Question by CA (Dr.) G.S.GREWAL, Series – 4

Fundamentals

Fill in the Blanks: –

  1. Partners may or may not have written ____________________.

True / False

  1. Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any of them acting for all.

Multiple Choice Question

  1. In case partners have guaranteed profit to a partner and deficiency of profit. The deficiency happens it is borne by

(a)    All the partners in new profit sharing ratio

(b)    Remaining partners in the ratio in which they have given guarantee

(c)    All the partners in sacrificing ratio.

(d)    All the partners in old profit sharing ratio.

Answer – Question by CA (Dr.) G.S.GREWAL, Series – 4

Fill in the Blank

  1. Partnership Deed

True / False

  1. True

Reason: It is one of the essential characteristic of Partnership that it is a relation between persons who have agreed to share profits of business carried on by all or any of them acting for all.

Multiple Choice Question

  1.   (b)

Reason: The Partners have an agreement with the other partner to give him a minimum profit. The deficiency thus, will be borne by the guaranteeing partner in the ratio in which they have guaranteed the minimum profit. If the ratio of guarantee is not given, they will share the deficiency in their profit – sharing ratio.

Question by CA (Dr.) G.S.GREWAL, Series – 14

Fundamentals

True / False

  1. Relationship between the partners is of Senior – subordinate.

Fill in the Blank

  1. Manager’s commission is a _________________ against profit.

Multiple Choice Question

  1. If the partnership deed provides for payment of interest on capital of the partners, then interest can be paid only out of

(a)    Accumulated Profits

(b)    Past Year’s Profits

(c)    Current Year’s Profits

(d)    General Reserve

Answer – Question by CA (Dr.) G.S.GREWAL ,Series -14

True/False

  1. False

Reason: According to the Partnership Act, 1932, the partners are principals and agents of the partnership firm, who acts on the behalf of the firm.

Fill in the Blank

  1. charge

Multiple Choice Questions

  1. (c)

Reason: If the Partnership Deed or agreement provides for the payment of interest on capital of the partners, interest can be paid out of current year’s profit only, and not from the past year’s profit or accumulated profits because it is for the current year and therefore is an appropriation of current year’s profit.

Question by CA (Dr.) G.S.GREWAL, Series – 20

Fundamentals

True / False

  1. In the absence of provision in the partnership deed, interest on loans given by the partners is allowed @ 6%.

Fill in the Blank

  1. If a fixed amount is withdrawn by a partner on the first day of every month interest on the total amount is charged for _________________ months.

Multiple Choice Question

  1. There are two partners in a firm P and Q. R is admitted into the firm for 1/3th share of profit with the guaranteed annual profit of ₹ 18,000. Firm’s profit for the year is ₹ 42,000. What amount of profit would be given to R as his share of profit by the firm?

(a) ₹ 20,000

(b) ₹ 25,000

(c) ₹ 18,000

(d) ₹ 16,000

Answer – Question by CA (Dr.) G.S.GREWAL Series – 20

True/False

  1. False

Reason: If the partnership deed is silent on allowing interest on Loan to the partners, the provisions of the Partnership Act, 1932 shall apply. It provides that interest on Loan shall be allowed @ 6% p.a.

Fill in the Blank

  1. 6.5 months

Reason: If fixed amount is withdrawn by partners on the first day of every month interest on the total amount is charged for 6.5 months.

Multiple Choice Question

  1. (c)

Reason: R (new partner) has been guaranteed minimum profit of ₹ 18,000 per annum. His capital account will be credited by that amount, irrespective of his share at all.

Question by CA (Dr.) G.S.GREWAL, Series – 34

Fundamentals

True/False

  1. Profits and losses of partners in absence of oral or written agreement will be shared in the ratio in their Capital Ratio.

Fill in the Blank

  1. The extension of Profit and Loss Account is _____________.

Multiple Choice Question

  1. Interest on Partner’s Capital Accounts is credited to:

(a) Partners’ Capital Accounts

(b) Revaluation Account

(c) Interest Account

(d) Goodwill Account

Answer – Question by CA (Dr.) G.S.GREWAL, Series – 34

True/False

  1.  False

Reason: The Partnership Act, 1932 provides that the parties to the partnership may determine the profit sharing ratio. But, in case they do not decide the profit sharing ratio, profit is to be shared equally.

Fill in the Blank

  1. Profit and Loss Appropriation Account

Multiple Choice Question

  1. (a)

Reason: Interest on capital is allowed to the partners on their capital balance. Interest allowed is credited to Partner’s Capital account. In the absence of information, it is assumed that Capital Accounts are maintained on Fluctuating Capital Accounts method hence, interest on Capital is credited to Partner’s Capital Accounts.

Question by CA (Dr.) G.S.GREWAL, Series – 43

Fundamentals

True/False

  1. A is drawing ₹1,000 p.m. on the last day of every month. If the rate of interest is 5% p.a. then the total interest chargeable from him in the accounting year ending on March 31, 2020 will be ₹ ₹ 275.

Fill in the Blank

  1. A partnership firm cannot have more than _____________ partners and is prescribed in the ______________.

Multiple Choice Question

  1. A and B are partners sharing in the ratio 2 : 1. They decided to share in the ratio 3 : 2 in future. If the goodwill of the firm is valued at ₹ 60,000, how the adjustment in the profit will be affected?

(a)     B pays A ₹ 4,000

(b)     A pays B ₹ 4,000

(c)     A pays B ₹ 6,000

(d)     B pays A ₹ 6,000

Answer – Question by CA (Dr.) G.S.GREWAL, Series – 43

True/False

  1. True

Reason: Interest will be charged @ 5% on ₹ 12,000 for 5 ½ months. Thus, interest will be ₹ 12,000 x 5% x 5 ½ / 12 = ₹ 275.

Fill in the Blank

  1. 50, Companies Act, 2013

Multiple Choice Question

  1. (a)

Reason:                                                   A                    B

New Ratio                                3/5                        2/5

Old Ratio                                 2/3                        1/3

Gaining / Sacrificing Ratio                (1/15)                    1/15

i.e., B is the Gaining Partner while A is the Sacrificing Partner. Therefore, B will compensate A an amount equal to 1/15th of ₹ 60,000 i.e. ₹ 4,000.

 

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