Accounting for Partnership: Basic Concepts Test 48

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Accounting for Partnership: Basic Concepts Test 48

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Weekly Quiz Competition

Question 1
1 / -0

The estate of a partner who dies, or who becomes insolvent, is not liable for partnership debts contracted _______________________.

A
After the date of the death or insolvency

B
Before the date of the death or insolvency

C
After the 1st day of the financial year in which he dies or becomes insolvent

D
All of above

Solution

Once a partner has exited from the partnership firm, he has no relations further with that firm, and he is not liable for any of the dues of the firm.
Hence, on death of any partner in the firm, his liability for the dues would be terminated just after the day he died or became insolvent. Termination of his partnership would legally remove him from the terms and conditions of the deed.
Question 2
1 / -0

Following are the essential elements of a partnership firm except.

A
At least two persons

B
There is an agreement between all partners

C
Equal share of profits and losses

D
Partnership agreement for some business

Solution

A partnership firm can be called a partnership between a person only when there are at least two persons. A single person running a business would not be a partnership. An agreement must be there between partners to prevent future riots.
Moreover, the partnership must be for business purpose. A group formed to make city green would not be a partnership firm.
Equal profit and loss ratio is not an essential element for any partnership firm, it is mutual decision of partners to decide the ratio.
Question 3
1 / -0

Partnership is defined as "the relation between persons who have agreed to share the profits of a business carried on by _________ acting for all".

A
All

B
Any of them

C
(A) or (B)

D
(A) and (B)

Solution

When a partnership firm is incorporated, the roles of various partners are decided. So the partnership is that relation where people share profits on the basis that a single person would work for all or each partner would work for every other partner. It is the mutual relationship between all the partners.
Hence, partnership is a relation between person who agree to share profits carried on by all acting for all or any of them acting for all.
Question 4
1 / -0

Which of the following is/are essential feature of partnership?

A
Association of two or more persons

B
Agreement/contract

C
Carrying on business

D
All of the above

Solution

A partnership firm runs on certain norms and feature which are listed as under:
The most important feature is that it is an association of two or more person. A single person carrying on with business would not be called a partnership. There must be at least two people to run a firm under partnership norms.
An agreement is another basic requirement for a partnership firm. This is because the agreement defines the term and condition of firm along with the duties and various task of partners.
The side feature of any partnership firm is that there must be a business which is handled by a single partner or all the partners for the welfare of all partners and the business.
Question 5
1 / -0

A partner claim interest on capital __________.

A
Even if there is loss

B
If there is profit

C
If there is profit and there is an agreement to pay it

D
Whether there is profit or loss to the firm

Solution

According to the Partnership Act 1932, every partner has an equal right to participate in the conduct and management of the business and has an equal share in the profit or loss of the firm, mentioned otherwise. A partner can only claim interest on capital only if there is profit and there is an agreement to pay it.
Hence, option (C) is the correct answer.
Question 6
1 / -0

Joint Life Policy is taken by the firm on the life (s) ___________________.

A
All the partners jointly

B
All the partners severely

C
On the life of all the partners and employees of the firm

D
Both (A) and (B)
Question 7
1 / -0

The estate of a deceased partner is liable for any act of the firm done after his death.

A
True

B
Partly true

C
False

D
None of the above

Solution

The given statement"estate of a deceased partner is liable for any act of the firm done after his death is false. The statement is false because once the partner has died, it's deed with the firm is terminated, and he is not liable to any of future dues of the firm.
Question 8
1 / -0

When a partner is given guarantee by the other partner, loss on such guarantee will be borne by -

A
All the other partners

B
Partnership firm

C
Partner with the highest ratio

D
Partner giving guarantee

Solution

If any partner enter into partnership with guaranteed profit. Then obligation to pay such amount in case insufficient profit born by a person who gave such guarantee.
Question 9
1 / -0

In partnership under fluctuating capital account method, recording the transactions relating to drawings, interest on capital, commission, salary, share of profit or loss are made in ___________.

A
Partner's Capital Account

B
Partner's Current Account

C
A or B

D
A & B

Solution

Fluctuating capital system states that any appropriations in profit are to be shown through capital only so that a clear picture of fluctuations in capital can be shown. And for this only a single partners' capital account is prepared.
Various appropriations like interest on capital, drawings, commission and share in profit and loss are thus to be recorded in partners' capital account to show the fluctuations in capital.
Question 10
1 / -0

When the partners capital accounts are fixed, then as per the decision in the Garner vs. Murray case, any loss arising due to the capital deficiency in the insolvent partner's capital accounts is to be borne by solvent partners in the ratio of _______.

A
Profit sharing ratio

B
Scarifying ratio

C
Gaining ratio

D
Last agreed capital ratio

Solution

In case of dissolution of a partnership firm, unless the partnership deed specifies otherwise, the debit balance in the capital account of the insolvent partner as reduced by any amounts received from insolvent partners estates shall be borne by the other solvent partners in their capital ratio.

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Re-Attempt Weekly Quiz Competition

Accounting for Partnership: Basic Concepts Test 48

Result

Accounting for Partnership: Basic Concepts Test 48

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SHARING IS CARING

Question 1

After the date of the death or insolvency

Before the date of the death or insolvency

After the 1st day of the financial year in which he dies or becomes insolvent

All of above

Solution

Question 2

At least two persons

There is an agreement between all partners

Equal share of profits and losses

Partnership agreement for some business

Solution

Question 3

All

Any of them

(A) or (B)

(A) and (B)

Solution

Question 4

Association of two or more persons

Agreement/contract

Carrying on business

All of the above

Solution

Question 5

Even if there is loss

If there is profit

If there is profit and there is an agreement to pay it

Whether there is profit or loss to the firm

Solution

Question 6

All the partners jointly

All the partners severely

On the life of all the partners and employees of the firm

Both (A) and (B)

Question 7

True

Partly true

False

None of the above

Solution

Question 8

All the other partners

Partnership firm

Partner with the highest ratio

Partner giving guarantee

Solution

Question 9

Partner's Capital Account

Partner's Current Account

A or B

A & B

Solution

Question 10

Profit sharing ratio

Scarifying ratio

Gaining ratio

Last agreed capital ratio

Solution

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