Accounting for Partnership Firms - Fundamentals

By virtue of Section 464 of the Companies Act, 2013 the Central Government is empowered to prescribe maximum number of partners in a firm but the number of partners cannot be more than ___________.

• 50

• 100

• 20

• 10

Which of the following elements of the nature of partnership is so important that there would be no partnership, if this element is absent?

• Agreement

• Sharing of Profit

• Lawful Business

• Mutual Agency

"The liability of a partner for acts of the firm is unlimited." Which of the following statement best describes the unlimited liability of a partner?

• Each partner is liable jointly with all the other partners and also severally to the third party for all the acts of the firm done while he is a partner.

• A partner's private assets can also be used for paying off the firm's debts.

• A partner is declared insolvent on his failure to pay the firm's debts.

• All of the above.

Ram and Mohan are childhood friends. Ram is a consultant whereas Mohan is an architect. They contributed equal amounts and purchased a building for Rs. 2 crores. After a year, they sold it for Rs. 3 crores and shared the equally. Are they doing the business in partnership?

• Yes

• No

In the absence of partnership deed, interest on loan of a partner is allowed :

• @ 8% per annum

• @ 6% per annum

• no interest is allowed

• @ 12% per annum

Which of the following transactions is always recorded in the partner's capital account irrespective of whether the partners capitals are fixed or fluctuating?

• Interest on partner's loan

• Additional capital introduced by a partner

• Permanent withdrawal of capital by a partner

• both (b) and (c)

If the drawings are made at regular intervals, as on the first day of each month, interest on drawings is calculated for an average period of _____.

• 6.5 months

• 6 months

• 5.5 months

• 7.5 months

Yash, a partner withdraws a fixed amount in the beginning of every month for the first six months of the year 2019-20. What will be the average period for calculation of interest on drawings?

• 6.5 months

• 5.5 months

• 3.5 months

• 2.5 months

Ram and Shyam are partners sharing profits and losses equally. Ram withdrew Rs. 1,000 p.m regularly on the first day of every month during the year 2019-20 for personal expenses. If interest on drawings is charged @ 5%p.a What will be interest on the drawings of Ram?

• Rs. 50

• Rs. 27

• Rs. 600

• Rs. 325

Partners current accounts are opened when their capital accounts are:

• Fixed and Fluctuating both

• Fluctuating

• None of these

• Fixed