Quiz on Partnership Accounting

You are a partner of a firm and want to retire. Your firm has some balances of Reserves A/c. What will you do with that Reserves Balance?

• Reserves should be transferred to your account only

• Reserves should be transferred to remaining partners.

• Reserves should be transferred to all partners.

• None of these

Retiring partner is compensated for forgoing his profit share in favour of all or some of the partners remaining as partners. The compensation is paid by the remaining partner in :

• profit sharing ratio

• Gaining ratio

• Capital ratio

• Sacrificing ratio

Accumulated losses are

• Debited to continuing partners' capital account in new profit-sharing ratio

• Debited to continuing partners' capital account in their old profit- sharing ratio

• Debited to all partner's capital account before reconstitution of the firm in their old profit-sharing ratio

• Credited to all partner's capital account before reconstitution of the firm in their old profit-sharing ratio

A, B and C are partners in a firm sharing profit and losses in the ratio of 3:2:1. The extract of their Balance sheet is as follows: Workmen compensation reserve 48,000 At the time of retirement of A, if liability for workmen compensation of Rs 20,000 is to be created, then what amount of workmen compensation reserve will be shown in new Balance sheet?

• Rs 48,000

• Rs 68,000

• Rs 20,000

• Not to be shown in new balance sheet

Assertion: Y wants that profits should be distributed in the ratio of capitals as he has invested more capital than X this dispute arises as the partnership deed was not there. Reason: As there is no partnership deed Indian Partnership Act, 1932 applies and as per the Act, Profits are to be distributed equally.

• Both A and R true and R is the correct explanation of A.

• Both A and R are true but R is not the correct explanation of A

• A is true and R is false

• A is false and R is true

Assertion: Average Normal Profit as Calculated is multiplied by number of years' purchase to determine the value of goodwill. Reason: Number of years' purchase means the number of years for which the firm is likely to earn same amount of profit after change in ownership becomes of the efforts put in the past.

• Both A and R true and R is the correct explanation of A.

• Both A and R are true but R is not the correct explanation of A

• A is true and R is false

• A is false and R is true

Ishu, Vishu and Nishu are partners in a firm sharing profits and losses in the ratio of 2:3:5. Their fixed capitals were ₹1,50,000, ₹3,00,000 and ₹6,00,000 respectively. After the final accounts have been prepared it was discovered that interest on capital was credited to them @ 12% instead of 10%.

• Nishu's Current A/c will be Debited by ₹1,500.

• Nishu's Current A/c will be Credited by ₹1,500.

• Nishu's Capital A/c will be Credited by ₹1,500.

• Nishu's Capital A/c will be Debited by ₹1,500.

Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R) Assertion (A): Rent paid to partner is shown in P & L Appropriation A/c. Reason (R): Rent paid to partner is a charge against the profits. In the context of the above statements, which one of the following is correct?

• (A) is correct, but (R) is wrong.

• Both (A) and (R) are correct.

• (A) is wrong, but (R) is correct.

• Both (A) and (R) are wrong.

If there exist insufficient profits for appropriations, the available profit is distributed in:

• Profit-sharing ratio

• Appropriation ratio

• Capital ratio

• Equally

Seeta and Geeta are partners sharing profits and losses in the ratio 4:1. Meeta was manager who received the salary of ₹ 4,000 p.m. in addition to a commission of 5% on net profits after charging such commission. Profit for the year is ₹ 6, 30,000 before charging salary. Find the total remuneration of Meeta.

• ₹78,000

• ₹88,000

• ₹87,000

• ₹76,000