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CodeVID-M12-WS
Accounting for Partnership: Fundamentals — Practice Worksheet
Chapter: Accounting for Partnership: Fundamentals
Topic: Accounting for Partnership: Fundamentals
Maximum Marks: 35
Time: 30 minutes
Name: ____________________ Roll No.: __________ Date: ____________

General Instructions

  • All questions are compulsory.
  • Choose the correct option (A, B, C or D) for each question.
  • The answer key is at the end — try the paper first!
Section A — Multiple Choice (1 mark each) 15 × 1 = 15 marks
1.
The maximum number of partners in a firm is:
  • A.10
  • B.20
  • C.50
  • D.100
2.
'The act of one partner binds all' describes:
  • A.Mutual agency
  • B.Unlimited liability
  • C.A deed
  • D.Goodwill
3.
The written agreement among partners is the:
  • A.Memorandum
  • B.Partnership deed
  • C.Prospectus
  • D.Balance sheet
4.
With no deed, profits are shared:
  • A.In capital ratio
  • B.Equally
  • C.By seniority
  • D.1:2:3
5.
With no deed, interest on capital is:
  • A.6%
  • B.Not allowed
  • C.10%
  • D.12%
6.
With no deed, interest on a partner's loan is:
  • A.Nil
  • B.6% p.a.
  • C.9% p.a.
  • D.12% p.a.
7.
Interest on a partner's loan is a:
  • A.Charge against profit
  • B.Appropriation of profit
  • C.Capital
  • D.Drawing
8.
Interest on capital is an:
  • A.Charge against profit
  • B.Appropriation of profit
  • C.Asset
  • D.Expense to outsiders
9.
The P&L Appropriation Account is prepared to:
  • A.Find net profit
  • B.Distribute net profit among partners
  • C.Value goodwill
  • D.Dissolve the firm
10.
Net profit 80,000; interest on capital 10,000; salary 10,000. Divisible profit =
  • A.Rs 60,000
  • B.Rs 80,000
  • C.Rs 70,000
  • D.Rs 100,000
11.
Under the fixed capital method, each partner has:
  • A.One account
  • B.Two accounts (Capital + Current)
  • C.Three accounts
  • D.No account
12.
The default capital method when the deed is silent is:
  • A.Fixed
  • B.Fluctuating
  • C.Current
  • D.Mixed
13.
Capital Rs 5,00,000 at 6% p.a. Interest on capital =
  • A.Rs 30,000
  • B.Rs 50,000
  • C.Rs 6,000
  • D.Rs 60,000
14.
If drawings are made evenly all year, the average period is:
  • A.3 months
  • B.6 months
  • C.12 months
  • D.1 month
15.
Interest on drawings is charged to:
  • A.Encourage drawings
  • B.Discourage drawings
  • C.Increase capital
  • D.Pay creditors
Section B — Challenge / Olympiad (2 marks each) 10 × 2 = 20 marks
16.
A and B contributed capitals of 3,00,000 and 1,00,000 with no deed. The firm earned 80,000. A claims profit in the capital ratio 3:1. He is:
  • A.Wrong — without a deed profit is shared equally (40,000 each)
  • B.Right — 60,000 and 20,000
  • C.Right — capital ratio always applies
  • D.Wrong — B gets all
17.
A partner's loan of 2,00,000 (deed silent on interest) in a year the firm made a LOSS. The interest:
  • A.Is still allowed at 6% as a charge
  • B.Is not allowed in a loss
  • C.Is 12%
  • D.Is an appropriation
18.
Net profit before appropriations is 50,000. Interest on capital due is 40,000 and salary due is 30,000 (total 70,000, deed says these are appropriations). They are allowed:
  • A.In the ratio 40:30, limited to the 50,000 available
  • B.In full, creating a loss
  • C.Equally
  • D.Not at all
19.
A draws 12,000 at the END of every quarter; interest on drawings 10% p.a. Using the product method the average period is:
  • A.4.5 months
  • B.6 months
  • C.7.5 months
  • D.3 months
20.
Under the FIXED capital method, in which account is a partner's share of profit recorded?
  • A.Current Account
  • B.Capital Account
  • C.Realisation Account
  • D.Bank Account
21.
A guarantee that a partner's share will be at least 25,000 is met by net profit 60,000 shared equally between A, B, C, with C guaranteed. C's actual share and the deficiency are:
  • A.C's 20,000, deficiency 5,000 borne by A and B
  • B.C's 25,000, no deficiency
  • C.C's 30,000
  • D.C gets nothing
22.
Why is interest on capital NOT allowed in a year of loss (when it is an appropriation)?
  • A.Appropriations are made only out of available profit
  • B.It is illegal
  • C.Capital earns no interest ever
  • D.The deed forbids it
23.
A partner is entitled to a commission of 10% of net profit AFTER charging such commission. If profit before commission is 1,10,000, the commission is:
  • A.Rs 10,000
  • B.Rs 11,000
  • C.Rs 9,900
  • D.Rs 12,000
24.
The fluctuating capital method differs from the fixed method in that the capital balance:
  • A.Changes every year as all items pass through it
  • B.Never changes
  • C.Is always nil
  • D.Is shown as a loan
25.
Drawings: 20,000 on 1 April and 20,000 on 1 October (year ends 31 March); interest 12% p.a. By the product method the interest is:
  • A.Rs 3,600
  • B.Rs 4,800
  • C.Rs 2,400
  • D.Rs 1,800

Answer Key

Section A — Multiple Choice (1 mark each)
  1. (C) 50
  2. (A) Mutual agency
  3. (B) Partnership deed
  4. (B) Equally
  5. (B) Not allowed
  6. (B) 6% p.a.
  7. (A) Charge against profit
  8. (B) Appropriation of profit
  9. (B) Distribute net profit among partners
  10. (A) Rs 60,000
  11. (B) Two accounts (Capital + Current)
  12. (B) Fluctuating
  13. (A) Rs 30,000
  14. (B) 6 months
  15. (B) Discourage drawings
Section B — Challenge / Olympiad (2 marks each)
  1. (A) Wrong — without a deed profit is shared equally (40,000 each)
  2. (A) Is still allowed at 6% as a charge
  3. (A) In the ratio 40:30, limited to the 50,000 available
  4. (A) 4.5 months
  5. (A) Current Account
  6. (A) C's 20,000, deficiency 5,000 borne by A and B
  7. (A) Appropriations are made only out of available profit
  8. (A) Rs 10,000
  9. (A) Changes every year as all items pass through it
  10. (A) Rs 3,600
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