Accountancy (055) · Class XII · Chapter-wise Board Questions

There are two statements Assertion (A) and Reason (R) :

Assertion (A) : Partnership Agreement becomes the basis of relationship among the partners.

Reason (R) : Partnership is the result of an agreement between two or more persons to do business and share its profits and losses.

Choose the correct option from the following :

1. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Assertion (A) is incorrect, but Reason (R) is correct.

Tarun and Tej were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1^st April 2024, Tej had given a loan of ₹50,000 to the firm. The net profit of the firm before charging interest on loan was ₹3,75,000. The firm closes its books on 31^st March every year. The amount of profit transferred from Profit and Loss Account to Profit and Loss Appropriation Account will be :

1. ₹3,75,000
2. ₹3,72,000
3. ₹4,25,000
4. ₹3,78,000

Ashok and Vasu were partners in a firm sharing profits and losses in the ratio of 4 : 3. Their capitals on 31^st March, 2025 were ₹3,00,000 and ₹3,75,000 respectively. During the year ended 31^st March, 2025 Vasu withdrew ₹40,000 for his personal use and introduced ₹1,50,000 as additional capital in the business. Profit of the firm for the year ended 31^st March, 2025 was ₹1,40,000. Vasu’s capital in the beginning of the year was :

1. ₹2,75,000
2. ₹4,25,000
3. ₹2,05,000
4. ₹3,45,000

Tula, Ram and Madhvi were partners in a firm. The partnership deed provided for interest on partners drawings @ 12% p.a. The firm closes its books on 31^st March every year. Starting from 31^st December, 2025 Madhvi withdrew ₹40,000 at the end of every month for her personal use. Interest on Madhvi’s drawings will be :

1. ₹19,200
2. ₹4,800
3. ₹2,400
4. ₹1,600

Nidhi and Kunal were partners in a firm sharing profits and losses in the ratio of 4 : 1. Their capitals were ₹3,00,000 and ₹2,00,000 respectively. They were entitled to interest on capital @ 6% p.a. The firm earned a profit of ₹15,000 during the year.

Interest on partners’ capitals will be :

1. Nidhi ₹18,000 ; Kunal ₹12,000
2. Nidhi ₹7,500 ; Kunal ₹7,500
3. Nidhi ₹9,000 ; Kunal ₹6,000
4. Nidhi ₹12,000 ; Kunal ₹3,000

Navya, Kartik and Samir were partners in a firm sharing profits and losses in the ratio of 4:3:1. Samir was given a guarantee that his share of profit in any year will not be less than ₹ 57,000. Any deficiency on this account was to be borne by Navya and Kartik equally. The firm earned a profit of ₹ 4,00,000 during the year ended 31^st March, 2025. The amount of deficiency borne by Kartik was :

1. ₹ 3,500
2. ₹ 4,000
3. ₹ 3,000
4. ₹ 7,000

Nandita and Prabha were partners in a firm manufacturing furniture. They were sharing profits and losses in the ratio of 8:7. During the year ended 31^st March 2025, Nandita withdrew ₹ 80,000 in cash and ₹ 20,000 as furniture for her personal use. The partnership deed provided for charging interest on partner's drawings @ 6% p.a. The amount of interest on Nandita's drawings for the year ended 31^st March 2025 was :

1. ₹ 6,000
2. ₹ 1,200
3. ₹ 2,400
4. ₹ 3,000

Dilshad, Ajit and Deepna were partners in a firm sharing profits and losses in the ratio of 2:2:1. Their fixed capitals were : ₹ 5,00,000, ₹ 4,00,000 and ₹ 1,00,000 respectively. After closing the accounts for the year ended 31^st March 2025, it was discovered that interest on partners' capitals was provided @ 6% p.a. instead of 7% p.a. The adjustment entry to rectify the above error will be :

Journal

Shiv, Riya and Rohit were partners in a firm. On 1^st October, 2024 Rohit had given a loan of ₹ 2,00,000 to the firm, at an interest rate of 10% p.a. as per the partnership agreement. The accountant of the firm is emphasizing that interest on loan will be paid at 6% p.a. The amount of interest on loan paid to Rohit for the year ended 31^st March, 2025 will be :

1. ₹ 20,000
2. ₹ 10,000
3. ₹ 12,000
4. ₹ 6,000

Amita, Shivani and Tarush were partners in a firm sharing profits and losses in the ratio of 4:3:2. Tarush's share of profit at the end of the year amounted to ₹ 1,80,000. Amita's share of profit at the end of the year was :

1. ₹ 2,70,000
2. ₹ 3,60,000
3. ₹ 1,80,000
4. ₹ 2,00,000

Atul, Bajaj and Madan were partners in a firm sharing profits and losses in the ratio of 1 : 2 : 5. The partnership deed provides that interest on a partner’s drawings shall be charged @ 18% per annum. During the year ended 31^st March, 2025, Bajaj withdrew ₹7,000 at the end of each quarter. Interest on Bajaj’s drawings will be :

1. ₹1,890
2. ₹3,150
3. ₹420
4. ₹5,040

Damodar, Rao and Shridharan were partners in a firm sharing profits and losses in the ratio of 3 : 1 : 1. Their fixed capitals were ₹4,00,000; ₹3,00,000 and ₹2,00,000 respectively. Interest on capital is allowed at the rate of 6% per annum. Journal entry for allowing interest on Rao’s capital will be :

Divya and Bholi were partners in a firm sharing profits and losses in the ratio of 3 : 1. On 1^st April, 2024, their fixed capitals were ₹8,00,000 and ₹6,00,000 respectively. On 30^th September, 2024, Bholi introduced ₹50,000 as additional capital. Partnership deed provided that interest on capital will be allowed @ 12% p.a. Interest on Bholi’s capital for the year ended 31^st March, 2025 was :

1. ₹78,000
2. ₹75,000
3. ₹72,000
4. ₹3,000

Persons who have entered into partnership with one another are collectively called :

1. Firm
2. Partnership
3. Partners
4. Partners’ firm

In the absence of partnership deed, partners are entitled to :

1. Interest on Capital
2. Share of profits/losses in the ratio of their capitals
3. Interest @ 6% p.a. on loans/advances by them to the firm
4. Remuneration for the firm’s work

When capitals of the partners are fluctuating, then the adjustments for drawings, interest on drawings, interest on capital, partners’ salary, etc. are shown in the _________.

1. Current Account of partners
2. Capital Account of partners
3. Drawings Account
4. Profit and Loss Appropriation Account

Reena and Teena were partners in a firm sharing profits and losses in the ratio of 2 : 1. Teena withdrew ₹ 20,000 at the beginning of each month during the year ended 31^st March, 2025. Interest on drawings was to be charged @ 6% per annum. Interest on Teena’s drawings for the year ended 31^st March, 2025 will be :

1. ₹ 7,800
2. ₹ 7,200
3. ₹ 9,600
4. ₹ 6,600

Rohan and Sohan were partners in a firm sharing profits and losses equally. Rohan withdrew ₹ 15,000 at the beginning of each quarter during the year ended 31^st March, 2025. Interest on Rohan’s drawings will be calculated for an average period of :

1. 6 months
2. 4 ½ months
3. 7 ½ months
4. 6 ½ months

Ankur and Angad were partners in a firm sharing profits and losses in the ratio of 8 : 7. On 1^st July, 2024, Angad advanced a loan of ₹ 8,00,000 to the firm. There is no partnership deed. Angad demands interest on loan @ 10% p.a. On 31^st March, 2025, the amount of interest on loan due to Angad will be :

1. ₹ 36,000
2. ₹ 48,000
3. ₹ 80,000
4. ₹ 60,000

Anita and Priyal were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1^st April, 2024, their capital accounts showed balances of ₹ 3,00,000 and ₹ 4,00,000 respectively. The partnership deed provided for interest on capital @ 8% p.a. The firm earned a profit of ₹ 28,000 for the year ended 31^st March, 2025.

Interest on capital allowed to Anita and Priyal was :

1. Anita ₹ 24,000, Priyal ₹ 32,000
2. Anita ₹ 16,000, Priyal ₹ 12,000
3. Anita ₹ 12,000, Priyal ₹ 16,000
4. Anita ₹ 16,800, Priyal ₹ 11,200

Arora and Gurmeet were partners in a firm sharing profits and losses in the ratio of 3 : 2. Starting from 1^st October, 2024 Arora withdrew ₹30,000 at the beginning of each quarter for his personal use. Interest on drawings was to be charged @ 12% per annum. Interest on Arora’s drawings for the year ended 31^st March, 2025 was :

1. ₹1,800
2. ₹2,700
3. ₹450
4. ₹3,600

Alok, Sarah and Aditya were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On 1^st January, 2025 Alok advanced a loan of ₹2,00,000 to the firm. In the absence of a partnership agreement, the amount of interest on loan due to Alok on 31^st March, 2025 will be :

1. ₹20,000
2. ₹12,000
3. ₹3,000
4. ₹5,000

Munna and Sonu were partners in a firm sharing profits and losses in the ratio of 4 : 1. Their fixed capitals were ₹40,00,000 and ₹30,00,000 respectively. During the year ended 31^st March, 2025, Munna withdrew ₹50,000 for personal use. Interest on drawings was to be charged @ 6% p.a. The journal entry for charging interest on Munna’s drawings will be :

Reema and Leena were partners in a firm, sharing profits and losses in the ratio of 4 : 1. On 1st April, 2024, Maya was admitted as a new partner for ¹/₄th share in the profits of the firm. Maya was guaranteed a minimum profit of ₹ 1,20,000. Any deficiency on this account was be borne by Reema and Leena in the ratio of 3 : 2. During the year ended 31st March, 2025, the firm earned a net profit of ₹ 4,00,000. The amount of deficiency borne by Leena will be :

1. ₹ 10,000
2. ₹ 8,000
3. ₹ 4,000
4. ₹ 12,000

Kartik and Yogesh were partners in a firm, sharing profits and losses in the ratio of 2 : 1. Their capitals were ₹ 6,00,000 and ₹ 4,00,000 respectively. Interest on capital is allowed @ 8% p.a. The firm earned a profit of ₹ 60,000 for the year ended 31st March, 2025. Interest on capital credited to the partners will be :

1. Kartik ₹ 36,000; and Yogesh ₹ 24,000
2. Kartik ₹ 30,000; and Yogesh ₹ 30,000
3. Kartik ₹ 40,000; and Yogesh ₹ 20,000
4. Kartik ₹ 48,000; and Yogesh ₹ 32,000

Adish, Bina and Chand were partners in a firm, sharing profits and losses in the ratio of 4 : 2 : 1. Bina’s share of profit at the end of the year amounted to ₹ 1,40,000. Adish’s share in the profit was :

1. ₹ 70,000
2. ₹ 2,10,000
3. ₹ 2,80,000
4. ₹ 1,40,000

Sara and Tara were partners in a firm. Their capitals as on 1^st April, 2023 were ₹ 6,00,000 and ₹ 4,00,000 respectively. On 1^st October, 2023, Tara withdrew ₹ 1,00,000 for personal use. According to the partnership deed, interest on capital was allowed @ 8% p.a.

The amount of interest allowed on Tara's capital for the year ended 31^st March, 2024 was :

1. ₹ 28,000
2. ₹ 30,000
3. ₹ 48,000
4. ₹ 32,000

Assertion (A) : Each partner carrying on the business of the firm is the principal as well as the agent for all the other partners of the firm.

Reason (R) : There exists a relationship of mutual agency between all the partners.

Choose the correct option from the following :

1. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Assertion (A) is incorrect, but Reason (R) is correct.

Anuj and Kartik were partners in a firm sharing profits and losses in the ratio of 5 : 4. Anuj withdrew ₹ 20,000 in the beginning of every alternate month starting from 1^st April, 2023 during the year ended 31^st March, 2024. Interest on Anuj's drawings @ 6% p.a. for the year ended 31^st March, 2024 will be :

1. ₹ 8,400
2. ₹ 1,200
3. ₹ 4,200
4. ₹ 3,600

When the partners' capitals are fixed, the drawings made by a partner are recorded on the :

1. Debit side of Partner's Capital Account.
2. Credit side of Partner's Capital Account.
3. Debit side of Partner's Current Account.
4. Credit side of Partner's Current Account.

Eliza, Fenn and Garry were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 1. Fenn was guaranteed ₹ 25,000 as his share in the profits. Any deficiency arising on that account was to be met by Eliza. The firm earned a profit of ₹ 80,000 for the year ended 31^st March, 2024. The amount of profit credited to Fenn's capital account will be :

1. ₹ 30,000
2. ₹ 40,000
3. ₹ 25,000
4. ₹ 10,000

Assertion (A) : The maximum number of partners in a partnership firm is 50.

Reason (R) : By virtue of the Companies Act 2013, the Central Government is empowered to prescribe maximum number of partners in a firm. The Central Government has prescribed the maximum number of partners in a firm to be 50.

Choose the correct option from the following :

1. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is true, but Reason (R) is false.
4. Both Assertion (A) and Reason (R) are false.

Nandita and Prabha were partners in a firm. Nandita withdrew ₹ 3,00,000 during the year for personal use. The partnership deed provides for charging interest on drawings @ 10% p.a. Interest on Nandita's drawings for the year ended 31^st March, 2024 will be :

1. ₹ 9,000
2. ₹ 30,000
3. ₹ 18,000
4. ₹ 15,000

Radhika, Mehar and Shubha were partners in a firm sharing profits and losses in the ratio of 9 : 8 : 7. If Radhika's share of profit at the end of the year amounted to ₹ 5,40,000, Shubha's share of profit will be :

1. ₹ 5,40,000
2. ₹ 4,80,000
3. ₹ 60,000
4. ₹ 4,20,000

Emily, Flora and Ginni entered into a partnership on 1^st October, 2023 with capitals of ₹ 10,00,000 each. The partnership deed provided for interest on capital at 10% p.a. The firm earned a net profit of ₹ 7,50,000 for the year ended 31^st March, 2024. The amount of profit transferred to Emily’s capital account was :

1. ₹ 2,00,000
2. ₹ 1,50,000
3. ₹ 6,00,000
4. ₹ 2,50,000

Assertion (A) : Partners’ salary is debited to Profit and Loss Appropriation Account and not to Profit and Loss Account.

Reason (R) : Partners’ salary is an appropriation of profit, it is not a charge against profits.

Choose the correct option from the following :

1. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Both Assertion (A) and Reason (R) are incorrect.

Reema, Meesha and Shikha were partners in a partnership firm sharing profits and losses in the ratio of 8 : 7 : 5. On 1^st October, 2023, Reema advanced a loan of ₹ 5,00,000 to the firm. There is no partnership deed. The firm’s profit for the year ended 31^st March, 2024 before charging interest on Reema’s loan amounted to ₹ 2,15,000. The amount of profit credited to Shikha’s capital account was :

1. ₹ 80,000
2. ₹ 70,000
3. ₹ 50,000
4. ₹ 42,500

‘The business of a partnership firm may be carried on by all the partners or any of them acting for all.’

The above statement highlights which of the following feature of partnership ?

1. Agreement
2. Business
3. Sharing of profit
4. Mutual agency

There are two statements Assertion (A) and Reason (R) :

Assertion (A) : The partners’ fixed capital accounts always show a credit balance, which shall remain the same (fixed) year after year unless there is any addition or withdrawal of capital.

Reason (R) : When captials are fixed, then various items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in partners’ capital accounts.

Choose the correct option from the following :

1. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Assertion (A) is incorrect, but Reason (R) is correct.

Sun and Moon were partners in a firm sharing profits and losses equally. Their fixed capitals were ₹ 5,00,000 each. After the accounts for the year ended 31^st March, 2024 were prepared, it was discovered that interest on capital @ 10% p.a. was not credited to the partners’ current accounts as provided in the partnership deed.

The rectifying adjustment entry for the same will be :

John and Harry were partners in a firm sharing profits and losses in the ratio of 2 : 1. On 1^st April, 2023, they admitted Dinesh as a new partner for ¹/₄th share in the profits of the firm with a guarantee that his share in the profits shall be at least ₹ 1,00,000. The net profit of the firm for the year ended 31^st March, 2024 was ₹ 2,80,000. John’s share in the profits of the firm after giving the guaranteed amount of profit to Dinesh will be :

1. ₹ 1,40,000
2. ₹ 1,20,000
3. ₹ 1,00,000
4. ₹ 70,000

Sudha, a partner withdrew ₹ 12,000 on 31^st October, 2023 for her personal use. Interest on drawings is charged @ 6% p.a. The interest on Sudha’s drawings for the year ended 31^st March, 2024 will be :

1. ₹ 300
2. ₹ 30
3. ₹ 3,000
4. ₹ 150

The partnership deed should be prepared as per the provisions of which of the following Acts ?

1. The Companies Act, 2013
2. The Indian Partnership Act, 1932
3. The Indian Stamp Act
4. The Cooperative Societies Act

Manoj, Dilip and Rajinder were partners in a firm sharing profits and losses in the ratio of 7 : 3 : 5. Their fixed capitals were ₹ 10,00,000, ₹ 8,00,000 and ₹ 6,00,000, respectively. The partnership deed provided for interest on partners’ drawings @ 12% p.a. Which of the following accounts will be debited for charging interest on partners’ drawings ?

1. Partners’ Capital Account
2. Profit and Loss Appropriation Account
3. Interest on Drawings Account
4. Profit and Loss Account

Ravi, Mohan and Vinod were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. The partnership deed provided that interest on partners' drawings will be charged @ 12% p.a. Starting from 1^st July, 2023, Mohan withdrew ₹20,000 every month for his personal use. For the year ended 31^st March, 2024 interest on Mohan's drawings will be charged for ___________ months.

1. 6½
2. 6
3. 5½
4. 5

There are two statements Assertion (A) and Reason (R) :

Assertion (A) : Partnership is the result of an agreement between two or more persons to do business and share its profits and losses.

Reason (R) : Partnership agreement should always be in written form.

Choose the correct alternative from the following :

1. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Assertion (A) is incorrect, but Reason (R) is correct.

Mohan, a partner, withdrew ₹80,000 from the business for his personal use during the year ended 31^st March, 2024. Interest on drawings was to be charged @ 12% per annum. Interest on Mohan's drawings will be :

1. ₹9,600
2. ₹4,800
3. ₹800
4. ₹1,600

The following account is debited for allowing interest on partners' capital :

1. Profit and Loss Account
2. Partners' Current Account
3. Interest on Capital Account
4. Partners' Capital Account

Ashok and Avinash were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1^st April, 2023, their capitals were ₹10,00,000 and ₹15,00,000 respectively. After the accounts for the year ending 31^st March, 2024 were prepared, it was discovered that interest on capital at the rate of 10% per annum, as provided for in the partnership deed, was not credited to the partners' capital accounts before distribution of profits. Had the interest on capital been duly provided, the firm's divisible profit would have :

1. Reduced by ₹2,50,000
2. Increased by ₹2,50,000
3. No change in the profits
4. Reduced by ₹25,000

Pooja and Kumari were partners in a firm sharing profits and losses in the ratio of 2 : 1. On 1^st April, 2023, Noori was admitted for a new partner 1/4^th share in the profits of the firm. Noori was guaranteed a minimum profit of ₹1,20,000. Any deficiency on this account was to be borne by Pooja and Kumari in their profit sharing ratio. During the year ended 31^st March, 2024, the firm earned a net profit of ₹3,60,000. The amount of deficiency borne by Pooja will be :

1. ₹20,000
2. ₹1,20,000
3. ₹10,000
4. ₹1,60,000

There are two statements Assertion (A) and Reason (R) :

Assertion (A) : Private assets of a partner can also be used for paying off the firm’s debts.

Reason (R) : Liability of a partner for acts of the firm is limited.

Choose the correct alternative from the following :

1. Assertion (A) is incorrect, but Reason (R) is correct.
2. Assertion (A) is correct, but Reason (R) is incorrect.
3. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
4. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Usha and Mohak were partners in a firm. Usha withdrew a fixed amount at the end of every half-year for the year ended 31^st March, 2024. Interest on drawings is charged at 9% p.a. Interest on Usha’s drawings will be charged for _____ months.

1. 3
2. 6
3. 9
4. 12

Saloni and Mohini were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31^st March, 2024, Saloni’s capital was ₹1,50,000. During the year, she withdrew ₹10,000 and introduced additional capital of ₹32,000. For the year ended 31^st March, 2024, the firm earned a profit of ₹50,000. Saloni’s capital as on 1^st April, 2023, was :

1. ₹1,30,000
2. ₹2,02,000
3. ₹1,08,000
4. ₹98,000

Kamal, Vimal and Nirmal are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. Their fixed capitals were ₹ 3,00,000, ₹ 2,00,000 and ₹ 1,00,000 respectively. Interest on capital was credited to them @ 10% p.a. instead of 8% p.a. The Adjustment Entry to rectify the error will be :

There are two statements, Assertion (A) and Reason (R).

Assertion (A) : Under the fluctuating capital method, only one account, i.e., capital account is maintained for each partner.

Reason (R) : All the adjustments such as share of profit and loss, interest on capital, drawings, interest on drawings, salary or commission to partners, etc. are recorded directly in the capital accounts of the partners.

Choose the correct alternative from the following :

1. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Assertion (A) is incorrect, but Reason (R) is correct.

Ranjeet and Ranvijay started a partnership firm on 1st April, 2023. According to the partnership deed, interest on drawings was to be charged @ 10% per annum. Ranjeet withdrew a fixed amount at the end of each month. The total yearly interest on Ranjeet’s drawings was ₹ 6,600. The amount of Ranjeet’s drawings for the year ended 31st March, 2024 was :

1. ₹ 1,32,000
2. ₹ 1,44,000
3. ₹ 1,21,846
4. ₹ 1,20,000

Mathur, Jain and Verma were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Jain was guaranteed that his share of profit will not be less than ₹ 80,000. The firm’s profit for the year ended 31st March, 2024 was ₹ 1,80,000. The amount of deficiency borne by Verma was :

1. ₹ 15,000
2. ₹ 5,000
3. ₹ 20,000
4. Nil

Divya and Saurabh are partners in a firm. On 1^st October, 2023, Saurabh advanced a loan of ₹ 5,00,000 to the firm. There is no partnership deed. On 31^st March, 2024, Saurabh was entitled to get the following amount as interest on loan :

1. ₹ 25,000
2. ₹ 30,000
3. ₹ 15,000
4. Nil

Abhay, Boris and Chetan were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Boris was guaranteed a profit of ₹95,000. Any deficiency on account of this was to be borne by Abhay and Chetan equally. The firm earned a profit of ₹2,00,000 for the year ended 31st March, 2023. The amount given by Abhay to Boris as guaranteed amount will be :

1. ₹17,500
2. ₹35,000
3. ₹25,000
4. ₹10,000

Assertion (A) : Each partner is a principal as well as an agent for all the other partners.
Reason (R) : As per the definition of Partnership Act, partnership business may be carried on by all the partners or any of them acting for all.

Choose the correct option from the following :

1. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Assertion (A) is incorrect, but Reason (R) is correct.

Read the following hypothetical situation and answer questions No. 7 and 8 on the basis of the given information.

Abha and Babita were partners in a clay toy making firm sharing profits in the ratio of 2 : 1. On 1^st April, 2023, their capital accounts showed balances of ₹5,00,000 and ₹10,00,000 respectively. The partnership deed provides for interest on capital @ 10% p.a. The firm earned a profit of ₹90,000 during the year.

The amount of interest on capital allowed to Abha will be :

1. ₹50,000
2. ₹1,00,000
3. ₹60,000
4. ₹30,000

Read the following hypothetical situation and answer questions No. 7 and 8 on the basis of the given information.

Abha and Babita were partners in a clay toy making firm sharing profits in the ratio of 2 : 1. On 1^st April, 2023, their capital accounts showed balances of ₹5,00,000 and ₹10,00,000 respectively. The partnership deed provides for interest on capital @ 10% p.a. The firm earned a profit of ₹90,000 during the year.

Babita’s share in profit will be :

1. ₹60,000
2. ₹30,000
3. Nil
4. ₹1,00,000

Which of the following items cannot be recorded in the capital account of partners if the capital accounts of partners are fixed ?

1. Drawings
2. Withdrawal of capital
3. Introduction of additional capital
4. Opening balance of capital

On 1^st January, 2023, Abhishek, a partner, advanced a loan of ₹ 3,00,000 to the firm. In the absence of a partnership agreement, the amount of interest on the loan for the year ending 31^st March, 2023 will be :

1. ₹ 18,000
2. ₹ 4,500
3. ₹ 9,000
4. No interest will be provided

If a partner withdraws a fixed amount at the end of each quarter, interest on drawings will be charged for __________ months.

1. 9
2. 7½
3. 6
4. 4½

Neeru and Meetu are partners in a firm with capitals of ₹ 2,00,000 and ₹ 1,50,000 respectively. If the firm earned a profit of ₹ 17,500 for the year ended 31^st March, 2023, then interest on capital @ 10% p.a. would be :

1. Neeru ₹ 15,000; Meetu ₹ 20,000
2. Neeru ₹ 8,750; Meetu ₹ 8,750
3. Neeru ₹ 20,000; Meetu ₹ 15,000
4. Neeru ₹ 10,000; Meetu ₹ 7,500

Raju, Sohan and Tina are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Tina is guaranteed a minimum amount of ₹ 40,000 as share of profit every year. Any deficiency arising on that account shall be borne by Raju. If profit of the firm for the year ended 31^st March, 2023 is ₹ 1,60,000, Raju will bear a deficiency of :

1. ₹ 8,000
2. ₹ 40,000
3. ₹ 48,000
4. ₹ 4,000

Read the following hypothetical situation and answer Questions No. 14 and 15 on the basis of the given information.

Vivek and Nisha were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1^st April, 2022, their capitals were ₹ 8,00,000 and ₹ 4,00,000 respectively. On 1^st July, 2022, Vivek introduced additional capital of ₹ 2,00,000. During the year, Vivek’s drawings were ₹ 40,000 while drawings of Nisha were ₹ 80,000. As per the partnership agreement, interest on capital is allowed @ 6% p.a., interest on drawings will be charged @ 5% p.a. The net profit for the year ended 31^st March, 2023 amounted to ₹ 6,50,000.

14. Interest on capital payable to Vivek will be :

1. ₹ 48,000
2. ₹ 60,000
3. ₹ 57,000
4. ₹ 24,000

Read the following hypothetical situation and answer Questions No. 14 and 15 on the basis of the given information.

Vivek and Nisha were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1^st April, 2022, their capitals were ₹ 8,00,000 and ₹ 4,00,000 respectively. On 1^st July, 2022, Vivek introduced additional capital of ₹ 2,00,000. During the year, Vivek’s drawings were ₹ 40,000 while drawings of Nisha were ₹ 80,000. As per the partnership agreement, interest on capital is allowed @ 6% p.a., interest on drawings will be charged @ 5% p.a. The net profit for the year ended 31^st March, 2023 amounted to ₹ 6,50,000.

15. The amount of interest on drawings of Nisha would be :

1. ₹ 2,000
2. ₹ 1,000
3. ₹ 4,000
4. ₹ 4,800

Shrikant and Ajay were partners in a firm sharing profits and losses in the ratio of 5 : 3. Shrikant withdrew ₹ 10,000 in the beginning of each quarter during the year ended 31^st March, 2023. Interest on Shrikant’s drawings @ 6% p.a for the year ended 31^st March, 2023 will be :

1. ₹ 2,400
2. ₹ 1,200
3. ₹ 1,500
4. ₹ 900

Abha, Manju and Rhea were partners in a firm sharing profits and losses in the ratio of 3 : 3 : 4. During the year ended 31^st March, 2023, Rhea withdrew ₹ 30,000 at the beginning of each half year. Interest on Rhea’s drawings @ 10% p.a. for the year ended 31^st March, 2023 will be :

1. ₹ 6,000
2. ₹ 4,500
3. ₹ 3,000
4. ₹ 1,500

Assertion (A) : Partners’ current accounts maintained under ‘Fixed Capital Method’ may show a debit or a credit balance.

Reason (R) : In the ‘Fixed Capital Method’, all items like share of profit or loss, interest on capital, drawings, interest on drawings etc. are recorded in the partners’ capital accounts.

Choose the correct option from the following :

1. Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
3. Assertion (A) is correct, but Reason (R) is not correct.
4. Both Assertion (A) and Reason (R) are not correct.

Read the following hypothetical situation and answer questions No. 7 and 8 on the basis of the given information :

Richa, Sheena and Tapti were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. The partnership deed provided for charging interest on drawings @ 10% p.a. The drawings of Richa, Sheena and Tapti during the year ended 31^st March, 2023 amounted to ₹ 50,000, ₹ 40,000 and ₹ 30,000 respectively. The net profit for the year ended 31^st March, 2023 was ₹ 57,000.

Sheena’s interest on drawings will be :

1. ₹ 5,000
2. ₹ 4,000
3. ₹ 3,000
4. ₹ 2,000

Read the following hypothetical situation and answer questions No. 7 and 8 on the basis of the given information :

Richa, Sheena and Tapti were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. The partnership deed provided for charging interest on drawings @ 10% p.a. The drawings of Richa, Sheena and Tapti during the year ended 31^st March, 2023 amounted to ₹ 50,000, ₹ 40,000 and ₹ 30,000 respectively. The net profit for the year ended 31^st March, 2023 was ₹ 57,000.

Tapti’s share of profit will be :

1. ₹ 11,500
2. ₹ 34,500
3. ₹ 10,500
4. ₹ 23,000

Kanha, Resham and Nisha were partners in a firm. Nisha had given a loan of ₹ 1,00,000 to the firm @ 10% p.a. The accountant of the firm is emphasizing that interest on loan will be paid @ 6% p.a. At what rate the interest on loan will be paid to Nisha ?

1. 6% p.a.
2. 10% p.a.
3. 8% p.a.
4. No interest on loan will be paid.

Assertion (A) : Under the fixed capital method, partners’ capital accounts always show a credit balance.
Reason (R) : Under the fixed capital method, all items like share of profit or loss, interest on capital, drawings, interest on drawings are recorded in a separate account called partners’ current account.

Choose the correct alternative from the following :

1. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Assertion (A) is incorrect, but Reason (R) is correct.

Vanya and Aanya were partners in a firm sharing profit and losses in the ratio of 3:2. Their capital were ₹ 5,00,000 and ₹ 1,00,000 respectively. Vanya was entitled to interest on capital @ 8% p.a. and Aanya was entitled to salary @ ₹ 5,000 per month. The net profit before any appropriation was ₹ 1,75,000. Vanya’s share in divisible profit will be :

1. ₹ 45,000
2. ₹ 30,000
3. ₹ 37,500
4. ₹ 40,000

Omkar and Shiva were partners in a firm. Omkar was entitled to a salary of ₹ 20,000 p.a. while Shiva was entitled to a salary of ₹ 50,000 p.a. Net profit for the year ended 31^st March, 2023 after charging salary of Omkar and Shiva was ₹ 5,60,000. The total amount credited to Omkar’s capital account will be :

1. ₹ 2,45,000
2. ₹ 2,65,000
3. ₹ 3,15,000
4. ₹ 3,00,000

Read the following hypothetical situation and answer questions 10 and 11 :
Aditi and Saurabh were partners in a firm sharing profits and losses in the ratio of 2:1. On 1^st April, 2022 their capitals were ₹ 5,00,000 and ₹ 4,00,000 respectively. Before any appropriation, the firm earned a Net profit of ₹ 81,000 for the year ended 31^st March, 2023. According to the partnership deed, interest on capital was to be provided @ 10% p.a.

Interest on capital will be provided to Aditi and Saurabh in which of the following ratio ?

1. 5:4
2. 2:1
3. 1:1
4. 8:1

Read the following hypothetical situation and answer questions 10 and 11 :
Aditi and Saurabh were partners in a firm sharing profits and losses in the ratio of 2:1. On 1^st April, 2022 their capitals were ₹ 5,00,000 and ₹ 4,00,000 respectively. Before any appropriation, the firm earned a Net profit of ₹ 81,000 for the year ended 31^st March, 2023. According to the partnership deed, interest on capital was to be provided @ 10% p.a.

Interest on Aditi’s capital will be :

1. ₹ 50,000
2. ₹ 45,000
3. ₹ 40,500
4. ₹ 54,000

Vishnu and Mishu are partners in a firm. Mishu draws a fixed amount at the end of every quarter. Interest on drawings is charged @ 15% p.a. At the end of the year interest on Mishu’s drawings amounted to ₹ 9,000. Interest on drawings was charged on drawings of Mishu for :

1. 6 months
2. 7 ½ months
3. 4 ½ months
4. 4 months

Which one of the following items is not dealt through Profit and Loss Appropriation Account ?

1. Interest on Capital
2. Interest on Drawings
3. Rent paid to partners
4. Partner’s salary

A partnership firm has 45 partners. It wants to admit 7 more partners into partnership. Only ______ more partners can be admitted in the partnership firm according to Companies Act, 2013.

1. 1
2. 6
3. 5
4. 3

Assertion (A) : In partnership firm, the private assets of the partners can also be used to pay off the firm's debts.
Reason (R) : The liability of the partners for acts of the firm is limited.

Choose the correct option from the following :

1. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is false, but Reason (R) is true.
4. Assertion (A) is true, but Reason (R) is false.

Ridhima and Kavita were partners sharing profits and losses in the ratio of 3 : 2. Their fixed capitals were ₹ 1,50,000 and ₹ 2,00,000 respectively. The partnership deed provides for interest on capital @ 8% p.a. The net profit of the firm for the year ended 31^st March, 2023 amounted to ₹ 21,000. The amount of interest on capital credited to the capital accounts of Ridhima and Kavita will be :

1. ₹ 12,000 and ₹ 16,000 respectively.
2. ₹ 10,500 and ₹ 10,500 respectively.
3. ₹ 9,000 and ₹ 12,000 respectively.
4. ₹ 16,000 and ₹ 5,000 respectively.

Ruchika and Harshita were partners in a firm. Ruchika had withdrawn ₹ 9,000 at the end of each quarter, throughout the year. The interest to be charged on Ruchika's drawings at 6% p.a. will be :

1. ₹ 540
2. ₹ 2,160
3. ₹ 1,080
4. ₹ 810

Read the following hypothetical situation and answer question numbers 10 and 11 :

Keshav and Hitesh are partners sharing profits and losses in the ratio of 3 : 2. On 31^st March, 2023 after division of profit of ₹ 15,000, their capitals were ₹ 55,000 and ₹ 45,000 respectively. During the year Keshav's drawings were ₹ 1,500 at the beginning of each quarter and Hitesh withdrew ₹ 9,000 on 1^st November, 2022.

After the final accounts have been prepared, it was discovered that interest on capital @ 5% p.a. and interest on drawings @ 8% p.a. have not been taken into consideration.

10. Opening capital of Keshav was :

1. ₹ 35,000
2. ₹ 39,000
3. ₹ 43,000
4. ₹ 52,000

Read the following hypothetical situation and answer question numbers 10 and 11 :

Keshav and Hitesh are partners sharing profits and losses in the ratio of 3 : 2. On 31^st March, 2023 after division of profit of ₹ 15,000, their capitals were ₹ 55,000 and ₹ 45,000 respectively. During the year Keshav's drawings were ₹ 1,500 at the beginning of each quarter and Hitesh withdrew ₹ 9,000 on 1^st November, 2022.

After the final accounts have been prepared, it was discovered that interest on capital @ 5% p.a. and interest on drawings @ 8% p.a. have not been taken into consideration.

11. Amount of interest to be charged on Hitesh's drawings will be :

1. ₹ 225
2. ₹ 4,500
3. ₹ 300
4. ₹ 7,200

Mahi, Ruhi and Ginni are partners in a firm sharing profits and losses in the ratio of 6 : 4 : 1. Mahi guaranteed a profit of ₹ 50,000 to Ginni. Net profit for the year ending 31^st March, 2023 was ₹ 1,10,000. Mahi's share in the profit of the firm after giving guaranteed amount to Ginni will be :

1. ₹ 20,000
2. ₹ 60,000
3. ₹ 40,000
4. ₹ 10,000

Nikhil and Sharat were partners in a firm sharing profits and losses in the ratio of 4 : 3. Nikhil withdrew ₹ 6,000 on the first day of every quarter for the year ended 31^st March, 2023. Interest on drawings is to be charged @ 5% p.a. Interest on Nikhil’s drawings will be calculated for :

1. 6 months
2. 4.5 months
3. 7.5 months
4. 3 months

There are two statements Assertion (A) and Reason (R) :

Assertion (A) : The maximum number of partners in a partnership firm are 50.

Reason (R) : The maximum number of partners are prescribed by the Partnership Act, 1932.

Choose the correct option from the following :

1. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
3. Assertion (A) is correct, but Reason (R) is incorrect.
4. Assertion (A) is incorrect, but Reason (R) is correct.

Read the following hypothetical situation and answer questions No. 7 and 8 on the basis of the given information :

Daksh and Ekansh are partners in a firm sharing profits and losses in the ratio of 3 : 1. Their capitals were ₹ 1,60,000 and ₹ 1,00,000 respectively. As per partnership deed, they were entitled to interest on capital @ 10% p.a.. The firm earned a profit of ₹ 13,000 for the year ended 31^st March, 2023.

7. Daksh’s interest on capital will be :

1. ₹ 5,000
2. ₹ 8,000
3. ₹ 16,000
4. ₹ 10,000

Read the following hypothetical situation and answer questions No. 7 and 8 on the basis of the given information :

Daksh and Ekansh are partners in a firm sharing profits and losses in the ratio of 3 : 1. Their capitals were ₹ 1,60,000 and ₹ 1,00,000 respectively. As per partnership deed, they were entitled to interest on capital @ 10% p.a.. The firm earned a profit of ₹ 13,000 for the year ended 31^st March, 2023.

8. Ekansh’s share of profit/loss will be :

1. Nil
2. ₹ 9,750 (Loss)
3. ₹ 3,250 (Loss)
4. ₹ 9,750 (Profit)

Hina and Neena are partners in a firm. Neena withdrew ₹ 10,000 per month at the beginning of each month during the year ended 31^st March, 2022. Interest on drawings was to be charged @ 6% per annum.

Interest on Neena’s drawings for the year ended 31^st March, 2022 will be :

1. ₹ 3,900
2. ₹ 325
3. ₹ 3,600
4. ₹ 3,300

Vibha and Asha are partners in a firm. Asha withdrew ₹ 1,000 at the end of each quarter during the year ended 31^st March, 2022. Interest on drawings will be calculated for an average period of :

1. 6 months
2. 4½ months
3. 7½ months
4. 6½ months

Aman and Chaman are partners in a firm. On 1^st July, 2021 Aman advanced a loan of ₹ 6,00,000 to the firm. There is no partnership deed. On 31^st March, 2022, Aman was entitled to get the following amount as interest on loan :

1. ₹ 36,000
2. ₹ 18,000
3. ₹ 9,000
4. ₹ 27,000

Read the following hypothetical situation and answer questions number 4 and 5 on the basis of the given information :

Kavita, Savita and Madhu were partners in a firm with capitals of ₹ 6,00,000, ₹ 4,00,000 and ₹ 2,00,000 respectively. After providing interest on capital @ 10% p.a., the profits are divisible as follows : Kavita 1/3, Savita 1/2 and Madhu 1/6. Kavita personally guaranteed that Savita’s share of profit after charging interest on capital would not be less than ₹ 1,00,000 in any year.

The profit for the year ending 31^st March, 2022 amounted to ₹ 3,00,000 before providing interest on capital.

4. Savita’s share of profit is short of the guaranteed amount by :

1. ₹ 40,000
2. ₹ 70,000
3. ₹ 20,000
4. ₹ 10,000

Read the following hypothetical situation and answer questions number 4 and 5 on the basis of the given information :

Kavita, Savita and Madhu were partners in a firm with capitals of ₹ 6,00,000, ₹ 4,00,000 and ₹ 2,00,000 respectively. After providing interest on capital @ 10% p.a., the profits are divisible as follows : Kavita 1/3, Savita 1/2 and Madhu 1/6. Kavita personally guaranteed that Savita’s share of profit after charging interest on capital would not be less than ₹ 1,00,000 in any year.

The profit for the year ending 31^st March, 2022 amounted to ₹ 3,00,000 before providing interest on capital.

5. The total profits of the firm after adjustment of guaranteed amount will be distributed between the partners as :

1. Kavita ₹ 60,000, Savita ₹ 40,000 and Madhu ₹ 20,000
2. Kavita ₹ 50,000, Savita ₹ 1,00,000 and Madhu ₹ 30,000
3. Kavita ₹ 60,000, Savita ₹ 90,000 and Madhu ₹ 30,000
4. Kavita ₹ 60,000, Savita ₹ 1,00,000 and Madhu ₹ 20,000

‘A’ and ‘B’ were partners in a firm sharing profits and losses in the ratio of 7 : 1. ‘A’ withdrew a fixed amount of ₹ 12,000 at the beginning of each quarter. Interest on drawings is charged @ 6% p.a. The journal entry for charging interest on drawings at the end of the year will be :

1. Interest on drawings A/c Dr. ₹ 1,800
       To A’s Capital A/c ₹ 1,800
2. Interest on drawings A/c Dr. ₹ 1,800
       To A’s Current A/c ₹ 1,800
3. A’s Capital A/c Dr. ₹ 1,800
       To Interest on drawings A/c ₹ 1,800
4. Profit and Loss Appropriation A/c Dr. ₹ 1,800
       To Interest on drawings A/c ₹ 1,800

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 31^st March, 2022 was ₹30,000. The amount of interest on capital was credited to each partner's current account for the year ended 31^st March, 2022 was :

1. Ram ₹30,000 and Mohan ₹20,000
2. Ram ₹20,000 and Mohan ₹10,000
3. Ram ₹18,000 and Mohan ₹12,000
4. Ram ₹30,000 and Mohan Nil

Anu, Bindu and Siya were partners in a firm sharing profits and losses in the ratio of 2:2:1. Siya was guaranteed that her share of profit will not be less than ₹50,000. The firm's profit for the year ended 31^st March, 2022 was ₹2,00,000. The amount of deficiency to be borne by Anu was :

1. ₹10,000
2. ₹2,500
3. ₹75,000
4. ₹5,000

Suchi and Ruchi were partners in a firm sharing profits and losses equally. Throughout the year Ruchi withdrew ₹12,000 in the middle of each month. Interest on drawings is to be charged @ 6% p.a. as per partnership agreement. The average period for calculation of interest on drawings will be :

1. 6½ months
2. 6 months
3. 5½ months
4. 1 month

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
2. 46
3. 100
4. 96

Read the following hypothetical situation and answer question no. 14 and 15 on its basis :

Rudra, Dev and Shiv were partners in a firm sharing profits in the ratio of 5:3:2. Their fixed capitals were ₹6,00,000, ₹4,00,000 and ₹2,00,000 respectively. Besides his capital Shiv had given a loan of ₹75,000 to the firm. Their partnership deed provided for the following :

1. Interest on capital @ 9% p.a.
2. Interest on partner's drawings @ 12% p.a.
3. Salary to Rudra ₹30,000 per month and to Dev ₹40,000 per quarter.
4. Interest on Shiv's loan @ 9% p.a.

During the year Rudra withdrew ₹50,000 at the end of each quarter; Dev withdrew ₹50,000 in the beginning of each half year and Shiv withdrew ₹70,000 at the end of each half year.

The profit of the firm for the year ended 31-3-2022 before allowing interest on Shiv's loan was ₹7,06,750.

14. How much amount of net profit will be transferred to Profit and Loss Appropriation A/c ?

1. ₹7,06,750
2. ₹7,02,250
3. ₹7,00,000
4. ₹7,13,000

Read the following hypothetical situation and answer question no. 14 and 15 on its basis :

Rudra, Dev and Shiv were partners in a firm sharing profits in the ratio of 5:3:2. Their fixed capitals were ₹6,00,000, ₹4,00,000 and ₹2,00,000 respectively. Besides his capital Shiv had given a loan of ₹75,000 to the firm. Their partnership deed provided for the following :

1. Interest on capital @ 9% p.a.
2. Interest on partner's drawings @ 12% p.a.
3. Salary to Rudra ₹30,000 per month and to Dev ₹40,000 per quarter.
4. Interest on Shiv's loan @ 9% p.a.

During the year Rudra withdrew ₹50,000 at the end of each quarter; Dev withdrew ₹50,000 in the beginning of each half year and Shiv withdrew ₹70,000 at the end of each half year.

The profit of the firm for the year ended 31-3-2022 before allowing interest on Shiv's loan was ₹7,06,750.

15. What will the amount of interest on drawings of the partners ?

1. Rudra ₹2,250; Dev ₹4,500 and Shiv ₹2,100
2. Rudra ₹9,000; Dev ₹9,000 and Shiv ₹4,200
3. Rudra ₹4,500; Dev ₹4,500 and Shiv ₹2,100
4. Rudra ₹24,000; Dev ₹12,000 and Shiv ₹16,800

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.

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

A and B were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1^st April, 2021 the balances in their capital accounts were ₹ 1,50,000 and ₹ 2,00,000 respectively. The partnership deed provided that interest on partners capital will be allowed @ 10% per annum. During the year ended 31^st March, 2022, the firm incurred a loss of ₹ 10,000. Interest on A’s capital will be :

1. ₹ 15,000
2. ₹ 9,000
3. Nil
4. ₹ 6,000

_______ is the basis of relationship between the partners to run the partnership business.

1. Offer
2. Agreement
3. Understanding
4. Acceptance

Assertion (A) : Interest on partners’ loan is debited to Profit and Loss Account.

Reason (R) : Interest on partners’ loan is a charge against profits.

On the basis of the above Assertion (A) and Reason (R), choose the correct option from the following :

1. Assertion (A) is correct and Reason (R) is wrong.
2. Assertion (A) is wrong and Reason (R) is correct.
3. Both Assertion (A) and Reason (R) are correct.
4. Both Assertion (A) and Reason (R) are wrong.

Read the following hypothetical situation and answer questions number 9 and 10 on the basis of information given :

Anu, Charu and Divya are partners sharing profits and losses in the ratio of 2 : 1 : 2. Their capitals were ₹ 5,00,000, ₹ 3,00,000 and ₹ 2,00,000 respectively. Anu personally guaranteed that in any year, Divya’s share of profit after allowing interest on capital to all partners @ 5% p.a. would not be less than ₹ 75,000. The profit for the year ending 31^st March, 2022 amounted to ₹ 2,00,000.

Divya’s amount of guarantee is short by the following amount :

1. ₹ 75,000
2. ₹ 5,000
3. ₹ 15,000
4. ₹ 20,000

Read the following hypothetical situation and answer questions number 9 and 10 on the basis of information given :

Anu, Charu and Divya are partners sharing profits and losses in the ratio of 2 : 1 : 2. Their capitals were ₹ 5,00,000, ₹ 3,00,000 and ₹ 2,00,000 respectively. Anu personally guaranteed that in any year, Divya’s share of profit after allowing interest on capital to all partners @ 5% p.a. would not be less than ₹ 75,000. The profit for the year ending 31^st March, 2022 amounted to ₹ 2,00,000.

The final amount of profit distributed among the partners after adjustment of guaranteed amount will be :

1. Anu ₹ 50,000; Charu ₹ 25,000; Divya ₹ 75,000
2. Anu ₹ 55,000; Charu ₹ 30,000; Divya ₹ 65,000
3. Anu ₹ 57,000; Charu ₹ 28,000; Divya ₹ 65,000
4. Anu ₹ 45,000; Charu ₹ 30,000; Divya ₹ 75,000

Vijay and Ajay are partners in a firm. The partnership agreement provides for interest on drawings @ 12% per annum. Which of the following account will be debited to transfer interest on drawings to Profit and Loss Appropriation A/c ?

1. Interest on Drawings Account
2. Bank Account
3. Partners’ Current Account
4. Partners’ Capital Account

On 1^st October 2020, Amit, a partner, advanced a loan of ₹ 1,20,000 to the firm. In the absence of partnership deed, the amount of interest on loan to be paid on 31^st March, 2021 will be :

1. ₹ 3,600
2. ₹ 7,200
3. ₹ 12,000
4. ₹ 6,000

Read the following hypothetical situation and answer questions number 13 and 14 on the basis of the given information :

Keshav, Krishna and Murari were in partnership sharing profits and losses in the ratio of 3 : 2 : 1. Their fixed capitals were : ₹ 12,00,000, ₹ 10,00,000 and ₹ 8,00,000 respectively. It was agreed that interest on capital will be allowed at 10% per annum. Partners were entitled to salaries as follows :
Keshav ₹ 5,000 per month and Krishna ₹ 3,000 per quarter.
Profit of the firm for the year ended 31^st March, 2022 was ₹ 6,72,000.

13. Amount credited to the Partners’ Current Accounts on account of ‘interest on capital’ and ‘salary’ was :

1. Keshav ₹ 1,20,000, Krishna ₹ 1,00,000 and Murari ₹ 80,000
2. Keshav ₹ 1,80,000, Krishna ₹ 1,12,000 and Murari ₹ 80,000
3. Keshav ₹ 60,000, Krishna ₹ 12,000 and Murari ₹ Nil
4. Keshav ₹ 3,30,000, Krishna ₹ 2,12,000 and Murari ₹ 1,30,000

Read the following hypothetical situation and answer questions number 13 and 14 on the basis of the given information :

Keshav, Krishna and Murari were in partnership sharing profits and losses in the ratio of 3 : 2 : 1. Their fixed capitals were : ₹ 12,00,000, ₹ 10,00,000 and ₹ 8,00,000 respectively. It was agreed that interest on capital will be allowed at 10% per annum. Partners were entitled to salaries as follows :
Keshav ₹ 5,000 per month and Krishna ₹ 3,000 per quarter.
Profit of the firm for the year ended 31^st March, 2022 was ₹ 6,72,000.

14. Amount of profit transferred to Partners’ Current Accounts was :

1. Keshav ₹ 1,00,000, Krishna ₹ 1,50,000 and Murari ₹ 50,000
2. Keshav ₹ 50,000, Krishna ₹ 1,50,000 and Murari ₹ 1,00,000
3. Keshav ₹ 1,50,000, Krishna ₹ 1,00,000 and Murari ₹ 50,000
4. Keshav ₹ 1,51,500, Krishna ₹ 1,01,000 and Murari ₹ 50,500

Assertion (A) : Partnership is the relation between persons who have agreed to share the profits of the business carried on by all or any of them acting for all.

Reason (R) : If a partner carries on any business of the same nature and competing with that of the firm, he/she shall account for and pay to the firm all profit made by him/her in that business.

Choose the correct option from the following :

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

Read the following hypothetical situation and answer Question Nos. 9 and 10 on the basis of the same.

Nitya, Shreya and Ishita are partners in a firm. They share profits in the ratio of 5 : 3 : 2. Their fixed capitals are ₹ 1,80,000; ₹ 1,60,000 and ₹ 2,00,000 respectively. For the year ending 31^st March, 2022, Nitya withdrew ₹ 7,500 at the end of every quarter.

The average number of months for which interest on drawings will be calculated, will be :

1. 3½ months
2. 4½ months
3. 7½ months
4. 6 months

Read the following hypothetical situation and answer Question Nos. 9 and 10 on the basis of the same.

Nitya, Shreya and Ishita are partners in a firm. They share profits in the ratio of 5 : 3 : 2. Their fixed capitals are ₹ 1,80,000; ₹ 1,60,000 and ₹ 2,00,000 respectively. For the year ending 31^st March, 2022, Nitya withdrew ₹ 7,500 at the end of every quarter.

The partnership deed provided that interest on capital will be allowed @ 10% p.a. The amount of interest on Ishita’s capital will be :

1. ₹ 18,000
2. ₹ 16,000
3. ₹ 20,000
4. ₹ 10,000

Amit, Sumit and Kiara are partners sharing profits and losses in the ratio 2 : 2 : 1. Sumit is entitled to a commission of 15% on the net profit after charging such commission. The net profit before charging commission is ₹ 9,20,000. The amount of commission payable to Sumit will be :

1. ₹ 1,20,000
2. ₹ 1,38,000
3. ₹ 48,000
4. ₹ 55,200

P, Q and R are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. For the year ended 31^st March, 2022, interest on capital was credited to them @ 10% p.a. instead of 5% p.a. Their fixed capitals were ₹ 2,00,000; ₹ 1,00,000; ₹ 50,000 respectively. The necessary adjustment entry to rectify the error will be :

JOURNAL

Persons who have entered into partnership with one another are individually called as :

1. Partners
2. Members
3. Firm
4. Owners

Madhu and Radha were partners in a partnership firm sharing profits and losses in the ratio of 3 : 2. Madhu withdrew ₹ 20,000 in each quarter during the year ended 31.03.2023. Interest on drawings was to be charged @ 6% p.a. Interest on Madhu’s drawings will be :

1. ₹ 3,000
2. ₹ 2,400
3. ₹ 1,800
4. ₹ 4,800

B and D were partners. According to the provisions of partnership deed, interest on B’s capital for the year ended 31.03.2022 was calculated at ₹ 4,000.

The necessary journal entry for transferring interest on B’s capital to Profit and Loss Appropriation Account will be :

1. Profit and Loss Appropriation A/c Dr. ₹ 4,000
   To B’s Capital A/c ₹ 4,000
2. Profit and Loss Appropriation A/c Dr. ₹ 4,000
   To Interest on B’s Capital A/c ₹ 4,000
3. Interest on B’s Capital A/c Dr. ₹ 4,000
   To Profit and Loss Appropriation A/c ₹ 4,000
4. Profit and Loss Appropriation A/c Dr. ₹ 4,000
   To B’s Current A/c ₹ 4,000

K and L were partners in a firm. Their partnership deed provided that interest on partner’s drawings will be charged @ 12% per annum. Interest on L’s drawings for the year ended 31.03.2022 was calculated at ₹ 900.

The necessary journal entry for charging interest on L’s drawings will be :

1. Profit and Loss Appropriation A/c Dr. ₹ 900
   To Interest on Drawings A/c ₹ 900
2. Interest on Drawings A/c Dr. ₹ 900
   To Profit and Loss Appropriation A/c ₹ 900
3. L’s Capital/Current A/c Dr. ₹ 900
   To Interest on Drawings A/c ₹ 900
4. Interest on Drawings A/c Dr. ₹ 900
   To Partner’s Capital/Current A/c ₹ 900

After doing the adjustments regarding drawings ₹ 40,000, share of profit ₹ 24,000 and the additional capital introduced ₹ 32,000, the capital of Ashok, a partner, as on 31.03.2022 was ₹ 5,00,000. His capital as on 01.04.2021 was :

1. ₹ 4,84,000
2. ₹ 5,16,000
3. ₹ 4,46,000
4. ₹ 5,96,000

Josh and Jeevan were partners in a firm. During the year ended 31.03.2022 Jeevan withdrew ₹ 5,000 per month starting from 30.06.2021. The partnership deed provided that interest on drawings will be charged @ 12% per annum. The average number of months for which interest on Jeevan’s total drawings will be charged is :

1. 6 months
2. 6½ months
3. 4½ months
4. 5 months

A partner’s capital account was credited with ₹80,000 during the year. Which of the following can be the possibility for such a credit in his capital account?

1. Opening Balance
2. Drawings during the year
3. Loss during the year
4. Capital introduced

Assertion (A) :- Fluctuating Capital Account can show debit balance.

Reason (R) :- Losses and Drawings can be more than Capital Balance.

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

On 1^st July, 2024, A, B and C entered into partnership sharing Profits & Losses in the ratio 5:3:2. C was guaranteed that his share of profits will not be less than ₹ 60,000 p.a. Deficiency if any will be borne by A and B equally. For the year ended March 31, 2025, firm incurred loss of ₹ 1,25,000. Deficiency will be borne by A and B will be:

1. A ₹ 30,000 and B ₹ 30,000
2. A ₹ 43,750 and B ₹ 26,250
3. A ₹ 42,500 and B ₹ 42,500
4. A ₹ 35,000 and B ₹ 35,000

On 1^st August, 2024 Tom, Jerry and Tyke entered into partnership with capitals of ₹5,00,000 each. Interest on Drawings was to be charged @ 6% p.a. For the year ended March 31, 2025, Tyke withdrew ₹ 80,000. What amount of Interest on drawings will be charged from Tyke?

1. ₹ 4,800
2. ₹ 1,600
3. ₹ 3,200
4. ₹ 2,400

Aman and Suman are partners sharing profits and losses in the ratio of 3:2. Their capitals as on 1^st April 2025 were ₹2,00,000 and ₹3,00,000 respectively. After the division of Net profits of ₹3,00,000 for the year 2025-26 among the partners, and adjustment of drawings, their capital balances on 31^st March 2026 were: Aman ₹3,00,000 Suman ₹4,00,000. The accountant omitted to charge interest on drawings. If the firm wants to charge interest on drawings @10% p.a. Interest on Aman’s drawings would be:

1. ₹ 4,000
2. ₹ 8,000
3. ₹ 40,000
4. ₹ 80,000

R and S are partners sharing profits and losses in the ratio of 3:2. Their capitals are ₹3,00,000 and ₹1,00,000 respectively.

On 1^st January 2026, the firm granted loans of ₹24,000 to R and ₹6,000 to S at 10% p.a.

The loss before charging interest for the year ended 31^st March 2026 was ₹2,650.

Calculate the share of loss to be borne by each partner after accounting for interest on loans.

1. Share of loss R ₹ 2,040, and S ₹ 1,360
2. Share of loss R ₹ 3,390, and S ₹ 2,260
3. Share of loss R ₹ 1,590, and S ₹ 1,060
4. Share of loss R ₹ 1,140, and S ₹ 760

X, Y, and Z are partners in a firm sharing profits and losses in the ratio 4:3:3. Z is guaranteed a minimum profit of ₹ 50,000 per annum, the deficiency, if any, is to be borne by X and Y equally. The firm's profit for the year ended 31^st March 2026 is ₹40,000. The amount of deficiency to be borne by X and Y respectively will be:

1. X ₹25,000 & Y ₹25,000
2. X ₹21,714 & Y ₹16,286
3. X ₹19,000 & Y ₹19,000
4. X ₹5,000 & Y ₹5,000

Sultan, Singh and Tulsi were partners in a firm sharing profits and losses in the ratio of 9 : 7 : 4. Their fixed capitals were ₹6,00,000, ₹5,00,000 and ₹4,00,000. The partnership deed provided that interest on partners capital accounts will be allowed at 10% per annum. After the final accounts for the year were prepared, it was found that interest on capital was allowed @ 12% per annum.

Pass the necessary adjusting journal entry.

Sameer and Manveer were partners in a firm sharing profits and losses in the ratio of 5 : 3. On 1^st April, 2024, they admitted Sandeep as a new partner for 1/5^th share in the profits with a guaranteed minimum amount of ₹80,000. Sameer and Manveer continue to share profits as before but agreed to bear any deficiency on account of guarantee to Sandeep in the ratio of 3 : 5. The net profit of the firm for the year ended 31^st March, 2025 was ₹3,20,000.

Prepare Profit and Loss Appropriation Account of Sameer, Manveer and Sandeep for the year ended 31^st March, 2025.

Shree and Hari were partners in a firm sharing profits and losses in the ratio of 2 : 3. Their fixed capitals were ₹4,00,000 and ₹3,00,000 respectively. The partnership deed provided that Hari is to be allowed a commission of 5% of net profit.

The net profit of the firm for the year ended 31^st March, 2025 was ₹1,00,000.

Pass the following journal entries in the books of the firm :

1. For crediting Hari’s commission to his current account.
2. For transferring the commission to Profit and Loss Appropriation Account.

Bose and Roy were partners in a firm sharing profits and losses in the ratio of 2:1. Bose withdrew the following amounts from the firm for personal use during the year ending 31^st March, 2025 :

1. For the first three months, he withdrew ₹ 3,000 at the beginning of every month.
2. For the remaining months, he withdrew ₹ 4,000 at the end of every month.

Interest on drawings was to be charged @ 6% p.a. The books of the firm are closed on 31^st March every year. Calculate interest on Bose's drawings for the year ending 31^st March, 2025.

Sarita and Veena were partners in a firm sharing profits and losses in the ratio of 3:2. The balance in their capital and current accounts as on 1^st April, 2024 were as under :

The partnership deed provided that Sarita was to be paid salary @ ₹ 2,000 per month whereas Veena was to get commission of ₹ 30,000 for the year. Interest on capital was to be allowed @ 8% p.a. The drawings of Sarita and Veena for the year ended 31^st March, 2025 were ₹ 20,000 and ₹ 15,000 respectively. After preparing Profit and Loss Appropriation Account for the year ended 31^st March, 2025, ₹ 36,000 and ₹ 24,000 were credited respectively to the current accounts of Sarita and Veena as their share of divisible profit. Prepare Current Accounts of Sarita and Veena.

Laxmi, Rani and Priya were partners in a firm sharing profits and losses in the ratio of 5 : 7 : 8. Their fixed capitals were ₹8,00,000; ₹7,00,000 and ₹5,00,000 respectively. The partnership deed provided interest on capital @ 9% per annum. For the year ending 31^st March, 2025, interest on capital was provided @ 12% per annum.

Showing your workings clearly, pass a single adjustment entry to rectify the error.

Sukesh and Surbhi were partners in a firm sharing profits and losses in the ratio of 5 : 3. On 1^st April, 2024, they admitted Suman, as a new partner for 1/5^th share in the profits of the firm with a minimum guaranteed profit of ₹1,20,000. Any deficiency arising on that account will be borne by Sukesh. The net profit of the firm for the year ended 31^st March, 2025 was ₹5,50,000.

Prepare Profit and Loss Appropriation Account of the firm for the year ended 31^st March, 2025.

Rohit, Ashish and Sameer entered into a partnership on 1^st October, 2024 with capitals of ₹ 12,00,000; ₹ 6,00,000 and ₹ 6,00,000 respectively. They decided to share the profits and losses in the ratio of 3 : 1 : 1. Partners were entitled to interest on capital @ 5% per annum as per the provisions of the partnership deed.

Sameer was given a guarantee that his share of profit, after charging interest on capital, will not be less than ₹ 1,50,000 per annum. Any deficiency arising on that account shall be met by Rohit. The profit for the year ended 31^st March, 2025 amounted to ₹ 5,60,000. Prepare Profit and Loss Appropriation Account for the year ended 31^st March, 2025.

Tara, Dev and Ishaan were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 1. The partnership deed provided for charging interest on drawings @ 10% p.a. The drawings of Tara, Dev and Ishaan during the year ending 31^st March, 2025 amounted to ₹ 30,000; ₹ 18,000 and ₹ 12,000 respectively. After the final accounts were prepared, it was discovered that interest on drawings was not taken into consideration. Give necessary adjusting journal entry to correct the omission. Show your workings clearly.

The Capital Accounts of Mala and Vaibhav stood at ₹ 3,00,000 and ₹ 2,00,000 respectively, after the necessary adjustments in respect of drawings and net profits for the year ended 31st March, 2025. It was later discovered that interest on drawings @ 6% p.a. was not taken into account while calculating the net profit. The drawings of the partners were : Mala ₹ 10,000 drawn at the beginning of each quarter and Vaibhav ₹ 10,000 drawn at the end of each half year. The profits for the year ended 31st March, 2025 amounted to ₹ 3,00,000. The profit sharing ratio of Mala and Vaibhav was 3 : 2.

Pass the necessary adjusting entry. Show your working clearly.

The firm of Amish, Nitish and Misha, who have been sharing profits in the ratio of 2 : 2 : 1, have existed for some years. Misha wanted that she should get equal share in the profits with Amish and Nitish and she further wished that the change in the profit sharing ratio should come into effect retrospectively for the last three years. Amish and Nitish had agreement for this.

The profits for the last three years were :

Show adjustment of profits by means of a single adjustment journal entry. Show your working clearly.

Vidhi, Manas and Ansh were partners sharing profits and losses in the ratio of 2 : 3 : 5. Ansh was given a guarantee that his share of profits in any given year would not be less than ₹ 1,20,000. Deficiency, if any, would be borne by Vidhi and Manas equally. Profits for the year ended 31^st March, 2024 amounted to ₹ 2,00,000.

Pass necessary journal entries in the books of the firm for division of profits.

Aakash and Baadal entered into partnership on 1^st October, 2023 with the capitals of ₹ 80,00,000 and ₹ 60,00,000 respectively. They decided to share profits and losses equally. Partners were entitled to interest on capital @ 10% per annum as per the provisions of the partnership deed.

Baadal is given a guarantee that his share of profit, after charging interest on capital will not be less than ₹ 7,00,000 per annum.

Any deficiency arising on that account shall be met by Aakash. The profit of the firm for the year ended 31^st March, 2024 amounted to ₹ 13,00,000.

Prepare Profit and Loss Appropriation Account for the year ended 31^st March, 2024.

Parul and Rajul were partners in a firm, sharing profits and losses in the ratio of 5 : 3. The balance in their fixed capital accounts on 1^st April, 2023 were : Parul ₹ 6,00,000 and Rajul ₹ 8,00,000. The partnership deed provided for allowing interest on capital at 12% per annum. The net profit of the firm for the year ended 31^st March, 2024 was ₹ 1,26,000.

Prepare Profit and Loss Appropriation Account for the year ended 31^st March, 2024. Show your working clearly.

Abhay and Sujoy entered into partnership on 1^st April, 2024 with capitals of ₹ 80,00,000 and ₹ 60,00,000 respectively. The partners decided to share profits in the ratio of their capital contribution. They withdrew ₹ 6,00,000 and ₹ 4,00,000 respectively during the year. The partners were charged interest on drawings @ 10% per annum as per the provisions of the partnership deed. Abhay’s share of profit was guaranteed by Sujoy at a minimum of ₹ 3,50,000 per annum.

The profit of the firm for the year ended 31^st March, 2024 amounted to ₹ 6,50,000.

Prepare Profit and Loss Appropriation Account of the firm for the year ended 31^st March, 2024.

Sonia and Shruti were partners in a firm sharing profits and losses in the ratio of 5 : 3. On 1^st April, 2023 the balance in their fixed capital accounts were ₹ 25,00,000 and ₹ 15,00,000 respectively. The profit of the firm for the year ended 31^st March, 2024 was ₹ 24,00,000. Calculate their share of profit if :

1. the partnership deed is silent as to the payment of interest on capital.
2. the partnership deed provides for interest on capital @ 10% per annum.

Suman and Lata were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1^st April, 2023, their capital accounts showed balances of ₹ 1,50,000 and ₹ 2,00,000, respectively. The partnership deed provided for interest on capital @ 8% p.a. Show the treatment of interest on capital in the following cases if :

1. The firm earned a profit of ₹ 14,000 for the year ended 31^st March, 2024.
2. The firm earned a profit of ₹ 60,000 for the year ended 31^st March, 2024.

On 1^st April, 2023, Jain and Gupta started a partnership firm with fixed capitals of ₹15,00,000 and ₹12,00,000 respectively. They decided to share profits and losses in the ratio of 3 : 2. On 1^st July, 2023, Jain withdrew ₹1,00,000 from this capital and Gupta introduced further capital of ₹2,00,000. Partnership deed provided for interest on capital @ 10% p.a. During the year Jain withdrew ₹50,000 and Gupta withdrew ₹60,000 for their personal use. Interest on drawings was to be charged @ 18% p.a. After preparing Profit and Loss Appropriation Account for the year ended 31^st March, 2024, ₹72,000 and ₹48,000 were credited respectively to the current accounts of Jain and Gupta as their share of divisible profit.

Prepare Current Accounts of Jain and Gupta.

Aman, Raj and Suresh were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 8. Suresh was guaranteed a minimum profit of ₹5,00,000 per year. Any deficiency on this account was to be borne by Aman and Raj equally. The net profit of the firm for the year ended 31^st March, 2024 was ₹8,00,000.

Prepare Profit and Loss Appropriation Account of Aman, Raj and Suresh for the year ended 31^st March, 2024.

Jay and Vijay were partners in a firm sharing profits and losses in the ratio of 7 : 3. Their respective fixed capitals were ₹9,00,000 and ₹7,00,000. The partnership deed provided for interest on capital @ 8% per annum. After preparing the accounts for the year ended 31^st March, 2024, it was discovered that interest on capital was allowed @ 9% per annum.

Showing your workings clearly, pass the necessary journal entry to rectify the error.

Mohan, Suhaan and Adit were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Their fixed capitals were : ₹2,00,000, ₹1,00,000 and ₹1,00,000 respectively. For the year ended 31^st March, 2023, interest on capital was credited to their accounts @ 8% p.a. instead of 5% p.a.

Pass necessary adjusting journal entry. Show your workings clearly.

Manoj and Nitin were partners in a firm sharing profits and losses in the ratio of 2 : 1. On 31^st March, 2023, the balances in their capital accounts after making adjustments for profits and drawings were ₹90,000 and ₹80,000 respectively. The net profit for the year ended 31^st March, 2023 amounted to ₹30,000. During the year Manoj withdrew ₹40,000 and Nitin withdrew ₹20,000. Subsequently, it was noticed that Interest on Capital @ 10% p.a. was not provided to the partners. Also Interest on Drawings to Manoj ₹3,000 and to Nitin ₹2,000 was not charged.

Pass necessary adjusting journal entry. Show your workings clearly.

Chaman, Burman and Aman were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. Aman was guaranteed a minimum amount of ₹ 60,000 as his share of profit every year. The net profit for the year ended 31^st March, 2023 amounted to ₹ 1,20,000.

Pass necessary journal entries in the books of the firm showing the distribution of profit amongst the partners.

Misha and Prisha were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 1^st April, 2022, their capital accounts showed balances of ₹ 50,000 and ₹ 30,000 respectively. During the year, Misha withdrew ₹ 12,900 while Prisha withdrew ₹ 9,600. They were allowed interest on capital @ 10% p.a. Interest on drawings of ₹ 660 was charged on Misha’s drawings and ₹ 540 on Prisha’s drawings. Prisha had advanced a loan of ₹ 20,000 to the firm on 1^st August, 2022. The net profit for the year ended 31^st March, 2023 amounted to ₹ 22,600.

Prepare Profit and Loss Appropriation Account for the year ended 31^st March, 2023.

On 31^st March, 2023, the capitals of Raghav and Diya stood at ₹ 4,00,000 and ₹ 3,00,000 respectively, after the necessary adjustment in respect of drawings and net profit. Subsequently, it was discovered that interest on capital @ 10% p.a had been omitted. The Net Profit for the year ended 31^st March, 2023 amounted to ₹ 1,00,000.

During the year ended 31^st March, 2023, Raghav’s drawings were ₹ 2,000 drawn at the beginning of each month, while Diya’s drawings were ₹ 3,000 drawn at the beginning of each quarter. Pass the necessary adjustment entry.

Atul and Gita were partners in a firm sharing profits and losses in the ratio of 3:2. Their fixed capitals were ₹ 4,00,000 and ₹ 2,00,000 respectively. After the accounts for the year were prepared, it was noticed that interest on capital @ 6% p.a., as provided in the partnership deed, was not credited to the capital accounts of partners before distribution of profits.

Pass the necessary adjusting Journal entry. Show your workings clearly.

Anand, Ridhi and Shyam were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Their fixed capitals were ₹ 1,00,000, ₹ 60,000 and ₹ 40,000 respectively. For the year ended 31^st March, 2023, interest on capital was credited to their capital accounts @ 9% p.a instead of 7% p.a. Pass the necessary adjusting Journal entry.

Jatin, Keshav and Lalit were partners in a firm with fixed capitals of ₹ 1,20,000, ₹ 1,00,000 and ₹ 80,000 respectively. As per the partnership deed, there was a provision for allowing interest on capitals @ 10% p.a., but entries for the same had not been made for the last two years.

The profit sharing ratio during the last two years was as follows :

Pass an adjustment entry of the beginning of the third year, i.e., on 1^st April, 2023.

Meera, Neena and Ojas were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. The partnership deed provided for charging interest on drawings @ 10% p.a. The drawings of Meera, Neena and Ojas during the year ended 31^st March, 2023 amounted to ₹ 60,000, ₹ 50,000 and ₹ 40,000 respectively. After the final accounts had been prepared, it was discovered that interest on drawings had not been taking into consideration.

Pass the necessary adjustment entry.

Rakshit and Malik are partners in a firm sharing profits and losses in the ratio of 4 : 1. On 1^st April, 2021, their capitals were ₹ 1,20,000 and ₹ 80,000 respectively. On 1^st December, 2021, they decided that the total capital of the firm should be ₹ 3,00,000 to be contributed by them in the ratio of 2 : 1.

According to the partnership deed, interest on capital is allowed to the partners @ 6% p.a.

Calculate interest on capital to be allowed for the year ending 31^st March, 2022.

Mohan, Sohan and Suresh were partners in a firm sharing profits in the ratio of 2:2:1. Suresh was guaranteed a profit of ₹70,000. Any deficiency on account of guarantee to Suresh was to be borne by Mohan and Sohan in 3:2 ratio. The profit of the firm for the year ended 31.3.2022 amounted to ₹2,00,000.

Prepare Profit and Loss Appropriation Account of the firm for the year ended 31.3.2022.

Raman, Manan and Naman were partners sharing profit in the ratio of 2 : 1 : 1. Raman withdrew ₹ 3,000 every month and Manan withdrew ₹ 4,000 every month. Interest on drawings @ 6% p.a. was charged whereas the partnership deed was silent about interest on drawings.

Showing your working clearly, pass the necessary adjustment entry to rectify the error.

Arun and Barun were partners sharing profits in the ratio of 3 : 2. Their capitals were ₹ 50,000 and ₹ 30,000 respectively. Partnership deed provided for interest on capital @ 6% p.a. to Arun and Barun and quarterly salary of ₹ 1,000 to Barun. Arun had given a loan of ₹ 1,00,000 on 1^st October, 2021 to the firm without any agreement about interest. For the year 2021 – 22, the profits earned were ₹ 26,800.

Prepare Profit and Loss Appropriation Account of the firm for the year ended 31^st March, 2022.

Monika, Bhoomika and Kamolika are partners sharing profits in the ratio of 6 : 4 : 1. Kamolika is guaranteed a minimum amount of ₹ 3,00,000 as her share in profits. The firm earned a net profit of ₹ 22,00,000 for the year ended 31^st March 2022.

Prepare Profit and Loss Appropriation Account of the firm for the year ended 31^st March, 2022.

Ananya, Bhavi and Chandni were partners in a firm with capitals of ₹ 3,00,000, ₹ 2,00,000 and ₹ 1,00,000 respectively.

According to the provisions of the partnership deed :

1. Ananya and Chandni were each entitled to a monthly salary of ₹ 1,500.
2. Bhavi was entitled to a salary of ₹ 4,000 per annum.

The profit for the year ended 31^st March, 2022, ₹ 80,000 was divided between the partners in their profit sharing ratio of 3 : 3 : 2 without providing for the above adjustments.

Pass the necessary adjustment entry to rectify the above omissions in the books of the firm. Show your working notes clearly.

A, B and C were partners in a firm sharing profits and losses equally. Their respective capitals were ₹ 10,00,000, ₹ 9,00,000 and ₹ 8,00,000. The partnership deed provided for the following :

1. Interest on capital @ 9% per annum.
2. Interest on drawings @ 12% per annum.
3. Interest on partners loan to the firm @ 10% per annum.

During the year, B had withdrawn ₹ 20,000 for his personal use. On 30.9.2021, A had given a loan of ₹ 70,000 to the firm.

Pass the necessary journal entries in the books of the firm for the following for the year ended 31^st March, 2022 :

1. Allowing interest on C’s Capital.
2. Providing interest on A’s Loan.
3. Charging interest on B’s Drawings.

Also give transfer entries in the Profit and Loss Account/Profit and Loss Appropriation Account, as the case may be.

Asha, Disha and Raghav were partners in a firm sharing profits in the ratio of 2 : 3 : 1. According to the partnership agreement, Raghav was guaranteed an amount of ₹ 40,000 as his share of profits. The net profit for the year ended 31^st March, 2022 amounted to ₹ 1,20,000.

Prepare Profit and Loss Appropriation Account of the firm for the year ended 31^st March, 2022.

Akhil and Nikhil were partners sharing profits and losses in the ratio of 3 : 2. Their fixed capitals were ₹ 1,00,000 and ₹ 80,000 respectively. Interest on capital was agreed @ 6% p.a. Nikhil was to be allowed an annual salary of ₹ 9,200. During the year 2021-22, the net profit prior to the calculation of interest on capital but after charging Nikhil’s salary amounted to ₹ 1,20,000.

Prepare Profit and Loss Appropriation Account of the firm for the year ending 31^st March, 2022.

On 01.04.2022, Ravi, Kavi and Avi started a partnership firm with fixed capitals of ₹ 6,00,000, ₹ 6,00,000 and ₹ 3,00,000 respectively. The partnership deed provided for the following :

1. Interest on capital @ 10% per annum.
2. Interest on drawings @ 12% per annum.
3. An annual salary of ₹ 1,20,000 to Avi.
4. Profits and losses were to be shared in the ratio of their capitals.

The net profit of the firm for the year ended 31.03.2023 was ₹ 3,08,000. Interest on partners’ drawings was Ravi ₹ 4,800, Kavi ₹ 4,200 and Avi ₹ 3,000.

Prepare Profit and Loss Appropriation Account of Ravi, Kavi and Avi for the year ended 31.03.2023.

P and Q were partners in a firm sharing profits and losses in the ratio of 2 : 1. On 01.04.2022, they admitted R as a new partner for 1/10^th share of profits with a guaranteed minimum of ₹ 50,000. P and Q continued to share profits as before but agreed to share any deficiency on account of guarantee to R in the ratio of 3 : 2. The net profit of the firm for the year ended 31.03.2023 was ₹ 3,00,000.

Pass necessary journal entries in the books of P and Q for the above transactions.

Sharma and Verma were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their fixed capitals were ₹ 14,00,000 and ₹ 10,00,000 respectively. The partnership deed provided for the following :

1. Interest on capital @ 10% per annum.
2. Interest on drawings @ 12% per annum.

During the year ended 31.03.2023, Sharma withdrew ₹ 2,00,000 and Verma withdrew ₹ 1,00,000. After preparing the accounts for the year ended 31.03.2023, it was realised that interest on capital was not allowed and interest on drawings was not charged.

Showing your working notes clearly pass necessary journal entries in the books of the firm to rectify the above error.

B, C and D are partners sharing profits in the ratio of 1:1:1. As per the partnership deed salary is allowed to the partners as follows:

• B is entitled to a salary of ₹ 2,000 per month.
• C is entitled to salary of ₹ 16,000 p.a.
• D is entitled to a salary of ₹ 4,000 per quarter.

Amit, an employee of the firm was entitled to a salary of ₹ 5,000 on half yearly basis which was omitted to be provided.

Calculate the amount of profits to be given to each partner by way of appropriation in each of the following cases, when the profit/loss before the above adjustments is:

Case 1. Profit of ₹ 72,000
Case 2. Profit of ₹ 45,000
Case 3. Loss of ₹ 20,000

Jain and Gupta were partners in a firm sharing profits and losses in the ratio of 3 : 1. On 1^st April, 2024, Agarwal was admitted as a new partner for 1/5^th share in the profits of the firm with a minimum guaranteed amount of ₹75,000. Any deficiency arising out of this account will be borne by Jain and Gupta in the ratio of 1 : 3. During the year ended 31^st March, 2025, the firm earned a net profit of ₹3,00,000.

Prepare Profit and Loss Appropriation Account of Jain, Gupta and Agarwal for the year ended 31^st March, 2025.

Amit, Sumit and Pulkit were partners sharing Profit &Loss in the ratio 5:3:2. Their Capitals were ₹ 8,00,000; ₹ 7,00,000 and ₹ 5,00,000 respectively. According to Partnership Deed:-

1. Interest on Capital @ 10% p.a.
2. Salary to Amit ₹ 10,000 p.m and Pulkit ₹ 15,000 per quarter.
3. Commission to Sumit ₹ 70,000.
4. Sumit was being guaranteed that his share of profits will not be less than ₹ 65,000. Deficiency if any will be borne by Amit and Pulkit equally.

Ignoring the above terms the profits of ₹ 6,00,000, for the year ended March 31, 2025 were divided equally between partners. You are required to pass necessary adjustment entry. Show your workings clearly.

S, D and A are partners, sharing profits in the ratio of 5 : 2 : 3. Their fixed capitals are:

S – ₹1,00,000
D – ₹50,000
A – ₹50,000

As per the partnership deed, S is entitled to a commission of 10% of net profit after charging such commission.

However, while preparing the accounts for the year ended 31^st March 2026, this commission was not provided. The net profit of the firm was ₹1,10,000.

On the basis of above information:

1. Calculate the correct amount of commission payable to S.
2. Pass the necessary journal entry that the accountant would have passed for distribution of profits without providing commission to S.
3. Pass the necessary adjusting journal entry at the beginning of the next year to rectify the above-mentioned error.

The books of Mehul and Barkha showed that their capital employed on 31^st March, 2025 was ₹6,00,000. If the normal profits are ₹60,000 and super profits are ₹20,000, then the normal rate of return is :

1. 6%
2. 15%
3. 30%
4. 10%

A business earned an average profit of ₹ 2,00,000 during the last few years. The value of net assets of the business is ₹ 17,00,000 and the normal rate of return in a similar business is 10%. The value of goodwill of the business by capitalisation of super-profits method will be :

1. ₹ 17,00,000
2. ₹ 2,00,000
3. ₹ 3,00,000
4. ₹ 30,000

Assertion (A) : Goodwill is an intangible asset.

Reason (R) : Goodwill is the value of the reputation of a firm in respect of profits expected in future over and above the normal profits.

Choose the correct option from the following :

1. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
2. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
3. Assertion (A) is incorrect, but Reason (R) is correct.
4. Assertion (A) is correct, but Reason (R) is incorrect.

Mansi and Uma were partners in a firm and their capitals were ₹4,00,000 and ₹2,00,000 respectively. Normal rate of return in a similar business was 15% and the goodwill of the firm was valued at ₹4,00,000. If goodwill was calculated at four years purchase of super profits, the average profits of the firm were :

1. ₹90,000
2. ₹60,000
3. ₹1,00,000
4. ₹1,90,000

Neeru and Pooja were partners in a partnership firm sharing profits and losses in the ratio of 4 : 3. The firm earned average profits of ₹ 5,00,000 during the last few years. The normal rate of return in a similar business is 10%. The average super profits of the firm were ₹ 4,00,000. The amount of capital employed by the firm was :

1. ₹ 90,00,000
2. ₹ 40,00,000
3. ₹ 50,00,000
4. ₹ 10,00,000

Uma and Veena were partners in a firm sharing profits and losses in the ratio of 4 : 5. On 1^st April, 2024 they decided to admit Usha as a new partner for 1/4^th share in the profits of the firm. On Usha's admission it was decided that the goodwill of the firm will be valued equal to the previous year's profit. The profit for the year ended 31^st March, 2024 were ₹5,76,000. However, to arrive at this profit, both the opening stock and closing stock were overvalued by ₹50,000. The goodwill of the firm will be :

1. ₹5,76,000
2. ₹6,76,000
3. ₹4,76,000
4. ₹7,76,000

P and Q are partners in a firm sharing profits and losses equally. They admitted R into the partnership firm on 1^st April, 2024. It was decided to value goodwill at 2 years’ purchase of super profits. The capital of the firm of P and Q was ₹ 5,00,000 and the normal rate of return on capital employed was 10%. During the year ended 31^st March, 2024, the profit of the firm was ₹ 2,10,000. The value of goodwill of the firm was :

1. ₹ 2,50,000
2. ₹ 1,40,000
3. ₹ 1,10,000
4. ₹ 3,20,000

Assertion (A) : Goodwill is a intangible asset.

Reason (R) : Goodwill is the value of the reputation of a firm in respect of profits expected in future, over and above the normal profits.

Select the correct answer from the following :

1. Assertion (A) is correct, but Reason (R) is wrong.
2. Assertion (A) is wrong, but Reason (R) is correct.
3. Both Assertion (A) and Reason (R) are correct.
4. Both Assertion (A) and Reason (R) are wrong.

Keshav and Karan were partners in a firm sharing profits equally. The capitalised value of average profits of the firm was ₹ 18,00,000. Assets of the firm were ₹ 20,00,000 (excluding goodwill) and Liabilities were ₹ 5,00,000. The value of goodwill of the firm by capitalisation of average profits method will be :

1. ₹ 2,00,000
2. ₹ 3,00,000
3. ₹ 4,00,000
4. ₹ 3,50,000

A partnership firm has capital employed of ₹ 6,00,000. Its average profits are ₹ 80,000. The normal rate of return in similar type of business is 10%. The amount of super profits are :

1. ₹ 60,000
2. ₹ 8,000
3. ₹ 20,000
4. ₹ 52,000

The goodwill of a firm was valued on the basis of 3 years purchase of average profits for the last four years. The profits of last four years ending 31^st March were as follows :

The value of goodwill of the firm was :

1. ₹ 8,885
2. ₹ 37,950
3. ₹ 58,950
4. ₹ 20,690

Jai and Veeru were in a partnership sharing Profit &Loss in the ratio 5:3. Their Capitals were ₹ 10,00,000 and ₹ 8,00,000 respectively. The firm was also having reserves of ₹ 7,00,000. Normal rate of return was 10%. Firm made average profits of ₹ 2,30,000 for the year ended March 31, 2025 (after adjustment of loss of machinery of book value of ₹2,00,000 by fire against which insurance claim of ₹1,50,000 was admitted). Value of goodwill as per Capitalisation of super profits will be:

1. ₹ 10,00,000
2. ₹ 3,00,000
3. ₹ 18,00,000
4. Nil.

Average profit of a firm during the last few years is ₹8,00,000. In similar business, the normal rate of return is 10% of the capital employed. Assets of the business were ₹60,00,000 and its external liabilities were ₹20,00,000.

Calculate the value of goodwill by :

1. Capitalisation of super profits method
2. Super profit method if the goodwill is valued at four years’ purchase of super profits.

Average profits of a firm during the last few years were ₹ 1,60,000. The normal rate of return in a similar business is 10%. If the goodwill of the firm is ₹ 4,00,000 at four years purchase of super profit, find the capital employed by the firm.

A business earned average profits of ₹ 60,000 during the last three years. The normal rate of return on similar business is 12%. The value of net assets of the business is ₹ 4,00,000.

Calculate the value of goodwill by :

1. Capitalisation of average profits method.
2. Capitalisation of super profits method.

Dhruv and Seema were partners in a firm sharing profits and losses in the ratio of 2 : 3. Their capitals were ₹18,00,000 and ₹12,00,000 respectively. The normal rate of return was 15%.

The profits of the last four years were :

The closing stock for the year 2024 – 25 was undervalued by ₹1,00,000. Goodwill of the firm is to be valued at three years’ purchase of last four years’ average super-profits.

Calculate the value of goodwill of the firm.

Vidur and Kavita were partners in a firm. Their capitals were ₹ 5,00,000 and ₹ 4,00,000 respectively. The business earned average profits of ₹ 1,20,000 during the last few years. The normal rate of return in a similar business is 10%. Calculate the value of goodwill of the firm by capitalisation of super-profits method.

The books of partners Nitish and Anshul showed that their capital employed on 31st March, 2025 was ₹ 5,00,000. The average profit of the last five years was ₹ 60,000. The normal rate of return in a similar business is 10%. Calculate the value of goodwill of the firm on the basis of capitalisation of average profit method.

The capital of the firm of Rajat and Karan is ₹ 15,00,000 and the market rate of interest is 12%. Annual salary of Rajat and Karan is ₹ 20,000 and ₹ 30,000 respectively. The profits for the last three years were ₹ 2,40,000, ₹ 2,80,000 and ₹ 3,20,000.

Goodwill of the firm is to be valued on the basis of two years purchase of last three years' average super profits. Calculate the goodwill of the firm.

Abha and Sara were partners in a firm. Their capitals were : Abha ₹ 3,00,000 and Sara ₹ 2,00,000. The normal rate of return in similar business is 10%. The profits of the firm of Abha and Sara for the last three years were :

Calculate goodwill of the firm on the following basis :

1. Four years purchase of the average profits for the last three years.
2. Capitalisation of super-profits.

Jeevan and Kavi were partners in a firm with capitals of ₹12,00,000 and ₹15,00,000 respectively. Annual salary of the partners was ₹2,00,000 each. The market rate of interest was 10%. During the previous three years the profits were ₹8,00,000, ₹9,00,000 and ₹7,00,000. The goodwill of the firm is to be valued at 2 years' purchase of the last 3 years' average super profits.

Calculate the goodwill of the firm.

Sana and Rajesh were partners in a firm sharing profits and losses in the ratio of 4 : 3. They admitted Sonu into partnership for 1/5^th share in the profits of the firm. Goodwill of the firm was to be valued at three years’ purchase of super-profits. Average net profit of the firm was ₹80,000. Capital employed in the business was ₹2,00,000 and normal rate of return was 10%. Calculate the amount of goodwill premium brought by Sonu.