Sequence Based Questions
Q51. Arrange the following steps in correct order with regard to determination of divisible profits of partners.
A) Calculation of Net profit
(B) Calculation of charge against profit like rent to partner
(C) Transfer to General Reserve as a percentage of divisible profit
(D) Calculation of appropriation of profits like partner’s salary
(E) Calculation of each partner’s share of divisible profits
Choose the correct answer from the options given below:
*26th May, 2023*
(a) (B), (A), (D), (C), (E)
(b) (A), (B), (D), (C), (E)
(c) (C), (A), (D), (B), (E)
(d) (A), (C), (B), (D), (E)
S51. Ans. (a)
Sol. The correct order for determining divisible profits of partners is:
(B) Calculation of charge against profit like rent to partner;
(A) Calculation of Net profit.
(D) Calculation of appropriation of profits like partners’ salary.
(C) Transfer to General Reserve.
(E) Calculation of each partner’s share of divisible profits.
Q52. State the order in which final accounts of a partnership firm are prepared:
A. Profit and Loss A/c
B. Balance Sheet
C. Trading A/c
D. Profit & Loss Appropriation A/c
E. Partners’ Capital Accounts
Choose the correct answer from the options given below:
*5th June, 2023*
(a) (C), (A), (B), (D), (E)
(b) (A), (D), (C), (B), (E)
(c) (A), (C), (D), (E), (B)
(d) (C), (A), (D), (E), (B)
S52. Ans. (d)
Sol. The order in which final accounts of a partnership firm are prepared is:
(C) Trading A/c: This account is prepared first to calculate the gross profit or loss.
(A) Profit and Loss A/c: The result from the Trading A/c is transferred here to compute the net profit or loss.
(D) Profit & Loss Appropriation A/c: This account is prepared to distribute the net profit among the partners according to the provisions of partnership.
(E) Partners’ Capital Accounts: The balances in the Partners’ Capital Accounts are updated based on the profit-sharing or loss-sharing ratio.
(B) Balance Sheet: Finally, the Balance Sheet is prepared to show the financial position of the partnership firm.
Q53. The steps in the Process of Preparing Profit and Loss Appropriation account are:
(A) Transfer the net profit to the credit side of P&L Appropriation A/c
(B) Divide the Profit among partners in the Profit-sharing ratio
(C) Ascertain net profit after providing for all charges
(D) Debit the P&L Appropriation A/c with all appropriations like partners salary etc.
(E) Credit the P&L Appropriation A/c with interest on drawing and deficiency on account of partner’s guarantee of earnings to the firm.
Choose the correct answer from the options given below:
*28th May, 2023*
(a) (A), (B), (C), (D), (E)
(b) (C), (A), (D), (E), (B)
(c) (B), (C), (E), (A), (D)
(d) (B), (C), (D), (A), (E)
S53. Ans. (b)
Sol. The process of Preparing Profit and Loss Appropriation account is:
C. Ascertain net profit after providing for all charges.
A. Transfer the net profit to the credit side of P&L Appropriation A/c
D. Debit the P&L Appropriation A/c with all appropriations like partners salary etc.
E. Credit the P&L Appropriation A/C with interest on drawing and deficiency on account of partner’s guarantee of earnings to the firm.
B. Divide the Profit among partners in the Profit-Sharing ratio
Q54. Complete the sequence where interest on capital has to be provided as per partnership deed, but available profits are not sufficient to provide full amount of interest on capital.
A. If it is appropriation, calculate interest on capital for all partners at given rate
B. Divide the available amount in the capital ratio among the partners
C. Calculate ratio between capital of partners
D. Consider the partnership deed and decide whether interest on capital is a charge or an appropriation
E. Consider the available profit
Choose the correct answer from the options given below:
*29th May, 2023*
(a) A, B, C, D, E
(b) B, C, D, E, A
(c) D, A, E, C, B
(d) C, D, A, B, E
S54. Ans.(c)
Sol. Correct Sequence:
(D) Consider the partnership deed and decide whether interest on capital is a charge or an appropriation.
(A) Consider the available profit.
(E) If it is appropriation, calculate interest on capital for all partners at given rate.
(C) Calculate ratio between capital of partners.
(B) Divide the available amount in the capital ratio among the partners.
Case Based Questions
Read the passage given below and answer the question: Direction Q55. To Q59.
*1st June, 2023*
Teesha and Ritik are partners in a firm without any agreement. Due to lack of agreement, they realised that there was contradiction between them on one issue or the other so they decided to enter into a written agreement with regard to different terms and conditions.
As per the agreement they will be sharing profits in the ratio of 3 : 2. At the beginning of 2022-2023 i.e., 1st April 2022 their capital were ₹60,000 and ₹40,000 respectively. They earn a profit of ₹30,000 for the year ending 31st March 2023. According to agreement, both Teesha and Ritik are entitled to ₹1,000 per month as salary and 5% p.a. interest on their capital. They are also to be charged an interest of 5% p.a. on their drawings, which was ₹12,000 for Teesha and ₹8,000 for Ritik for the year 2022-2023.
Determine the amount of interest on drawing to be charged from Ritik.
Q55. Determine the amount of interest on drawing to be charged from Ritik.
(a) ₹200
(b) ₹300
(c) ₹400
(d) ₹600
S55. Ans. (a)
Sol. Interest on drawings for Ritik = 8,000 × 5/100 × 6/12 = ₹200
Q56. Identify the written agreement entered by Teesha and Ritik, containing terms of the agreement.
(a) Past adjustment
(b) Partnership agreement
(c) Partnership Deed
(d) Contract between partners
S56. Ans. (c)
Sol. A Partnership Deed is a legal document that outlines the terms, conditions, and rights of the partners in a partnership. It contains details about profit sharing, capital contributions, management responsibilities, and other important aspects of the partnership. It serves as the formal agreement between partners and is essential for the smooth operation of the partnership.
Q57. Identify the account in which salary of Teesha will be transferred, when capitals are fixed.
(a) Profit and loss account
(b) Realisation account
(c) Capital account
(d) Current account
S57. Ans. (d)
Sol. When salaries are paid to partners in a partnership with fixed capitals, they are typically transferred to their respective Current Accounts. The current account keeps track of various transactions between partners, including salary payments, drawings, and other current financial activities.
Q58. Determine the share of Ritik in divisible profits.
(a) ₹1,200
(b) ₹600
(c) ₹800
(d) ₹400
S58. Ans. (b)
Sol. Divisible Profit = Net profit + Interest on drawings – Interest on capital – Salary to partners
Divisible Profit = 30,000 + 200 + 300 – 3,000 – 2,000 – 24,000 = ₹1,500
Ritik’s share = 1,500 × 2/5 = ₹600
Q59. Select the amount that will be provided to Teesha as interest on her capital.
(a) ₹3,000
(b) ₹2,000
(c) ₹1,000
(d) ₹500
S59. Ans. (a)
Sol. Interest on Capital for Teesha = 60,000 × 5% = ₹3,000
Read the following information and answer the questions Q60-Q64.
*2nd June, 2023*
A and B entered into partnership to supply stationery items without any terms and conditions. A contributed ₹1,00,000 as capital while B contributed ₹20,000 only but he allowed his building to be used as the firm office. After running business for nearly nine months, they felt urgency of funds and same was fulfilled by B by providing ₹80,000 as loan to the firm. At the end of the accounting year, they made a profit of ₹50,000. They decide to expand their business in future by admitting C into the firm and also to make agreement in writing containing all the terms and conditions.
Q60. Identify the document that contains the terms of the agreement between the partners.
(a) Partnership
(b) Partnership Agreement
(c) Partnership Deed
(d) Partnership Contract
S60. Ans. (c)
Sol. The document that outlines and formalizes the terms of the agreement between partners in a partnership is known as the “Partnership Deed.” It serves as a legally binding contract that specifies each partner’s rights, responsibilities, profit-sharing ratios, capital contributions, and other important details related to the partnership.
Q61. Select the ratio in which A and B will share divisible profits.
(a) 5 : 1
(b) 1 : 1
(c) 2 : 1
(d) 4 : 1
S61. Ans. (b)
Sol. Since, no agreement was prepared beforehand, the partners will share profits and losses equally.
Q62. In case A want to claim interest on capital as he had contributed five times of capital what B had contributed than select the amount of interest on capital that will be paid to A.
(a) ₹8,000
(b) ₹6,000
(c) Interest on capital will be provided 6% p.a.
(d) No interest on capital will be allowed to A
S62. Ans. (d)
Sol. Since, no agreement was prepared beforehand, no interest on capital will be provided.
Q63. Select the amount that will be paid to B as interest on loan.
(a) ₹4,800
(b) ₹2,400
(c) ₹1,200
(d) No interest on loan is to be paid
S63. Ans. (c)
Sol. The interest on loan will be provided only for 3 months
Interest on loan = 80,000 × 6% × 3/12 = ₹1,200
Q64. Select out of the following that is charge against profit.
(a) Interest on partner’s capital
(b) Partner’s salary
(c) Partner’s commission
(d) Interest on partner’s loan
S64. Ans. (d)
Sol. Interest on partner’s loan is considered an expense that is charged against profit in a partnership.
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