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Worksheetsclass 12 Partnership Accounts Test dtd. 26.08.25
Total questions: 11
Worksheet time: 4mins
How is the profit sharing ratio determined in a partnership?
The profit sharing ratio is determined by partners' contributions and agreements.
The profit sharing ratio is based solely on the age of the partners.
The profit sharing ratio is determined by the location of the business.
The profit sharing ratio is fixed and cannot be changed once established.
What is the significance of a written partnership agreement?
It eliminates the need for communication between partners.
It guarantees profits for all partners involved.
It provides clarity, legal protection, and a framework for resolving disputes.
It allows partners to operate independently without any guidelines.
Describe the treatment of goodwill in partnership accounts.
Goodwill cannot be amortized and is not recorded in partnership accounts.
Goodwill is treated as a liability in partnership accounts.
Goodwill is treated as an intangible asset in partnership accounts, recognized during partner admission or dissolution, and may be amortized.
Goodwill is only recognized during the annual financial audit.
What is the difference between a general partner and a limited partner?
A general partner manages the business and has unlimited liability, whereas a limited partner has limited liability and does not manage the business.
Both partners have equal management responsibilities and liabilities.
A limited partner manages the business and has unlimited liability.
A general partner has limited liability and does not manage the business.
How do partners' capital accounts differ from their current accounts?
Partners' capital accounts are only for tax purposes, while current accounts are for profit distribution.
Partners' capital accounts are used for personal expenses, while current accounts are for investments.
Partners' capital accounts represent equity, while current accounts track ongoing transactions.
Current accounts reflect long-term assets, whereas capital accounts show liabilities.
What is the role of a partnership deed?
The role of a partnership deed is to define the terms and conditions of the partnership.
To outline the profit-sharing ratio among partners.
To provide a list of all partners' personal assets.
To establish the legal identity of the partnership.
How is the profit sharing ratio adjusted when a new partner joins?
The profit sharing ratio remains unchanged regardless of the new partner.
Existing partners must pay the new partner to join the profit sharing.
The profit sharing ratio is adjusted based on the new partner's contribution and the agreement among existing partners.
The new partner automatically receives half of the profits without negotiation.
What are the implications of not having a partnership agreement?
Complete freedom from legal obligations
The implications include potential disputes, lack of clarity in roles, and legal vulnerabilities.
Increased profits for all partners
Guaranteed success in business
Explain how to calculate the share of profit for each partner.
Divide the total profit by the profit-sharing ratio to determine each partner's share.
Add each partner's initial investment to the total profit.
Calculate the share by taking the average of all partners' investments.
Multiply the total profit by the number of partners.
What is the treatment of interest on capital in partnership accounts?
Interest on capital is treated as an expense and credited to partners' capital accounts.
Interest on capital is distributed equally among partners regardless of their capital contributions.
Interest on capital is ignored in partnership accounts altogether.
Interest on capital is treated as a liability and deducted from profits.
Write your name and class roll no.
