Accountancy Test - 32

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Accountancy Test - 32

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Weekly Quiz Competition

Question 1
5 / -1

Is interest on a loan permitted in the absence of any agreement or when the partnership deed is silent?

A
No interest is allowed.

B
Allowed only if agreed upon by all the other partners.

C
Will be paid only when there are sufficient profits.

D
Allowed at a rate of 6% per annum.
Solution
In the absence of a specific agreement or if the partnership deed is silent, the following applies:
- Interest on a loan is typically allowed at a rate of 6% per annum.
- This is a standard provision in partnerships where no other stipulations are made.
Question 2
5 / -1

What does a guarantee given to a partner 'A' by the other partners 'B & C' imply?

A
In case of loss, 'A' will not contribute towards that loss.

B
In case of insufficient profits, 'A' will receive only the share of profit and not the minimum guarantee amount.

C
In case of loss or insufficient profits, 'A' will withdraw the minimum guarantee amount.

D
All of the above.
Solution
When partners B and C give a guarantee to partner A, it means:
- A is assured a minimum amount irrespective of the partnership's profits or losses.
- If profits are insufficient or there are losses, A is still entitled to withdraw this guaranteed amount.
Question 3
5 / -1

How would you close the Partner's Drawings Account?

A
By transfer to Capital Account debit side

B
By transfer to Capital Account credit side

C
By transfer to Current Account credit side

D
Either 'B' or 'C'
Solution
The Partner’s Drawings Account is closed by transferring the balance. Here's how it can be done:
- Transfer the balance to the Capital or Current Account on the debit side.
- This process reduces the partner's capital or current account by the amount drawn.
Question 4
5 / -1

In the absence of any agreement, partners are liable to receive interest on their loans at what rate?

A
12% p.a.

B
10% p.a.

C
8% p.a.

D
6% p.a.

Solution

In the absence of any agreement, partners are entitled to receive interest on their loans at a rate of 6% per annum. This is the standard rate unless specified otherwise in a partnership agreement.
Question 5
5 / -1

Interest on Drawings is:

A
Debited to P/L A/C

B
Credited to P/L A/C

C
Debited to Capital A/C

D
None

Solution

Interest on drawings is gain for the business. Interest on drawings is an income to the firm, and hence it is credited to the profit and loss appropriation account. On the other hand, interest on drawings is an expense to the partners, and hence it is debited to their capital accounts.
Question 6
5 / -1

Firm has earned exceptionally high profits from a contract which will not be renewed. In such a cash the profit from this contract will not be included in ______.

A
Profit sharing of the partners.

B
Calculation of the goodwill.

C
Both

D
None

Solution

Because it is not related to the admission or retirement of the partners. At the time of admission or retirement goodwill will be calculated.
Question 7
5 / -1

A draws Rs. 1000 per month on the last day of every month. If the rate of interest is 5% k.p.a. then the total interest chargeable from him to accounting year ending on 31-12-1985 will be

A
Rs. 325

B
Rs. 275

C
Rs. 300

D
Rs. 350

Solution

There is a formula for calculating interest on drawings at the end of every month.

= amount * 12 * rate * (11/24)

= 1000 * 12 * (5/100) * (11/24)

= Rs. 275
Question 8
5 / -1

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.:

A
7

B
4

C
5

D
6

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.
Question 9
5 / -1

A partner acts as ______ for a firm.

A
Agent

B
Third Party

C
Employee

D
None of the above

Solution

A Partner is an Agent of the Firm (Section 18).

A partnership is a relationship between partners who agree to share the profits of the business.

The business can be carried on by all of them or any of them acting for all. This definition suggests that a partner can be an agent of the others.
Question 10
5 / -1

If there is no partnership deed then interest on capital will be charged at ______________p.a.

A
6%

B
8%

C
9%

D
NIL

Solution

According to partnership act 1932, No interest on capital will be allowed in the absence of partnership deed.

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Re-Attempt Weekly Quiz Competition

Accountancy Test - 32

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Accountancy Test - 32

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Question 1

No interest is allowed.

Allowed only if agreed upon by all the other partners.

Will be paid only when there are sufficient profits.

Allowed at a rate of 6% per annum.

Solution

Question 2

In case of loss, 'A' will not contribute towards that loss.

In case of insufficient profits, 'A' will receive only the share of profit and not the minimum guarantee amount.

In case of loss or insufficient profits, 'A' will withdraw the minimum guarantee amount.

All of the above.

Solution

Question 3

By transfer to Capital Account debit side

By transfer to Capital Account credit side

By transfer to Current Account credit side

Either 'B' or 'C'

Solution

Question 4

12% p.a.

10% p.a.

8% p.a.

6% p.a.

Solution

Question 5

Debited to P/L A/C

Credited to P/L A/C

Debited to Capital A/C

None

Solution

Question 6

Profit sharing of the partners.

Calculation of the goodwill.

Both

None

Solution

Question 7

Rs. 325

Rs. 275

Rs. 300

Rs. 350

Solution

Question 8

7

4

5

6

Solution

Question 9

Agent

Third Party

Employee

None of the above

Solution

Question 10

6%

8%

9%

NIL

Solution

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