Fundamentals of Partnership Firm (MCQs)

Fundamentals of Partnership Firm

MCQs

 Multiple Choice Questions (MCQs)

1. Mahesh, a partner in a partnership firm, withdraws `15,000 at the end of each quarter throughout the year. Calculate the amount of interest if deed provides for interest on drawings @ 6% p.a.?

(a) ₹17,500 (b) ₹1,850 (c) ₹1,250 (d) ₹1,350

2. Salma is a partner in a firm. She withdraws `4,000 per month in the middle of every month during the year ended 31st March, 2021. If interest on drawings is charged @ 8% p.a. the amount of interest on drawings will be

(a) ₹2,350 (b) ₹1,860 (c) ₹1,510 (d) ₹1,920

3. In the absence of partnership deed, a partner is entitled to get interest on his capital in firm at:

(a) 12% p.a. (b) 5% p.a. (c) 6% p.a. (d) None of these

4. Pick the odd one out, with respect to fixed Capital Account:

(a) Capital introduced (b) Interest on Capital (c) Capital withdrawn (d) None of these

5. Bawa is manager in a partnership firm and is entitled to receive a salary of `8,000 per month and a commission of 5% on net profit after charging such commission. Profit for the year is `13,56,000 before charging salary and commission. The total remuneration of Bawa is

(a) ₹1,50,000 (b) ₹95,000 (c) ₹1,75,000 (d) ₹1,56,000

6. Surender, Jitender and Rajiv are partners in a firm sharing profits in the ratio of 5 : 3 : 2. As per partnership deed, Rajiv is to get a minimum amount of `10,000 as profit. Net profit for the year is `40,000. Calculate deficiency (if any) to Rajiv.

(a) ₹1,250 (b) ₹1,650 (c) ₹2,000 (d) ₹3,500

7. Bablee, Suman and Bharti are partners sharing profits equally. Bablee drew regularly ` 4,000 in the beginning of every month for the six months ended 30th September, 2020. Calculate interest on Bablee’s drawings @ 5% p.a.

(a) ₹350 (b) ₹650 (c) ₹800 (d) ₹1100

8. The firm of Satender and Jitender earned a profit of `3,25,000 during the year ending on 31st March 2021. They have decided to donate 10% of this profit to an NGO working for Senior citizens. Choose the correct Journal entry related to the statement:

(a) Satender’s Capital A/c(a) Satender’s Capital A/c Dr. ₹1,46,250

Jitender’s Capital A/c Dr. `1,46,250

To Profit and Loss Appropriation A/c ₹2,92,500

(b) Profit and Loss Appropriation A/c Dr. ₹32,500

To Jitender’s Current A/c ₹16,250

To Satender’s Current A/c ₹16,250

To Satender’s Current A/c ₹1,46,250

To Jitender’s Current A/c ₹1,46,250

(d) None of the above

9. On 1st January, 2021 a partner advanced a loan of `1,00,000 to the firm. In the absence of agreement,

interest on loan on 31st March, 2021 will be:

(a) Nil (b) ₹1,500 (c) ₹3,000 (d) ₹6,000

10. Which of the following items is not dealt through Profit and Loss Appropriation Account?

(a) Interest on Partner’s Loan (b) Partner’s Salary

11. Neena, Meena and Reena are partners sharing profits in the ratio of 3 : 3 : 2. As per the partnership agreement, Reena is to get a minimum amount of `80,000 as her share of profits every year and any deficiency on this account is to be personally borne by Neena. The net profit for the year ended 31st March, 2021 amounted to `3,12,000. Calculate the amount of deficiency to be borne by Neena?

(a) ₹1,000 (b) ₹4,000 (c) ₹8,000 (d) ₹2,000

12. Pick the odd one out:

(a) Rent to partner (b) Manager’s Commission

13. Number of Partners in a partnership firm may be:

(a) Maximum 2 (b) Maximum 10 (c) Maximum 100 (d) Maximum 50

14. In which condition a partnership firm is deemed to be dissolved?

(a) on a partners’ admission (b) on retirement of partner

15. If equal amount is withdrawn by a partner at the end of each month during a period of 6 months, interest on the total amount will be charged for .................. months.

(a) 2.5 (b) 3 (c) 3.5 (d) 6

16. Forming a Partnership deed is:

(a) mandatory (b) mandatory in writing (c) not mandatory (d) none of the above

17. If equal amount is withdrawn by a partner at the end of each quarter, interest on the total amount will be charged for .............. months.

(a) 21⁄2 (b) 41⁄2 (c) 31⁄2 (d) 6

18. Interest on capital will be paid to the partners if provided for in the partnership deed but only out of

(a) Profits (b) Reserves (c) Accumulated Profits (d) Goodwill

19. When a partner is given guarantee by other partners, loss on such guarantee will be borne by:

(a) Partnership firm (b) All the other partners

20. In the absence of partnership deed, the following rule will apply:

(a) No interest on capital (b) Profit sharing in Capital Ratio

21. Arjun and Varun are partners in the ratio of 3 : 2. Their fixed capitals are `20,000 and `10,000 respectively. After closing the accounts for the year ending 31st March 2021, it was discovered that interest on capital was allowed @ 12% instead of 10% per annum. By how much amount Arjun will be debited/credited in the adjustment entry:

(a) ₹600 (Debit) (b) ₹400 (Credit) (c) ₹400 (Debit) (d) ₹600 (Credit)

22. Which of the following items is/are recorded in the Profit and Loss Appropriation Account of a partnership firm?

(a) Interest on capital (b) Transfer to Reserve (c) Salary to partner (d) All of the above

23. X and Y are partners. Y draws a fixed amount at the end of every month. Interest on drawings is charged @ 15% p.a. At the end of the year interest on Y’s drawings amounts to `8,250. Drawings of Y were:

(a) ₹12,000 p.m. (b) ₹10,000 p.m. (c) ₹9,000 p.m. (d) ₹8,000 p.m.

24. A sleeping partner is one who:

(a) does not provide capital but takes active part in the firm.

(b) provides capital but does not share profit and loss of the firm

(d) provides capital, share profits and losses of the firm but does not take active part in the firm.

25. Neelu and Rita are the two partners having a capital of `50,000 and `60,000. Interest on capital is @ 5% p.a. If the profit before appropriation is `4,600, then find out the interest allocated to the partners:

(a) ₹3,500 and ₹1,100 (b) ₹600 and ₹4,000 (c) ₹2,091 and ₹2,509 (d) ₹2,500 and ₹3,000

26. Which of the following statements is true?

(a) Fixed capital account will always have a credit balance.

(b) Current account can have a positive or negative balance.

(d) All of the above

27. Ravina and Karishma are partners sharing profits and losses in the ratio of 3 : 2 having the capital of `80,000 and `50,000 respectively. They are entitled to 9% p.a. interest on capital before distributing the profits. During the year firm earned `7,800 before allowing any interest on capital. Profits apportioned among Ravina and Karishma is:

(a) ₹4,680 and ₹3,120 (b) ₹4,800 and ₹3,000 (c) ₹5,000 and ₹2,800 (d) None of these

28. In the case of fixed capital method, adjustments in respect of profit, loss, drawings etc. are made in

(a) Current Account (b) Capital Account (c) Both (a) and (b) (d) None of these

29. Partner’s Capital Account and Partner’s Current Account are prepared in the case of:

(a) Fixed Capital Account (b) Fluctuating Capital Account

30. Which one of the following is NOT an essential feature of a partnership?

(a) There must be an agreement. (b) There must be a business.

31. Every partner is bound to attend diligently to his ................. in the conduct of the business.

(a) rights (b) meetings (c) capital (d) duties

32. How would you close the Partner’s Drawings Account:

(a) By transfer to Capital or Current Account Debit Side.

(b) By transfer to Capital Account Credit Side.

(d) Either (b) or (c)

33. Partners are supposed to pay interest on drawings only when ................. by the ................. .

(a) provided, deed (b) permitted, investors (c) agreed, partners (d) (a) and (c) above

34. Where will you record interest on drawings:

(a) Debit Side of Profit & Loss Appropriation Account.

(b) Credit Side of Profit & Loss Appropriation Account.

(d) Debit Side of Capital/Current Account Only.

35. Profit on Profit & Loss Appropriation Account should be transferred to:

(a) Credit Side of Partner’s Capital Account (b) Debit Side of Partner’s Capital Account

36. Partnership is defined under which section of the Partnership Act, 1932?

(a) Section 4 (b) Section 2 (c) Section 3 (d) Section 5

37. Partner’s Current Accounts are opened in case their Capital Accounts are:

(a) Fluctuating (b) Fixed (c) Both (a) and (b) (d) None

38. Loss in Profit & Loss Appropriation Account will:

(a) Reduce capital of partners (b) Increase capital of partners

39. If a firm makes exceptional profits which are not routine in nature, then such profits will not be included while:

(a) calculating Profit share of the Partners (b) calculating Goodwill of the firm

40. Akshay and Shubham are partners sharing profits and losses in the ratio of 4 : 1. Girish, the manager.was entitled to a commission @ 5% of net profits after charging such commission. If the profit before commission is `6,30,000 find out the commission:

(a) 378,000 (b) ₹30,000 (c) ₹28,000 (d) ₹32,000

41. The relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all is known as:

(a) Partnership (b) Joint Venture

42. Features of a partnership firm are:

(a) Two or more persons carrying common business under an agreement.

(b) They are sharing profits and losses in the fixed ratio.

(d) All of the above.

43. Is rent paid to a partner an appropriation of profits?

(a) It is appropriation of profit.

(b) It is not appropriation of profit.

(d) If partner is a working partner.

44. What balance does a Partner’s Current Account has:

(a) Debit Balance (b) Credit Balance (c) Either (a) or (b) (d) None of the above

45. Ritu, Mannu and Neetu were Partners with capitals of `50,000; ₹40,000 and ₹30,000 respectively carrying on business in partnership. The firm’s reported profit for the year was ₹80,000. As per provision of the Indian Partnership Act, 1932, find out the share of each partner in the above amount after taking into account that no interest has been provided on an advance by Ritu of ₹20,000 in addition to her capital contribution.

(a) ₹27,466 for Ritu and `₹26,267 each for Mannu and Neetu

(b) ₹26,666 each partner

(d) ₹30,000 each partner

46. Sonu, Titu and Sweety are partners in a firm. At the time of division of profit for the year, there was dispute between the partners. Profits before interest on partners’ capital was `6,000 and Titu determined interest @ 24% p.a. on his loan of `80,000. There was no agreement on this point. Calculate the amount payable to Sonu, Titu and Sweety respectively.

(a) ₹2,000 to each partner

(b) Loss of ₹4,400 for Sonu and Sweety and Titu will take ₹14,800

(d) None of the above

47. Alpna, Anjali and Harsha are partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profits before interest on partners’ capital was `6,000 and Z demanded minimum profit of `5,000 as his financial position was not good. However, there was no written agreement on this point.

(a) Other partners will pay Harsha the minimum profit and will share the loss equally.

(b) Other partners will pay Harsha the minimum profit and will share the loss in capital ratio.

(d) ₹2,000 to each of the partners.

48. In the absence of partnership deed, interest on drawings is payable at:

(a) 2% (b) Not payable (c) 5% (d) 6%

49. What would be the profit sharing ratio, if the partnership act is complied with:

(a) As per Agreement (b) Equally (c) In Capital Ratio (d) None of the above.

50. In the absence of any agreement, partners are entitled to receive interest on their loans at the rate of:

(a) 12% Simple Interest (b) 12% Compounded Annually

51. What is the average period in case the parther withdraws consistently at the end of each quarter for a year?

(a) 5.5 (b) 4.5 (c) 6.5 (d) 7.5

52. Which of these is not duty of partners?

(a) Devote time to business of the parthership

(b) Use property of firm for official purpose

(d) To indemnify for the loss caused by his/her neglect

53. Under fixed capital system, there are ..................... accounts.

(a) 2 (b) 1 (c) Either (a) and (b) (d) None of these

54. Match the follwoing:

Column I (In absence of partnership deed)

A. Interest on Capital

B. Interest on Partner’s Loan

C. Profits/Losses

D. Partners allowed to Withdraw

Column II (Provisons)

(i) Allowed

(ii) Equally

(iii) @ 6% p.a

(iv) Not allowed

(a) (A)—(i), (B)—(iv), (C)—(ii), (D)—(iii) (b) (A)—(i), (B)—(ii), (C)—(iii), (D)—(iv)

 Assertion-Reason Type Questions

DIRECTION: Two statements are given—one labeled Assertion (A) and the other labeled Reason (R). Select the

correct answer to these questions from the codes (a), (b), (c) and (d) as given below:

(a) Assertion and Reason both are correct statements and Reason is correct explanation for Assertion.

(b) Assertion and Reason both are correct statements but Reason is not the correct explanation for Assertion.

(d) Assertion is false but Reason is true.

55. Assertion (A): There must be at least two persons in a partnership firm.

Reason (R): According to Section 4 of the Indian Partnership Act, 1932, Partnership is the relation between two or more persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

56. Assertion (A): A charitable dispensary is run by eight eminent members of society. It is an example of a partnership concern.

Reason (R): In a partnership, there must be a business in which profit is being shared by all the partners.

57. Assertion (A): Partnership Deed is a written document which contains the terms and conditions of

partnership agreed upon by all the partners.

Reason (R): The main purpose of a partnership deed is to avoid any disputes and misunderstanding among the partners.

58. Assertion (A): A partner may be exempted from sharing the loss in a firm.

Reason (R): If the Partnership Deed so provides, a partner is exempted from sharing of loss. A minor

partner is exempt from sharing the loss of the firm.

59. Assertion (A): In the absence of a Partnership Deed, a sleeping partner will get equal share of profits.

Reason (R): The sleeping partner is liable for the acts done by other active partners.

60. Assertion (A): X and Y are partners in a firm having no partnership deed. X and Y have contributed

`1,00,000 and `2,00,000 as capital. They want the profit should be distributed in the ratio of their capital.

Reason (R): In the absence of a partnership deed, the profits are to be shared equally.

61. Assertion (A): X and Y are partners having no partnership deed. Y has advanced ₹1,00,000 as loan to the firm. He claims interest as the usual interest charged by the Bank.

Reason (R): In the absence of partnership deed, partner who has provided loan to the firm is entitled to interest @ 6%

62. Assertion (A): Interest is charged for a period of 7.5 months when the drawings are made in the beginning

of each quarter.

Reason (R): Average Period is the average of time left after first drawing and time left after the last drawings.63. Assertion (A): Drawings against profits are not considered for calculating interest on capital.

Reason (R): Drawings against profits are considered for calculating interest on capital as it is not withdrawal of capital.

64. Assertion (A): Interest on partners’ loan is debited to Profit & Loss Account.

Reason (R): Interest on partners’ loan is a charge against the profit of the firm and it is not an appropriation out of the profits.

65. Assertion (A): Profit & Loss Appropriation Account is merely an extension of the Profit & Loss adjustment Account.

Reason (R): Profit & Loss Appropriation Account is merely an extension of the Profit and Loss Account.

66. Assertion (A): Interest on partners’ loan is credited to Partner’s Loan Account.

Reason (R): Interest on partners’ loan is a gain to a partner in the capacity of a lender and not in the

capacity a partner.

67. Assertion (A): Profit and Loss Appropriation Account is prepared to ascertain Net Profit.

Reason (R): Profit and Loss Appropriation Account is prepared to show the distribution of Net Profit

among the partners.

68. Assertion (A): Interest on partners’ loan is an Appropriation of Profit.

Reason (R): Interest on partners’ loan is a charge against the profit of the firm.

69. Assertion (A): Rent to partner is not shown in Profit & Loss Appropriation Account.

Reason (R): Rent to partner is charge against profit.

70. Assertion (A): X and Y were partners sharing Profit & Loss in the ratio 3 : 2. Their Capitals were `5,00,000 and `3,00,000 respectively. Interest on capital was to be allowed @ 10% p.a. for the year ended March 31, 2021 and the firm made profits of `40,000. X and Y will get interest on capitals of ₹25,000 and `15,000 respectively.

Reason (R): In case of insufficient profits, interest on capital is to be provided in proportion of capital ratio.

71. Assertion (A): If partnership deed is silent regarding interest on loan then interest on loan is given to the partner and it is a charge against profit.

Reason (R): If deed is silent on interest on loan, then interest on loan will be paid @ 6% p.a.

72. Assertion (A): Shiva and Abhishek enter into in the partnership in the profit sharing ratio 1 : 2. Abhishek agrees to pay Shiva if his share of profit falls short of ₹60,000. The profit earned by the firm was ₹1,50,000. Shiva asked to pay Abhishek the balance ₹10,000 and he agreed to pay the same.

Reason (R): Profit is guaranteed only when the minimum amount of profit is not earned by the partner.

73. Assertion (A): Interest on drawings is shown in debit side of the Profit and Loss Appropriation Account.

Reason (R): Interest on drawings is debited to the Capital/Current Accounts of the partner.

74. Assertion (A): If percentage of interest on drawings is not mentioned in the partnership deed then partner will not pay interest on drawings.

Reason (R): Interest on drawings will be paid by the partner and it will be debited to the Partner’s Capital Account.

75. Assertion (A): The drawings out of profit will be recorded in the Partners’ Capital Accounts if Partners’ Capitals are fixed.

Reason (R): If capitals of the partners are fixed, all the transactions are recorded in Partners’ Current

Accounts.

 Case Based Questions

I. Read the given extract and answer the following questions:

Since partnership is the outcome of an agreement, it is essential that there must be some terms and conditions agreed upon by all the partners. Such terms and conditions may be either oral or written. The law does not make it compulsory to have a written agreement. However, in order to avoid all misunderstandings and disputes, it is always the best course to have a written agreement duly signed and registered under the Act. Such a written document which contains the terms of agreement is called ‘Partnership Deed’. In the absence of a partnership deed or verbal agreement, or if the partnership deed is silent on a certain point, various provisions of Partnership Act, 1932 will be applicable.

76. In the absence of Partnership Deed the profits are divided among the partners:

(a) in the ratio of their capital

(b) equally

(d) according to their managerial abilities

77. In the absence of Partnership Deed, interest on loan of a partner is allowed:

(a) at 8% per annum (b) at 6% per annum

78. The Partnership Deed is silent on payment of salary to partners. Amita, a partner, claimed that since she manages the business, she should get a monthly salary of ₹10,000. Is she entitled for the salary?

(a) No (b) Yes (c) Half of the salary (d) Defined salary by law

79. If their is a provision for the interest on capital in the partnership deed, it will be allowed only when there is .............. .

(a) Loss (b) Profit

II. Read the given extract and answer the following questions:

Partnership Firm and partners are considered separate from each other. When partners withdraw money from business for their personal use, then the term used for such withdrawal of money is known as Drawings. Since, drawings is a type of loan provided to the partners, and they have to pay interest on the amount withdrawn from the firm, which is known as interest on drawings.

81. Where would you record ‘Interest on Drawings’ when Capitals are fluctuating?

(a) Debit side of Partner’s Capital A/c (b) Debit side of Partner’s Current A/c

82. In a partnership firm, a partner withdrew `5,000 per month on the first day of every month during the year for personal expenses. If interest on drawings is charged @ 6% p.a. the interest charged will be:

(a) `3,600 (b) `1,950 (c) `1,800 (d) `1,650

83. If the date of drawings of the partners is not given in the question, interest is charged for how much time?

(a) 1 month (b) 3 months (c) 6 months (d) 12 months

84. When the profit is less than the amount of interest on capitals, the available profit will be distributed .............. .

(a) equally (b) in the ratio of their capital

85. Interest on capital can only be calculated using ........... .

(a) Opening Capital (b) Closing Capital (c) Both (a) and (b) (d) Neither (a) nor (b)

86. What should be the amount of Jay’s interest on Capital (Blank A)?

(a) ₹4,000 (b) ₹4,500 (c) ₹4,800 (d) ₹7,200

87. What should be the amount of Vijay’s interest on Capital (Blank B)?

(a) ₹4,500 (b) ₹4,000 (c) ₹7,200 (d) ₹3,000

IV. Read the given information and answer the following questions:

A and B are partners in a new start-up providing personal care services to the citizens of a city. A and B are sharing profits and losses in the ratio of 3 : 2. Their capital on 31st March, 2022 after all the adjustments stood at ₹1,65,500 and ₹1,27,600 respectively. Profits amounting to `50,000 for the year 2021-22 were distributed after adjusting interest on drawings @ 12% p.a. During the year A withdrew ₹15,000 at the beginning of every quarter and B withdrew ₹40,000 during the year. Partnership deed is silent on interest on drawings but provides for interest on Capital @ 5% p.a. Interest on Capital has not been provided.

88. What was the amount of interest on Drawings that was charged from A and B?

(a) ₹7,200 and 32,400 (b) ₹2,400 and ₹4,500 (c) ₹4,500 and ₹2,400 (d) ₹4,000 and ₹6,000

89. What was the balance in their capital accounts on 1st April, 2021?

(a) ₹1,65,500 and ₹1,27,600 (b) ₹2,00,000 and ₹1,50,000

90. Partners’ amount of interest on capital are:

(a) ₹10,000 and ₹7,500 (b) ₹15,000 and ₹7,500 (c) ₹16,000 and ₹6,000 (d) None of the above

V. Read the given information and answer the following questions:

Nancy, Shweta and Ajay were partners in a firm sharing profits and losses in the ratio of 3 : 3 : 4. Their

partnership deed provided for the following:

(i) Interest on capital @ 5% p.a.

(ii) Interest on drawings @ 12% p.a.

(iii) Interest on partners’ loan @ 6% p.a.

(iv) Nancy was allowed an annual salary of `4,000; Shweta was allowed a commission of 10% of net profit as shown by Profit & Loss Account and Ajay was guaranteed a profit of ₹1,50,000 after making all the adjustments as provided in the partnership agreement. Their fixed capitals were Nancy—₹5,00,000; Shweta—₹8,00,000 and Ajay—₹4,00,000. On 1st April, 2021 Shweta extended a loan of ₹1,00,000 to the firm. The net profit of the firm for the year ended 31st March, 2021 before interest on Shweta’s loan was ₹3,06,000. Prepare Profit and Loss Appropriation Account of Nancy, Shweta and Ajay for the year ended 31st March, 2021 and their Current Accounts assuming that Shweta withdrew `5,000 at the end of each month, Nancy withdrew ₹10,000 at the end of each quarter and Ajay withdrew ₹40,000 at the end of each half year.

92. What is the amount of Net Profit?

(a) ₹3,06,000 (b) ₹3,00,000 (c) ₹2,00,000 (d) None of the above

93. What is each partner’s interest on drawings?

(a) ₹3300, ₹1800, `2400 (b) ₹1800, ₹3300, ₹2400 (c) ₹2400, ₹3600, ₹4800 (d) None of the above

94. What should be the amount of profit after adjustments?

(a) ₹1,88,500 (b) ₹2,10,500 (c) ₹3,00,000 (d) None of the above

95. Calculate the amount of Ajay’s deficiency?

(a) ₹75,400 (b) ₹74,600 (c) ₹85,000 (d) ₹56,550

solution

 Multiple Choice Questions (MCQs)

1. (d)

2. (d);

3. (d)

4. (b)

5. (d) Total Remuneration of Bawa = `60,000 + `96,000 = `1,56,000

6. (c)

7. (a)

8. (c); Profits to be distributed between partners equally = `3,25,000 ×90X100 = `2,92,500

9. (b); Interest on loan will be provided @ 6% p.a. for period of 3 months only.

10. (a)

11. (d); Deficiency borne by Neena = Minimum Guaranteed Amount – Reena’s Share of Profit

= `80,000 – `78,000 (i.e., `3,12,000 × 2x 8 ) = `2,000

12. (d); Interest on Partners’ Capital is a charge against Profit & Loss Appropriation Account.

13. (d)

14. (c)

15. (a)

16. (c)

17. (b)

18. (a)

19. (c)

20. (a)

21. (c)

22. (d)

23. (b)

24. (d)

25. (c)

26. (d)

27. (b)

28. (a)

29. (a)

30. (d)

31. (d)

32. (a)

33. (a)

34. (b)

35. (a)

36. (a)

37. (b)

38. (a)

39. (b)

40. (b)

41. (a)

42. (d)

43. (b)

44. (c)

45. (a); As there is no agreement of partnership in the firm then profit sharing ratio among partners is assumed to be equal and interest on loan will be charged @ 6% p.a.

Profit after charging Interest = Profit before charging Interest – Interest on Loan

 Profit for Ritu = `26,266 + `1,200 = `27,466

46. (c); In the absence of partnership deed, Interest on loan at 6% will be calculated and also profit will be shared equally.

47. (d); As there is no agreement of partnership, therefore amount of profit will be distributed among all

partners equally.

48. (b) 49. (b) 50. (d) 51. (b) 52. (c)

53. (a) 54. (d)

 Assertion-Reason Type Questions

55. (a) 56. (d) 57. (a) 58. (a) 59. (b)

60. (d) 61. (d) 62. (a) 63. (c) 64. (a)

65. (d) 66. (a) 67. (d) 68. (d) 69. (a)

70. (a) 71. (b) 72. (a) 73. (d) 74. (b)

75. (d)

 Case Based Questions

76. (b) 77. (b) 78. (a) 79. (b) 80. (c)

81. (a) 82. (b); 83. (c) 84. (b) 85. (a) 86. (c); As per the given information (`)

Interest on Jay’s Capital (`80,000 × 9/100) = 7,200

Interest on Vijay’s Capital (`50,000 × 9/100) = 4,500

11,700

The available profit is `7,800. Since the profit is less than the amount of interest, the available profit will

be distributed between the partners in the ratio of their capitals, i.e., 8 : 5.

Therefore, Jay’s Interest on Capital = `7,800 × 8/13 = `4,800

87. (d); In addition to the Question 86, Vijay’s Interest on Capital = `7,800 × 5/13 = `3,000

88. (c)

89. (b);

90. (a);

92. (b); Firm’s Profit = `3,06,000 – `6,000 (Interest on loan) = `3,00,000 ...[∵ Interest on loan = `1,00,000 × 6% = `6,000

93. (b); Calculation of Interest on Drawings:

94. (a)

95. (b); Calculation of the amount of Ajay’s Deficiency:

Ajay’s Share of Profit = `1,88,500 × 4/10 = `75,400

 Ajay’s Deficiency = Guaranteed Amount – Ajay’s Share of Profit = `1,50,000 – `75,400 = `74,600

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