Accounting for Partnership: Basic Concepts Test 49

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Accounting for Partnership: Basic Concepts Test 49

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Weekly Quiz Competition

Question 1
1 / -0

_________ rule is applicable at the time of any partner becoming insolvent.

A
Garner v. Murray

B
Derry v. Peek

C
Salomon v. A. Salomon & Co. Ltd.

D
Mohirri Bibi v. Dhamodas Ghose

Solution

The Garner vs. Murray rule is applicable in case of dissolution of Firm; The rule says that the loss on account of insolvency of a partner is a capital loss which should be borne by the solvent partners in the ratio of their capitals standing in the balance sheet on the date of dissolution of the firm.
Question 2
1 / -0

X, Y & Z are partners sharing profits & losses in the ratio of $$3:3:2$$. Each partner withdraws as follows:
X had withdrawn Rs. $$15,000$$ on $$15-6-2015$$. Y had withdrawn Rs. $$8,500$$ on $$1-5-2015$$ & $$10,000$$ on $$15.10.2015$$. Z had withdrawn Rs. $$2,500$$ at the end of each month. Rate of interest on drawing is $$9\%$$. Accounting year ends on $$31$$st December each year. Calculate the interest on drawings.

A
$$731.25$$, $$697.5$$ & $$1,237.5$$

B
$$675$$, $$510$$ & $$1,327.5$$

C
$$657$$, $$679.5$$ & $$1,237.5$$

D
$$567$$, $$796.5$$ & $$1,732.5$$

Solution

Calculation of interest on drawings:
$$X=15,000\times 9\%\times \dfrac{6.5}{12}=731.25$$
$$Y=8,500\times 9\% \times \dfrac{8}{12}=510$$
$$=10,000\times 9\%\times \dfrac{2.5}{12}=187.5$$
________
$$697.5$$
________
$$Z=2,500\times 12\times 9\%\times \dfrac{5.5}{12}=1,237.5$$
Question 3
1 / -0

In partnership under fixed capital account method, which of the following account is opened?

A
Partner's Capital Account

B
Partner's Current Account

C
(A) or (B)

D
(A) & (B)

Solution

Fixed capital system of accounting states that the capital of partners will remain the same as in beginning.
To record any entry related to capital introduction or withdrawal, partners' capital account is prepared and to record any appropriation in the profit like interest on drawing, capital and salaries of partners, partners' current account is prepared so that therre is no change in capitals of partners.
Question 4
1 / -0

N & Z are two partners. During the year N withdraws Rs. $$37,000$$ on $$1-5-2012$$ & Z withdraws Rs. $$45,000$$ on $$15-8-2012$$. Accounts are closed on $$31-12-2012$$. Rate of interest on drawings is $$10\%$$ p.a. Interest on drawing for two partner respectively will be.

A
$$2,775$$ & $$2,063$$

B
$$2,063$$ & $$2,775$$

C
$$2,467$$ & $$1,688$$

D
$$1,688$$ & $$2,467$$

Solution

Calculation of interest in drawings:
$$N=37,000\times 10\%\times \dfrac{8}{12}=2,467$$
$$S=45,000\times 10\%\times \dfrac{4.5}{12}=1,688$$.
Question 5
1 / -0

On $$1-1-2015$$ balance in capital account of partner was Rs. $$1,00,000$$. He introduced certain amount on $$1-5-2015$$. As per partnership deed interest on capital is to be provided @ $$12\%$$ p.a. If Profit & Loss Appropriation A/c is debited for Rs. $$18,000$$ as interest on capital, how much amount was introduced by the partner on $$1-5-2015$$?

A
Rs. $$18,000$$

B
Rs. $$60,000$$

C
Rs. $$75,000$$

D
Rs. $$1,00,000$$

Solution

Let the amount introduced be 'x'.
$$1,00,000\times 12\% =12000$$
$$x\times 12\% \times \displaystyle\frac{8}{12}= 0.08x$$
___________________
$$18,000$$
___________________
$$12,000+0.08x=18,000$$
$$0.08x=6,000$$.
$$x=75,000$$.
Question 6
1 / -0

The partners can share profit in ____________.

A
Capital ratio if no ratio is agreed between partners

B
Agreed ratio or in their current ratio or in their capital ratio

C
Last agreed capital ratio or if no ratio is agreed in equal proportions

D
Agreed ratio and if no ratio is agreed then in equal proportions

Solution

Indian Partnership Act, 1932 is the base of any partnership firm and this act has stated that partners have to share profit and losses in a particular ratio which is a mutual decision of partners. But if there is no agreement for the partnership then profit and losses are to be shared equally irrespective of the work done for the business.
Question 7
1 / -0

X, Y & Z commence a business in partnership. X puts in Rs. $$20,000$$ for the whole year. Y introduced Rs. $$30,000$$ and increases it Rs. $$40,000$$ at the end of four months but withdraws Rs. $$10,000$$ at the end of eight month. Z brings Rs. $$50,000$$ at first, but withdraws Rs. $$15,000$$ at the end of six months. Calculate the profit sharing ratio based on effective capital.

A
$$24:40:51$$

B
$$41:22:54$$

C
$$6:4:3$$

D
$$17:13:8$$

Solution

Calculation of effective capital:
$$X=20,000\times 12=2,40,000$$
$$Y=(30,000\times 4)+(40,000\times 4)+(30,000\times 4)=4,00,000$$
$$Z=(50,000\times 6)+(35,000\times 6)=5,10,000$$
$$2,40,000 : 4,00,000 : 5,10,000$$.
$$24 : 40 : 51$$.
Question 8
1 / -0

The capital account of a partner may be a ______________.

A
Fixed Capital A/c

B
Fluctuating Capital A/c

C
A or B

D
None of the above

Solution

Accounting of partnership is done either on fixed capital system basis or fluctuating capital system basis. Fixed system states that the capital invested in the beginning would remain same throughout, so to follow this statement a fixed capital account is prepared to record entry related to introduction or withdrawal of capital.
Fluctuating system states that capitals of partners can later as per the transactions carried out by them. For this fluctuating capital account of partners is prepared to record the fluctuations in capital.
Thus, a fluctuating and a fixed capital system is prepared for partnership accounting.
Question 9
1 / -0

The Indian Partnership Act came into force on _________.

A
1.9.1872

B
1.7.1930

C
1.10.1930

D
1.10.1932

Solution

An Act to define and amend the law relating to partnership. 1 October 1932 except section 69 which came into force on the 1st day of October 1933. extends to the whole of India except for Jammu and Kashmir. The Indian Partnership Act, 1932 was enacted in India in 1932.
Question 10
1 / -0

Under fluctuation method of capital, what is the treatment of "interest on capital"?

A
Credited to capital account

B
Debited capital account

C
No treatment or adjustment is needed

D
Credited to current account

Solution

Fluctuation method states that only a single partners' capital account will be prepared to record an entry.
Interest on capital the amount to be received by partners for investing their capitals in business and is a type of income for the partners.
All the incomes are credited to capital account of partners and thus interest on capital will be credited to partners' capital account.

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Accounting for Partnership: Basic Concepts Test 49

Result

Accounting for Partnership: Basic Concepts Test 49

Score

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Rank

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SHARING IS CARING

Question 1

Garner v. Murray

Derry v. Peek

Salomon v. A. Salomon & Co. Ltd.

Mohirri Bibi v. Dhamodas Ghose

Solution

Question 2

$$731.25$$, $$697.5$$ & $$1,237.5$$

$$675$$, $$510$$ & $$1,327.5$$

$$657$$, $$679.5$$ & $$1,237.5$$

$$567$$, $$796.5$$ & $$1,732.5$$

Solution

Question 3

Partner's Capital Account

Partner's Current Account

(A) or (B)

(A) & (B)

Solution

Question 4

$$2,775$$ & $$2,063$$

$$2,063$$ & $$2,775$$

$$2,467$$ & $$1,688$$

$$1,688$$ & $$2,467$$

Solution

Question 5

Rs. $$18,000$$

Rs. $$60,000$$

Rs. $$75,000$$

Rs. $$1,00,000$$

Solution

Question 6

Capital ratio if no ratio is agreed between partners

Agreed ratio or in their current ratio or in their capital ratio

Last agreed capital ratio or if no ratio is agreed in equal proportions

Agreed ratio and if no ratio is agreed then in equal proportions

Solution

Question 7

$$24:40:51$$

$$41:22:54$$

$$6:4:3$$

$$17:13:8$$

Solution

Question 8

Fixed Capital A/c

Fluctuating Capital A/c

A or B

None of the above

Solution

Question 9

1.9.1872

1.7.1930

1.10.1930

1.10.1932

Solution

Question 10

Credited to capital account

Debited capital account

No treatment or adjustment is needed

Credited to current account

Solution

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