Accounting for partnership firms (fundamentals) Quiz-2

Accounting for partnership firms (fundamentals) Quiz-2

Quiz

 

1. Which one from the below is not a right of a partner?
   1.   Right to inspect the books of
   2.   Right to take part in the management of the firm
   3.   Right to share the profit/losses with other partners in agreed ratio
   4.   Right to receive salary
2. In partnership accounting, how is interest on partners' capital typically treated?
   1.   Interest on partners' capital is recorded as an expense in the partnership's income statement.
   2.   Interest on partners' capital is credited to partners' capital accounts.
   3.   Interest on partners' capital is debited to partners' capital accounts.
   4.   Interest on partners' capital is recorded as a liability in the partnership's balance sheet.
3. In partnership accounting, which of the following statements regarding fixed and fluctuating capital accounts is correct?
   1.   Fixed capital accounts maintain a constant balance, while fluctuating capital accounts change over time.
   2.   Fixed capital accounts are used when partners have unequal capital investments, while fluctuating capital accounts are used when partners have equal capital investments.
   3.   Fixed capital accounts are credited with the partners' share of profits, while fluctuating capital accounts are credited with the partners' drawings.
   4.   Fixed capital accounts are adjusted for the partners' share of profits or losses, while fluctuating capital accounts are adjusted for the partners' capital contributions and withdrawals.
4. As per the partnership Act, 1932 what is the maximum limit regarding number of partners in a partnership business?
   1.   100
   2.   50
   3.   20
   4.   none of the above
5. What is the nature of partnership from legal point of view?
   1.   It is a separate legal entity
   2.   It is not a separate legal entity
   3.   Both a and b are correct
   4.   None of the above
6. In partnership accounting, how are profits and losses typically distributed among partners when there is no specific agreement in place?
   1.   Profits and losses are shared equally among all partners.
   2.   Profits are allocated based on the partners' capital balances, while losses are allocated based on the partners' profit-sharing ratios.
   3.   Profits and losses are allocated based on the partners' profit-sharing ratios.
   4.   Profits are allocated based on the partners' profit-sharing ratios, while losses are borne by the partners in proportion to their capital investments.
7. In partnership accounting, what is the impact of a guarantee of profits on the partners' liability?
   1.   It increases the partners' liability beyond their capital contributions.
   2.   It decreases the partners' liability below their capital contributions.
   3.   It has no impact on the partners' liability.
   4.   It converts the partners' liability into a fixed amount.
8. Registration of partnership firm is :
   1.   Optional
   2.   Compulsory
   3.   Depends upon numbers of partners in a firm
   4.   None of the above
9. In partnership accounting, what is the guarantee of profits?
   1.   It is a legal requirement for partnerships to guarantee a minimum level of profits.
   2.   It is a provision in the partnership agreement that guarantees each partner a specific share of profits.
   3.   It is an agreement between partners to allocate profits based on their capital contributions.
   4.   It is a mechanism to protect partners from incurring losses in the partnership.
10. The methods by with partner’s capital accounts are maintained known as :
    1.   Fixed capital method
    2.   Fluctuating capital method
    3.   Both (a) and (b)
    4.   None of the above
11. A and B are partners A advances a loan of ₹3,50,000 to the Firm and don’t have any partnership deed. At the end of the year, A will be allowed
    1.   More share in profits
    2.   Interest on loan @6% a
    3.   Interest on loan @12% a
    4.   None of the above
12. Appropriation of profit means:
    1.   Deduction of profit for creating reserve
    2.   Capital profit of the firm
    3.   Distribution of available net profit left out after providing all the appropriations
    4.   None of the above
13. What is a charge against/ on profits?
    1.   It means set a side some portion of profit for reserve
    2.   It means deduction of expenses from the profits for computing net profit/loss for the appropriation
    3.   It means capital profit earned by the firm
    4.   None of the above
14. What will be the interest on drawings of Narayan @ 10 % per annum if Narayan withdrew ₹1,50,000 per month in the middle of every month.
    1.   ₹18000
    2.   ₹9000
    3.   ₹8500
    4.   None of the above
15. A and D are partners in a firm. A is to get a commission of 10 % of net profit before charging any commission. Net profit before charging any commission was Rs. 1,00,000 .Commission of A will be :
    1.   10,000
    2.   9,600
    3.   9,700
    4.   None of the above
16. What will be the interest on drawings of Raj @ 10 % per annum if Raj withdrew 12000 per month in the end of every month for 6 months
    
    1.   7200
    2.   5200
    3.   1500
    4.   None of the above
17. In the absence of partnership deed what will be the profit share of a sleeping partner if the contribution made by him for capital is 30% of the total capital of the firm.
    1.   30% of the total profit
    2.   Equal share in profit
    3.   As mutually decided by partners with each other
    4.   None of the above
18. If a fixed amount is withdrawn at the end of every month, for what period the interest on total amount withdrawn will be calculated?
    1.   5 months
    2.   6 months
    3.   5.5 months
    4.   None of the above
19. In partnership accounting, which of the following statements regarding the distribution of profits among partners is correct?
    1.   Profits are distributed equally among partners, regardless of their capital investments.
    2.   Profits are distributed based on the partners' capital balances.
    3.   Profits are distributed based on the partners' profit-sharing ratios specified in the partnership agreement.
    4.   Profits are distributed based on the partners' seniority in the partnership.
20. X and Y purchased a Building and contributed capital equally to convert the building into an apartment. They let it out on a rent of Rs 35000 and share the rental income equally. Now relation between X and Y is:
    1.   X and Y are partners
    2.   X and Y are co – owners
    3.   Both (a) and (b)
    4.   None of the above