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Accounting for Partnership: Basic Concepts Test 57

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Accounting for Partnership: Basic Concepts Test 57
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  • Question 1
    1 / -0
    If profit sharing ratio is not specified in the partnership deed, then the profit is shared ______.
    Solution
    If profit sharing ratio is not specified in the partnership deed, then the profit is shared equally. The partners can share profits in any agreed ration but in the absence of an agreement, they share the property equally, that means,the amount of the profit received by each of the partners will be equal.
  • Question 2
    1 / -0
    X, Y and Z are partners in a firm. At the time of division of profit for the year, there was a dispute between the partners. Profits before interest on partner's capital were Rs.12,000 and Z demanded a minimum profit of Rs. 10,000 as his financial position was not good. However, there was no written agreement on this profit. Calculate the amount payable to X, Y and Z. 
    Solution
    When there is no written agreement in regard to how the profits are to be distributed equally among the partners. So, Z's demand of minimum profit won't be entertained. All the partners will get profit of Rs.4,000 equally. 
  • Question 3
    1 / -0
    Ram and Mohan, are partners. They Draw for private use Rs. 6,000 and Rs. 4000 respectively. Interest is chargeable @ 6% per annum on drawings. What is the interest?
    Solution
    Interest on drawings = Amount x rate of interest x average period
     RAM:-
    = Rs.6,000 x 6/100 x 6/12
    = Rs-180
     MOHAN:-
    = Rs.4,000 x 6/100 x 6/12
    = Rs-120.

    Note:-
    Because nothing is mentioned hence, average period is taken as 6/12.  
  • Question 4
    1 / -0
    Partnership agreement can be __________.
    Solution
    Partnership agreement can be oral or written. Some individuals have to enter into a contract or agreement in order to become partners in a partnership firm. Partnerships are the only business entities that can be formed by oral agreement as well as written agreement.
  • Question 5
    1 / -0
    Ram is a partner. He made drawing as follows:
    July 1Rs.200
    August 1Rs.200
    September 1Rs.300
    November 1Rs.50
    February 1Rs.100
    If the rate of interest on drawings is 6% and accounts are closed on March 31 the interest on drawing is:
    Solution
    date of drawings    total months     amount       Working                       Interest 
    July 1                          9                      200        200 x 6/100 x 9/12          = Rs-9
    August 1                     8                      200       200 x 6/100 x 8/12          = Rs-8
    September 1              7                      300        300 x 6/100 x 7/12          = Rs-10.5
    November 1               5                        50          50 x 6/100 x 5/12          = Rs-1.25
    February 1                  2                      100        100 x 6/200 x 2/12          = Rs-1
    Total interest                                                                                       =    Rs-29.75
  • Question 6
    1 / -0
    A Drawn Rs.1000 per month on the last day of every month. If the rate of interest is 5% p.a. then the total interest or drawings will be:
    Solution
    Interest on drawing = Total drawings x rate of interest x average period/12
                                     = 1,000 x 12 x 5/100 x 5.5/12 (WN 1)
                                     = 12,000 x 5% x 5.5/12
                                     = RS-275.

    Working note:-
    Average period = Beginning period of use + end period of use
                                 ------------------------------------------------------------------
                                                                    2
                               = 11 + 0
                                 --------
                                     2
                              = 5.5 
  • Question 7
    1 / -0
    Which of the following is not covered by the term "Property of the firm".
    Solution
    Property of the partners is not covered by the term "Property of the firm". Partners can carry on the business of partnership firm only with the properties which belongs to the firm and not with their personal property. Partners of the firm belongs to a  separate domain from the property of the partners,
  • Question 8
    1 / -0
    Share in partnership can be transferred by consent of ______ the partners.
    Solution
    Share in partnership can be transferred by consent of all the partners. Partners are the agents of the partnership firm who all carry on the business related activities in a partnership entity. A partner does not have any right to sell the share in partnership without the consent of all the partners.
  • Question 9
    1 / -0
    Ajay and Vijay are partners in a firm. They share profits in the ratio of 3:2. As per their partnership agreement, interest on drawings is to be charged @ 10% p.a. Their drawings during 2017 were Rs 24,000 and Rs 16,000, respectively. Calculate interest on drawings based on the assumption that the amounts were withdrawn evenly, throughout the year.
    Solution
    Interest on Drawings = Amount withdrawn x rate of interest x 6/12 (evenly)
    AJAY:-
    = 24,000 x 10/100 x 6/12
    = RS-1,200.

    VIJAY:-
    = 16,000 x 10/100 x 6/12
    = RS-800.
  • Question 10
    1 / -0
    As per section 37 of the Indian Partnership Act 1932, the executors would be entitled at their choice to the interest calculated from the date of death till the date of payment on the final amount due to the deceased partner at _______ % p.a.:
    Solution
    As per section 37 of the Indian Partnership Act 1932, the executors would be entitled at their choice to the interest calculated from the date of death till the date of payment on the final amount due to the deceased partner at 6% p.a. The loan of the deceased partner is treated as a third party loan. 
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