Accounting for Partnership Basic Concepts

Previous Years' CBSE Board Questions

1.1 Nature of Partnership

MCQ

OR A partnership firm has four partners. How many additional partners can be admitted into the business as per the provisions of the Companies Act, 2013?

1. 50 (b) 46
2. 100 (d) 96

2 Which of the following statements are correct?

1. The liability of a partner for acts of the firm is unlimited.
2. What is meant by "Unlimited liability of a Partner"? (Delhi 2016) R
3. Private assets of a partner can also be used for paying the debts of the firm.
4. Each partner is liable jointly with all other partners and also severally to the third parties for all the acts of the firm done, while he is a partner.

The liability of a partner is limited to the extent of his capital contribution.

1. (iii) only
2. (i) and (ii) only
3. (i), (ii) and (iii) only
4. (i), (ii), (iii) and (iv) (Term-I, 2021-22) (II)

1. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R): Assertion (A): Co-ownership of property amounts to partnership. Reason (R): The element of business is present in co- ownership. In the context of the above two statements which of the following is correct?

1. Both A and R are correct and R is the correct reason for A.
2. Both A and R are correct but R is not the correct reason for A.
3. A is correct but R is incorrect.
4. Both A and R are incorrect.

(Term-I, 2021-22) [II]

VSA: (1 mark)

1. Ritesh and Hitesh are childhood friends. Ritesh is a consultant whereas Hitesh is an architect. They contributed equal amounts and purchased a building for ₹2 crores. After a year, they sold it for ₹3 crores and shared the profits equally. Are they doing the business in partnership? Give reason in support of your answer. (Delhi 2018)

1. Does partnership firm has a separate legal entity? Give reason in support of your answer.

(Delhi 2017) R

What is the maximum number of partners that

partnership firm can have? Name the Act that

provides for the maximum number of partners in a

partnership firm. (Delhi 2016) R

A group of 40 people want to form a partnership

firm. They want your advice regarding the maximum

number of persons that can be there in a partnership

firm and the name of the Act under whose provisions

it is given. (Al 2016) R

1.2 Partnership Deed

MCQ

1. The partnership deed should be properly drafted and prepared as per the provisions of the _____ and preferably registered with the __
2. Indian Partnership Act 1932, Registrar of Companies.
3. Indian Partnership Act 1932, Registrar of firms.
4. Stamp Act, Registrar of Companies.
5. Stamp Act, Registrar of Firms.

(Term-I, 2021-22)

1. The document that contains the terms of partnership is called:
2. Partnership Agreement
3. Partnership Contract
4. Partnership Deed
5. Partnership Rules (Term-I, 2021-22) R

In the absence of partnership deed, the profits of a

firm are divided among the partners:

1. In the ratio of capital
2. Equally
3. In the ratio of time devoted for the firm's business.
4. According to the managerial abilities of the partners. (Delhi 2015) R
5. In the absence of Partnership Deed, interest on loan of a partner is allowed:
6. at 8% per annum.
7. at 6% per annum.
8. no interest is allowed.
9. at 12% per annum. (Al 2015) R

VSA (1 mark)

In the absence of a . mutual

relation between partners are governed by the Indian

Partnership Act 1932. (2021 C)

1.3 Special Aspects of Partnership Accounts

MCQ

1. Vijayand Rattan are partners in a firm. The partnership agreement provides for interest on drawings @ 12% per annum. Which of the following accounts will be debited to transfer interest on drawings to Profit and Appropriation Account?
2. Interest on Drawing account
3. Bank account
4. Partners' Current accounts
5. Partners' Capital accounts (Term-I, 2021-22) [II]

1.4 Maintenance of Capital Accounts of Partners

MCQ

Which of the following statement is not true for fixed

capital account?

1. (b) The capital accounts always show a credit balance.
2. (d) All adjustments for drawings, salary, interest on capital etc., are made in the current accounts. (Term-I, 2021-22) R

Rita and Usha were partners in a firm sharing profits and losses in the ratio 3:5. During the year, Usha withdrew ₹15,000 at the end of each month. Interest on drawings is to be charged @ 8% p.a. The average period for the calculation of interest on drawings will be:

1. 4 ½ months (b) 6 months
2. 6 1/2 months (d) 5 1/2 months

1. Ram and Mohan were partners with fixed capitals of ₹3,00,000 and ₹2,00,000 respectively. As per their partnership deed, interest on capital was allowed @10% p.a. Net profit for the year ended 31st March, 2022 was ₹30,000. The amount of interest on capital was credited to each partner's current account for the year ended 31st March, 2022 was:
2. Ram ₹30,000 and Mohan ₹20,000
3. Ram ₹20.000 and Mohan ₹10.000
4. Ram ₹18,000 and Mohan ₹12000
5. Ram ₹30,000 and Mohan Nil.

(Term-1, 2021-22)

1. Two statements are given below marked as Assertion(A) and Reason(R). Choose the correct alternative on the basis of these statements. Assertion (A): Under the fluctuating capital method, the balance in the capital account fluctuates from time to time. Reason (R): Under the fluctuating capital method, all the adjustments such as share of profit and loss, interest on capital, drawings, interest on drawings etc. are recorded directly in the capital accounts of the partners.
2. A is correct but R is incorrect.

1. Both A and R are correct but R is not the correct explanation of A.
2. Both A and R are incorrect.
3. Both A and R are correct and R is the correct explanation of A. (2023)

Gagan, a partner in a partnership firm, withdrew

₹10,000 in the beginning of each quarter. For how

many months would interest on drawings be charged?

1. 6 months (b) 6.5 months
2. 7.5 months (d) 4.5 months (2021 C)

The difference between the fixed capital method and

fluctuating capital method of maintaining partner's

capital is whether or not the transactions other than

are recorded in the Capital accounts of the

partners.

1. (b) Withdrawal of Capital
2. (d) Both (a) and (b) (Term-I, 2021-22) An

Given below are two statements, one labelled as

Assertion (A) and other labelled as Reason (R):

Assertion (A): The fixed capital account balance of a

partner may change due to additional Capital introduced

or capital withdrawn or both, during the year.

Reason (R): Under fixed capital method, the partner's

capital accounts balance always remains same.

In the context of the above two statements which of

the following is correct?

1. (b) A is correct, but R is incorrect.
2. (d) Both A and R are is incorrect.

VSA. (1 mark)

State the two situations under which interest on

capital is generally provided. (Al 2019)

Nusrat and Sonu were partners in a firm sharing

profits in the ratio of 3: 2. During the year ended

31-3-15, Nusrat had withdrawn ₹15,000. Interest

on her drawings amounted to ₹300. Pass necessary

Journal entry for charging interest on drawings

assuming that the capital of the partners were fixed.

(Delhi 2016) Ev

Tom and Harry were partners in a firm sharing profits

in the ratio of 5: 3. During the year ended 31.3.15,

Tom had withdrawn ₹40,000. Interest on his drawings

amounted to ₹2,000. Pass necessary journal entry

for charging interest on drawings assuming that the

capitals of the partners were fluctuating. (Al 2016)