Fundamentals of partnership and Goodwill Test

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Fundamentals of partnership and Goodwill Test - 13

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Weekly Quiz Competition

Question 1
1 / -0

The persons who have entered into a partnership business with one another are individually called

A
Firm

B
Company

C
Co-operatives

D
Partner

Solution

A person who joins a partnership business, individually called a partner. The group of partners is called Firm and the name under which all business activities going on is known as firm’s name.
Question 2
1 / -0

The members of the partnership firm are called

A
Proprietors

B
Managers

C
Partners

D
Directors

Solution

Members of the firm are called partners. Proprietor word is mainly used in case of sole proprietorship. But in case of partnership persons join hands together to run a business are called partners. They contribute capitals individually and responsible for all profits or losses.
Question 3
1 / -0

From the following, identify a situation when fixed capitals of the partners may change?

A
When drawings are made by the partners

B
When additional capital is introduced

C
When current accounts are opened

D
When there is loss in the business

Solution

Fixed capitals of the partners will remain fixed but there are two situations when fixed capitals of the partners may change:

1. When additional capital is introduced by the partners

2. When capital is withdrawn permanently under an agreement.
Question 4
1 / -0

If the partnership agreement is silent as to Interest on capital

A
6% interest on capital is allowed

B
5% interest on capital is allowed

C
2% interest on capital is allowed

D
No interest on capital is allowed

Solution

When rate of interest on capital is not mentioned in partnership deed, partners cannot claim for interest on capital. Interest on capital will be allowed to the partners only if rate of interest is mentioned in the partnership deed.
Question 5
1 / -0

Rent paid to a partner comes under:

A
Partners capital Account

B
Profit and Loss appropriation Account

C
Profit and Loss Account

D
Partners current Account

Solution

Rent paid to a partner is a charge against the profit. It means it will reduce the profit. That’s why it is shown in Profit and Loss Account instead of Profit and Loss Appropriation Account.
Question 6
1 / -0

Salary paid to a partner will be shown in:

A
Partners current account only

B
Partners capital account only

C
Profit and loss appropriation account

D
Profit and loss account

Solution

Salary paid to partner is an appropriation of profit. All appropriation items are shown in the Profit and loss appropriation account.
Question 7
1 / -0

Sometimes a partner may be guaranteed a minimum amount of his share in profits by

A
Always by two partners

B
In agreed ratio by all old partners

C
Both All partners and In agreed ratio by all old partners

D
All partners

Solution

Guarantee of minimum amount can be given by a single partner, some of the partners or by all the partners in an agreed ratio. If guarantee is given by only one partner then it is known as guarantee by partner but if guarantee is given by the firm (all partners) then it is known as guarantee by firm.
Question 8
1 / -0

What journal entry is to be recorded in the books of account when Balance of Profit and Loss Account is transferred to the Profit and Loss Appropriation account.

A
Profit and Loss A/c Dr. To capital A/c

B
Capital A/c Dr. To Profit and Loss Appropriation A/c

C
Profit and Loss A/c Dr. To Profit and Loss Appropriation A/c

D
Profit and Loss A/c Dr. To Reserve A/c

Solution

Correct Entry is Profit and loss A/c Debit and Profit and loss appropriation account Credit. To find out the net profit all charge items should be deducted and all non operating incomes should be added to the profit. Net Profit shown by profit and loss account is transferred to the credit side of profit and loss appropriation account.
Question 9
1 / -0

Salary or Commission to a partner is an

A
Asset

B
charge against profits

C
Appropriation cum charge

D
appropriation out of profits

Solution

In a normal situation salary or commission paid to a partner is treated as an appropriation. It means salalry or commission is paid only when there is profit and amount of salary or commission cannot be more than the profits
Question 10
1 / -0

It is better to have the agreement in writing to avoid any ___

A
Case

B
Loss

C
Audit

D
Dispute

Solution

Partnership deed plays important role in regulating the duties and responsibilities of each partner. A written partnership deed is useful to resolve disputes and misunderstanding among partners because everything is in written form

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Re-Attempt Weekly Quiz Competition

Fundamentals of partnership and Goodwill Test - 13

Result

Fundamentals of partnership and Goodwill Test - 13

Score

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Rank

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SHARING IS CARING

Question 1

Firm

Company

Co-operatives

Partner

Solution

Question 2

Proprietors

Managers

Partners

Directors

Solution

Question 3

When drawings are made by the partners

When additional capital is introduced

When current accounts are opened

When there is loss in the business

Solution

Question 4

6% interest on capital is allowed

5% interest on capital is allowed

2% interest on capital is allowed

No interest on capital is allowed

Solution

Question 5

Partners capital Account

Profit and Loss appropriation Account

Profit and Loss Account

Partners current Account

Solution

Question 6

Partners current account only

Partners capital account only

Profit and loss appropriation account

Profit and loss account

Solution

Question 7

Always by two partners

In agreed ratio by all old partners

Both All partners and In agreed ratio by all old partners

All partners

Solution

Question 8

Profit and Loss A/c Dr. To capital A/c

Capital A/c Dr. To Profit and Loss Appropriation A/c

Profit and Loss A/c Dr. To Profit and Loss Appropriation A/c

Profit and Loss A/c Dr. To Reserve A/c

Solution

Question 9

Asset

charge against profits

Appropriation cum charge

appropriation out of profits

Solution

Question 10

Case

Loss

Audit

Dispute

Solution

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