Online Test — Accounting for Partnership: Fundamentals
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
The maximum number of partners in a firm is:
10
20
50
100
Explanation: The maximum is 50 partners.
Question 2 of 15
'The act of one partner binds all' describes:
Mutual agency
Unlimited liability
A deed
Goodwill
Explanation: Mutual agency: each partner is agent and principal.
Question 3 of 15
The written agreement among partners is the:
Memorandum
Partnership deed
Prospectus
Balance sheet
Explanation: The partnership deed is the written agreement.
Question 4 of 15
With no deed, profits are shared:
In capital ratio
Equally
By seniority
1:2:3
Explanation: Profits are shared equally when there is no deed.
Question 5 of 15
With no deed, interest on capital is:
6%
Not allowed
10%
12%
Explanation: No interest on capital is allowed without a deed.
Question 6 of 15
With no deed, interest on a partner's loan is:
Nil
6% p.a.
9% p.a.
12% p.a.
Explanation: A partner's loan earns 6% p.a.
Question 7 of 15
Interest on a partner's loan is a:
Charge against profit
Appropriation of profit
Capital
Drawing
Explanation: It is a charge, shown in the P&L Account.
Question 8 of 15
Interest on capital is an:
Charge against profit
Appropriation of profit
Asset
Expense to outsiders
Explanation: Interest on capital is an appropriation.
Question 9 of 15
The P&L Appropriation Account is prepared to:
Find net profit
Distribute net profit among partners
Value goodwill
Dissolve the firm
Explanation: It distributes the net profit.
Question 10 of 15
Net profit 80,000; interest on capital 10,000; salary 10,000. Divisible profit =
Rs 60,000
Rs 80,000
Rs 70,000
Rs 100,000
Explanation: 80,000 − 10,000 − 10,000 = 60,000.
Question 11 of 15
Under the fixed capital method, each partner has:
One account
Two accounts (Capital + Current)
Three accounts
No account
Explanation: A fixed Capital Account and a Current Account.
Question 12 of 15
The default capital method when the deed is silent is:
Fixed
Fluctuating
Current
Mixed
Explanation: Fluctuating capital is the default.
Question 13 of 15
Capital Rs 5,00,000 at 6% p.a. Interest on capital =
Rs 30,000
Rs 50,000
Rs 6,000
Rs 60,000
Explanation: 6% of 5,00,000 = 30,000.
Question 14 of 15
If drawings are made evenly all year, the average period is:
3 months
6 months
12 months
1 month
Explanation: Even drawings give an average period of 6 months.
Question 15 of 15
Interest on drawings is charged to:
Encourage drawings
Discourage drawings
Increase capital
Pay creditors
Explanation: It discourages withdrawals by partners.