Practice Questions of Accounting for Partnership Firm: Fundamental
Lesson 1 – Partnership Firm – Fundamental
Dear students, there are no many days left in the board exam. During this time you should practice as much as possible. Only practice and revision is the main key to success. That’s why we are posting some questions for you here. We hope these questions will help you in revising the concepts of Partnership Firm fundamental chapter.
I. State which of the following is correct:
Question 1. Partnership deed may be _______
(a) oral
(b) written
(c) duplicate
(d) either written or oral
Answer: (d) either written or oral
Question 2. If no agreement is made by partners then interest on loan will be given @ _________
(a) 5% p.a.
(b) 6% p.a.
(c) no interest
(d) 7% p.a
Answer: (b) 6% p.a.
Question 3. Profit will be divided in ________ in the absence of partnership deed.
(a) 1 : 1
(b) 2 : 1
(c) 1 : 2
(d) equal ratio
Answer: (d) equal ratio
Question 4. In a partnership, the liability of all partners is _________
(a) unlimited
(b) limited
(c) according to capital
(d) decided by the company act
Answer: (a) unlimited
Question 5. The maximum number of partners in a partnership firm can be ________
(a) 50
(b) 20
(c) 100
(d) no limit
Answer: (a) 50
Question 6. When there is no partnership deed then provisions of partnership act ________ will be applicable.
(a) 1956
(b) 1912
(c) 1932
(d) 1949
Answer: (c) 1932
Question 7. Liability of a partner in LLP is ________
(a) limited
(b) unlimited
(c) not defined in the law
(d) limited to the capital only
Answer: (a) limited
Question 8. Provisions of Table _______ are applicable in the absence of partnership deed.
(a) A
(b) B
(c) C
(d) D
Answer: (a) A
Question 9. In the absence of any provision, interest on capital will be calculated for _________.
(a) 6 months
(b) 1 year
(c) 1 month
(d) no interest
Answer: (d) no interest
Question 10. The minimum number of partners in a partnership are ________
(a) 5
(b) 7
(c) 2
(d) 10
Answer: (c) 2
Question 11. Current accounts are opened if capital is __________
(a) fixed
(b) fluctuating
(c) not contributed
(d) fixed or fluctuating
Answer: (a) fixed
Question 12. Balance of fix capital accounts may be _________.
(a) Dr.
(b) Cr.
(c) Dr. or Cr.
(d) Cr. and Dr.
Answer: (b) Cr.
Question 13. Salary to partners will be shown in _________
(a) Profit and loss account
(b) Profit and loss appropriation account
(c) Trading account
(d) Manufacturing account
Answer: (b) Profit and loss appropriation account
Question 14. Interest on capital will be shown in ________
(a) Capital account
(b) Profit and loss appropriation account
(c) Trading account
(d) Both of capital account and profit and loss appropriation account
Answer: (d) Both of capital account and profit and loss adjustment account
Question 15. Drawings of partners will be shown in ________
(a) Capital account
(b) Profit and loss appropriation account
(c) Profit and loss account
(d) Trading account
Answer: (a) Capital account
Question 16. In the absence of a partnership deed partners are entitled to receive __________
(a) Interest on Capital
(b) Interest on Loan
(c) Salary
(d) Commission
Answer: (b) Interest on Loan
Question 17. When the question is silent about the date of withdrawal of drawing then Interest will be calculated for ________
(a) 6 months
(b) 1 month
(c) 6½ months
(d) 1 year
Answer: (a) 6 months
Question 18. If the partnership deed mentions that interest will be given 6% p.a. interest will be given _________
(a) out of profits only
(b) definitely
(c) out of losses
(d) with the permission of all partners
Answer: (a) out of profits only
Question 19. Partners Current Account have _________
(a) debit balance
(b) credit balance
(c) debit or credit
(d) debit and credit
Answer: (c) debit or credit
Question 20. In the absence of a partnership deed, how much interest will be given on capital?
(a) 5% p.a.
(b) 6% p.a.
(c) 7% p.a.
(d) No interest
Answer: (d) No interest
II. Fill in the blanks with the correct word.
Question 1. In the absence of a deed, ______ salary will be given to partners.
Answer: No
Question 2. In the absence of a deed, profit will be shared in _______ ratio.
Answer: Equal
Question 3. ________ accounts are opened, while capital is fixed.
Answer: current
Question 4. ________ accounts is opened, while capital is fluctuating.
Answer: capital
Question 5. Liability of partners is ________ in a general partnership firm.
Answer: Unlimited
Question 6. Liability of partners is ________ in LLP.
Answer: limtied
Question 7. The business of the firm can be conducted even by ________ partner.
Answer: One
Question 8. There must be atleast two ________ partners in LLP.
Answer: designated
Question 9. A partnership can be formed only for a _________ business.
Answer: legal
Question 10. Partners are mutual _______ of each other in a partnership firm/business.
Answer: agents
Question 11. Money advanced to the firm in addition to the capital is called __________
Answer: loan
Question 12. The partnership is the result of _________ between two or more persons.
Answer: Agreement
Question 13. General Partnership is governed by Partnership Act ________ where LLP is govern by LLP Act _______
Answer: 1932, 2008
Question 14. To form a partnership there should be atleast _______ persons.
Answer: two
Question 15. The business of _________ concern may be carried on by all the partners or any of them acting for all.
Answer: partnership
Question 16. ________ interest is to be charged on the drawings made by the partners, if there is nothing mentioned in
the deed.
Answer: No
Question 17. Maximum number of partners in a partnership firm can be ________
Answer: 50
Question 18. Interest on partners _________ to the firm shall be paid even if there are losses.
Answer: loan
III. State whether the following statements are True or False.
Question 1. Minimum number of partners in a partnership firm is two.
Answer: True
Question 2. In the absence of a partnership deed, no interest will be charged on drawings.
Answer: True
Question 3. In the absence of a partnership deed, profit will be distributed equally between all partners.
Answer: True
Question 4. If majority of partners decide to close the LLP business, they can do so by giving notice in writing.
Answer: False
Question 5. In the absence of partnership deed, interest @ 6% p.a. will be allowed on partner’s Loan.
Answer: True
Question 6. In the absence of partnership deed, interest on capital will be given @ 6% p.a.
Answer: False
Question 7. In case of LLP business in partnership, maximum number of partners are limited.
Answer: False
Question 8. Partnership deed must be in written form.
Answer: False
Question 9. A minor can never become a partner in a partnership firm.
Answer: False
Question 10. Liability of partners in general partnership is unlimited.
Answer: True
Question 11. If partnership deed is silent then remuneration can be given to partners.
Answer: False
Question 12. If any partner remain absent from the business, share of profit will automatically reduce.
Answer: False
Question 13. If time of drawings is not given then interest will be calculated for half of the time period.
Answer: True
Question 14. In case of fixed capital accounts, balance of capital always fluctuate.
Answer: False
Question 15. Partners Current Account always have credit balance.
Answer: False
Question 16. Every partner is an agent of the firm.
Answer: True
Question 17. Expenses as charge in nature are shown in the profit and loss appropriation account whereas expenses as appropriation in nature is shown in the profit and loss account.
Answer: False
Question 18. A partnership Act 1932 does not differentiate kind of businesses whereas LLP Act 2008 permits only
legal business to run.
Answer: False
Question 19. Under fixed capital, any provision of salary, interest etc., are shown incurrentaccount.
Answer: True
Question 20. LLP business is similar to the company form of business.
Answer: True
IV. One-word Questions
Question 1.
Chhavi and Neha were partners in a firm sharing profits and losses equally. Chhavi withdrew a fixed
amount at the beginning of each quarter. Interest on drawings is charged @ 6% p.a. At the end of the year,
interest on Chhavi’s drawings amounted to ₹ 900. Pass necessary journal entry for charging interest on
drawings.
Question 2.
Dev withdrew ₹ 10,000 on 15th day of every month. Interest on drawings was to be charged @ 12% per
annum. Calculate interest on Dev’s drawings.
Answer: Interest On Drawings = 1,20,000 × 12/100 × 6 × 12 = 7,200
Question 3.
Amit, a partner in a partnership firm withdrew ₹ 7,000 at the beginning of each quarter. For how many
months would interest on drawings be charged?
Answer: 7½ months
Question 4.
Raj and Seema started a partnership firm on 1st July 2018. They agreed that Seema was entitled to a
commission of 10% of the net profit after charging Raj’s salary of ₹ 2,500 per quarter and Seema’s
commission. The net profit before charging Raj’s salary and Seema’s commission for the year ended 31st March 2019 was ₹ 2,27,500. Calculate Seema’s commission.
Answer: Net profit before salary and commission = ₹ 2,27,500
Net Raj’s salary ₹ 2,500 × 3 = ₹ 7,500
Net profit after Raj’s salary but before Seema’s commission = ₹ 2,20,000
Seema’s commission = 10/110 of ₹ 2,20,000 = ₹ 20,000
Question 5.
A and B are partners in firm sharing profits and losses in the ratio of 7 : 3. Their fixed capitals were: A ₹
9,00,000 and B ₹ 4,00,000. The partnership deed provided the following:
(i) Interest on capital @ 10% p.a.
(ii) A’s salary ₹ 50,000 per year and B’s salary ₹ 3,000 per month.
Profit for the year ended 31st March 2019 ₹ 2,78,000 was distributed without providing for interest on
capital and partner’s salary. Showing your work clearly, pass the necessary adjustment entry for the above
omissions.
Question 6.
Partners of ABC Corporation have agreed that D, a minor, should be admitted as a partner in the firm.
What will be the liability of D?
Answer: Limited
Question 7.
X, Y, and Z are partners in a firm. The firm had adopted the fixed capital method. Mention the account in
which the interest on capital will be recorded:
Answer: Capital Account
Question 8.
A partnership deed provides for the payment of interest on capital but there was a loss instead of profits
during the year 2010-11. Will the interest on capital be allowed?
Answer: No
Question 9.
Where is interest on a partner’s loan debited to Profit and Loss Account or Profit and Loss Appropriation
Account?
Answer: Profit and loss Account
Question 10.
Is interest on a partner’s loan is payable even in case of loss to the firm?
Answer: Yes
Question 11.
Net profit of a firm is ₹ 30,000, partners’ salary is ₹ 12,000, and interest on capital is ₹ 20,000. Mention
the amount of partners’ salary and interest on capital which should be debited to the Profit and Loss
Appropriation Account if both items are treated as appropriation.
Answer: Partners’ salary ₹ 11,250, Interest on capital ₹ 18,750.
Note: In the ratio of salary and interest on capital i.e. 12,000 : 20,000 = 3 : 5.
Question 12.
Ram and Shyam are partners sharing profits/losses equally. Ram withdrew ₹ 1,000 p.m. regularly on the
first day of every month during the year 2013-14 for personal expenses. If interest on drawings is charged
@ 5% p.a. Calculate interest on the drawings of Ram.
Answer: Interest on Drawings = = ₹ 325
Question 13.
Verma and Kaul are partners in a firm. The partnership agreement provides that interest on drawings
should be charged @ 6% p.a. Verma withdraws ₹ 2,000 per month starting from April 01, 2013 to March
31, 2014. Kaul withdraw ₹ 3,000 per quarter, starting from April 01, 2013. Calculate interest on partner’s
drawings.
Answer: Interest on Verma’s Drawings = = ₹ 780
Interest on Kaul’s Drawings = = ₹ 450
Question 14.
Himanshu withdraws ₹ 2,500 at the end of each month. The partnership deed provides for charging the
interest on drawings @ 12% p.a. Calculate interest on Himanshu’s drawings for the year ending 31st
December 2013.
Answer: Interest on Drawings = = ₹ 1650
Question 15.
Bharam is a partner in a firm. He withdraws ₹ 3,000 at the starting of each month for 12 months. The
books . of the firm closes on March 31 every year. Calculate interest on drawings if the rate of interest is
10% p.a.
Answer: Bharam withdraws ₹ 3,000 at the starting of each month.
Therefore, Drawings = ₹ 3,000 × 12 = 36,000
Interest on Drawings = = ₹ 1,950
Question 16.
Amit and Bhola are partners in a firm. They share profits in the ratio of 3 : 2. As per their partnership
agreement, interest on drawings is to be charged @ 10% p.a. Their drawings during 2013 were ₹ 24,000
and ₹ 16,000, respectively. Calculate interest on drawings based on the assumption that the amounts were
withdrawn evenly, throughout the year.
Answer: Amit’s Drawings = ₹ 24,000
Interest on Drawings @ 10% p.a = = ₹ 1,200
Bhola’s Drawings = ₹ 16,000
Interest on Bhola’s Drawings = = ₹ 800
Note: In the absence of the date of drawings, it is assumed drawings have been made in the middle of
each month/period.
Question 17.
A, B, and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. B was guaranteed a profit of ₹
2,00,000. During the year the firm earned a profit of ₹ 84,000. Calculate the net amount of Profit/Loss
transferred to the capital accounts of A and C.
Answer: Net Amount of Loss transferred to:
A’s Capital Account: ₹ 87,000
C’s Capital Account: ₹ 29,000
