating.
    Ans : Roy – 149100, Sara – 99150. 

    1. Gireesh and Ramees are equal partners in firm and their capitals as on 01-04-2016 were Rs.80,000 and Rs 60,000 respectively. As per the partnership deed Gireesh is entitled to a monthly salary of Rs.3000.Ramees gets a commission of 10% on the Net profit of the business, before charging such commission .They are also eligible for interest on capital at 8% p.a. Interest on drawings is charged as 6%.p.a. Gireesh withdrew Rs.2000 at the beginning of every month for his personal purpose.Total drawings of Ramees during 2016-17 was Rs .20000.
      Prepare Profit and Loss Appropriation Account to show the distribution of profit among partners.The net profit of the business for the year ended 31-03-2017 was rs.124000(before charging above items)

    Ans : 

    Profit – 65780
    Cammissio – 12400
    Interest on drawings
    Gireesh – 24000 x 6/100 x 6.5/12 = 780
    Ramees – 20000 x 6/100 x 6/12 = 600

  28. Under the fixed capital method, all adjustments relating to partners capital are shown in________.
    (a) Current A/c   (b) Capital A/c   (c) Profit & Loss Appropriation A/c    (d) Profit & Loss A/c (Mar23)
  29. List out any four items appearing in the credit side of Partners Capital Account, when capitals are fluctuating.                                                                                       (Mar 23 – 2 Score)
    Ans : Balance bId or Bank, Interest on capital, Partners salary, Partners Commission, Share of profit, General reserve etc
  30. Rajan and Sajan are partners in a firm sharing profits and losses in the ratio of 2 : 1. Their capital balance as on 01-04-2022 was ` 4,00,000 and ` 3,00,000 respectively. The partnership deed provides that Rajan is to be paid a salary of ` 2,000 per month and Sajan is to get a commission of ` 10,000 for the year. Interest on capital is to be allowed at 8% p.a.
    The drawings of Rajan and Sajan for the year were ` 30,000 and ` 10,000 respectively. Interest on Rajan’s drawings was ` 750 and on Sajan’s drawings, ` 250. The Net Profit of the firm before making these adjustments was ` 1,82,000.
    Prepare Profit and Loss Appropriation Account.        (Mar.23   5 Score)
    Ans : Raj an – 62,000,Sajan – 31,000 (Balance – 93,000)
  31. contn….