Partnership Accounts Quiz

What is the definition of Partnership according to the Indian Partnership Act 1932?

• A. The relation between persons who have agreed to share the profits of the business carried on by all or any of them acting for all.

• B. The relation between persons who have agreed to share the losses of the business carried on by all or any of them acting for all.

• C. The relation between persons who have agreed to share the assets of the business carried on by all or any of them acting for all.

• D. The relation between persons who have agreed to share the liabilities of the business carried on by all or any of them acting for all.

Under which Act is Limited Liability Partnership (LLP) defined as a partnership form and registered?

• B. Companies Act 2013

• C. LLP Act 2008

• A. Partnership Act 1932

• D. Income Tax Act 1961

What is the main difference between Partnership and LLP regarding the creation of the entity?

• A. Partnership is created by an agreement, while LLP is created by law.

• B. Partnership is created by law, while LLP is created by an agreement.

• D. Partnership is compulsory, while LLP is optional.

• C. Partnership is optional, while LLP is compulsory.

What is the main characteristic of a partnership deed?

• C. It is the written agreement between partners in the partnership.

• D. It restricts profit and losses to be shared equally.

• A. It allows partners to have a right to salary.

• B. It allows interest to be charged on capital.

Which method of maintaining capital account involves two accounts for each partner, one for capital and one for current?

• D. Static capital method

• A. Fluctuating capital method

• B. Fixed capital method

• C. Floating capital method

What is the purpose of the Profit & Loss appropriation account in a partnership?

• A. To show how the net profit has been distributed among the partners.

• C. To calculate the interest on capital for each partner.

• D. To determine the market value of the business.

• B. To record the daily profits and losses of the business.

How is Goodwill valued in a partnership firm using the Average profit method?

• C. By multiplying the average profit by the number of years of purchase.

• D. By dividing the total profit by the number of partners.

• B. By finding the difference between the capital and assets.

• A. By calculating the total profit over the years.

What is the main difference between Dissolution of Partnership and Dissolution of Firm?

• A. Dissolution of Partnership leads to complete closure of a partnership business, while Dissolution of Firm allows the business to continue.

• B. Dissolution of Partnership allows the business to continue with a new agreement, while Dissolution of Firm leads to complete closure of the business.

• C. Dissolution of Partnership involves settling assets and liabilities, while Dissolution of Firm does not require any settlements.

• D. Dissolution of Partnership changes the economic relationship among partners, while Dissolution of Firm has no impact on the partners.

What is the purpose of a Revaluation account in a partnership firm?

• D. To determine the market value of the business.

• A. To find out profit or loss on revaluation of assets and reassessment of liabilities.

• C. To calculate the interest on drawings for each partner.

• B. To record the daily transactions of the business.

When is a Memorandum Revaluation account prepared in a partnership firm?

• C. To determine the market value of the business.

• D. To find out profit or loss on realization of assets and payment of liabilities.

• B. To calculate the interest on capital for each partner.

• A. To record the effect of revaluation of asset and liabilities and to record asset and liabilities at their old figures in the new balance sheet.