Class 12 Accounting for Partnership: Basic Concepts Mock Test (CBSE)

Topics in Accounting for Partnership: Basic Concepts

• Nature of partnership
• Partnership deed
• Special aspects of partnership accounts
• Maintenance of capital accounts of partners: fixed and fluctuating
• Distribution of profit among partners
• Profit and loss appropriation account
• Interest on capital
• Interest on drawings
• Guarantee of profit to a partner
• Past adjustments

Accounting for Partnership: Basic Concepts practice questions with answers

1. Q1Multiple choice·1 mark
   A, B and C are partners sharing profits in $5:3:2$. C is guaranteed a minimum profit of $10,000$ per year. Any deficiency in C's share is to be borne by A and B equally. Total profit for the year is $40,000$. What will be the final share of profit for A?

   1. (a)19,000
   2. (b)18,500
   3. (c)20,000
   4. (d)21,000
   Show answer and step marks

   1. Correct option: (a) A's share is $20,000$ minus $1,000$ (deficiency share paid to C), making it $19,000$.+1

   Answer: (a)
2. Q2Multiple choice·1 mark
   In case of past adjustments involving omissions or errors in accounts, the correction is generally made by passing:

   1. (a)Reversal entries for all previous transactions
   2. (b)A single adjustment entry through partners' capital/current accounts
   3. (c)No entry is required after closing books
   4. (d)A fresh set of final accounts
   Show answer and step marks

   1. Correct option: (b) A single adjustment entry through partners' capital/current accounts+1

   Answer: (b)
3. Q3Assertion and reason·1 mark
   Assertion (A): In the absence of an agreement, interest on a partner's loan is allowed at $6\%$ per annum. Reason (R): Interest on loan is an appropriation of profit and is provided only if there are profits.

   1. (a)Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
   2. (b)Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
   3. (c)Assertion (A) is true but Reason (R) is false.
   4. (d)Assertion (A) is false but Reason (R) is true.
   Show answer and step marks

   1. Correct option: (c) Assertion (A) is true ($6\%$ p.a. as per Indian Partnership Act, 1932), but Reason (R) is false because interest on loan is a charge against profit, not an appropriation.+1

   Answer: (c)
4. Q4Assertion and reason·1 mark
   Assertion (A): Profit and Loss Appropriation Account is prepared to show the distribution of net profit among partners. Reason (R): Items like interest on capital, interest on drawings, and partner's salary are charges against profits.

   1. (a)Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
   2. (b)Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
   3. (c)Assertion (A) is true but Reason (R) is false.
   4. (d)Assertion (A) is false but Reason (R) is true.
   Show answer and step marks

   1. Correct option: (c) Assertion (A) is true because P&L Appropriation Account distributes net profit, but Reason (R) is false because interest on capital, salary, etc., are appropriations of profit, not charges.+1

   Answer: (c)
5. Q5Short answer·2 marks
   A and B are partners in a firm. There is no partnership deed. A has advanced a loan of $\text{₹}2,00,000$ to the firm on 1st October 2023 without any agreement as to interest. State the rate at which interest will be paid to A and calculate the total interest payable for the year ended 31st March 2024.
   Show answer and step marks

   1. State that in the absence of a partnership deed, interest on partner's loan is allowed at $6\%$ per annum.+1
   2. Calculate interest: $\text{₹}2,00,000 \times \frac{6}{100} \times \frac{6}{12} = \text{₹}6,000$.+1

   Answer: $6\%$ p.a.; interest $= \text{₹}2,00,000 \times \frac{6}{100} \times \frac{6}{12} = \text{₹}6,000$
6. Q6Short answer·2 marks
   X, Y and Z are partners sharing profits in the ratio of $5:3:2$. Z is guaranteed a minimum profit of ₹$20,000$ p.a. The net profit for the year ended March 31, 2024, is ₹$80,000$. Calculate the share of profit of each partner.
   Show answer and step marks

   1. Z's normal share $= ₹80,000 \times \frac{2}{10} = ₹16,000$; deficiency $= ₹20,000 - ₹16,000 = ₹4,000$, borne by X and Y in $5:3$.+0.5
   2. X: $₹80,000 \times \frac{5}{10} = ₹40,000$, less $₹4,000 \times \frac{5}{8} = ₹2,500$, gives $₹37,500$.+0.5
   3. Y: $₹80,000 \times \frac{3}{10} = ₹24,000$, less $₹4,000 \times \frac{3}{8} = ₹1,500$, gives $₹22,500$.+0.5
   4. Z receives the guaranteed $₹20,000$.+0.5

   Answer: X: ₹37,500, Y: ₹22,500, Z: ₹20,000

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