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Book-Keeping &
Accountancy
Salient Features
Precise Theory for every topic including Specimen Journal Entries and Formats
for Ledger Accounts.
Includes Board Questions (March 08 March 14) and additional questions for
practice to facilitate better preparation.
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TEID : 757
Preface
Book Keeping and Accountancy is an indispensable subset of accounting. It refers to the process of
accumulating, organizing, storing and accessing the financial information of a business concern, thus
facilitating in its day-to-day operations. It further aids in preparing the financial statements such as Trading
Account, Profit & Loss Account and Balance Sheet at the end of each accounting year.
We present to you "Std. XII Commerce: Book-Keeping and Accountancy" with a revolutionary fresh
approach towards content, thus laying a platform for an in depth understanding of the subject.
This book has been written according to the revised syllabus and guideline as prescribed by the state board
and includes specimen journal entries/ ledgers and illustrations. We have provided a section of solved
examples for every chapter, which covers an array of questions from simple to complex. It further
encompasses solutions to all textual questions.
Furthermore, towards the end of every chapter, we have provided a set of sums for practice along with board
questions from March 2008 to March 2014 which helps in revision. The book also includes two model
question papers as per the latest paper pattern.
Solutions to practice problems
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Total Marks: 80
(B)
(C)
Select the most appropriate alternative from those given below and rewrite the
statements:
Five sub-questions. Each sub question carries four options.
[one mark each]
(D)
(E)
[8]
[10]
[12]
[15]
Total:
Scheme of Evaluation
(A)
(B)
Written Examination
Project Preparation (with Viva)
Total:
Marks
80
20
100
80
Unitwise Weightage
No.
Units
Marks
Problem
Objectives
Total
Problem
Objectives
Total
1.
Introduction to Partnership
(Objectives
only)
and
Partnership Final Accounts
15
02
17
15
03
18
2.
12
01
13
12
02
14
10
02
12
02
22
04
24
10
20
04
20
25
118
3.
4.
5.
6.
Admission / Retirement /
Death of a Partner
OR
Admission / Retirement /
Death of a Partner
Dissolution of Partnership Firm
OR
Accounting for Shares /
Accounting for Debentures
Bill of Exchange (Objectives
include 5 marks for question
on specimen)
Single Entry System
OR
Analysis of Financial Statements
(Theory Questions)
10
10
10
10
02
12
10
10
06
16
08
02
10
10
08
08
Total
65
15
80
93
No.
1.
2.
3.
4.
5.
6.
7
8
9
10
11
12
Units
Introduction to Partnership
Partnership Final Accounts
Reconstitution of Partnership (Admission of Partner)
Reconstitution of Partnership (Retirement of Partner)
Reconstitution of Partnership (Death of Partner)
Dissolution of Partnership Firm
Accounts of Not for Profit Concerns
Single Entry System
Bill of Exchange (Trade Bill)
Company Accounts Part I (Accounting for Shares)
Company Accounts Part II (Accounting for Debentures)
Analysis of Financial Statements
Model question paper I
Model question paper II
Board Question Paper March 2014
Page No.
1
17
95
155
190
219
267
323
359
418
457
477
498
503
508
01
Introduction to partnership
Contents:
1.1
1.1
Introduction
1.2
Partnership
1.3
Partnership Deed
1.4
1.5
Introduction
There are many forms of business organizations. Sole Trading Concern is the oldest form. The sole proprietorship
is a form of business that is owned, managed and controlled by a single individual. He has to arrange capital for
the business and he alone is responsible for its management. But, when he needs to expand the business, he needs
more resources and capital. It becomes very difficult for a sole trader to manage and run the activities of the
business alone with limited resources and capital.
The limited access of a sole proprietor to financial resources and his limited managerial skills create the need for
an additional partner. Thus, the Partnership form of business comes into existence.
1.2
Partnership
vi.
Unlimited Liability:
The partners of the firm have Unlimited Liability. They are jointly as well as individually liable for the
debts and obligations of the firms. If the Assets of the firm are insufficient to meet the firms Liabilities, the
personal properties of the partners can also be utilized for the repayment of the firms Liabilities. However,
the Liability of a Minor Partner is limited to the extent of his share in the profit.
vii. Management:
All the partners can participate actively in the business management depending on the agreement formed.
viii. Dissolution:
Dissolution means to close the business. Legally a partnership comes to an end if any partner dies, retires or
becomes insolvent.
ix. Relationship between the Partners:
The partnership business may be carried on by all or any of the partners acting for all. Thus, each partner is
a principal and so can act in his own right. At the same time, he can act on behalf of the other partners as an
agent. Thus, every partner acts as an Agent as well as Principal.
Types of Partners:
Following are the various types of partners:
i.
Active Partners:
Partners who take active part in the conduct of day-to-day transactions of the firm are called Active
Partners. These partners perform the business activities on behalf of the other partners.
ii.
Sleeping Partners:
A Sleeping Partner is also known as Dormant Partner. Sleeping or Dormant Partners are those, who do not
take active part in the management of the business. Such partners only contribute capital in the firm and are
bound by the activities of other partners. However, they share in the profits and losses of the business
iii. Nominal Partners:
Nominal partners are those who lend their name to the firm but do not have interest in the business. They do
not make any capital contribution, and are not entitled to take part in management, but are liable to third
parties, like the other partners.
iv. Minor Partner:
A minor is a person who has not completed 18 years of age. A minor cannot become a partner because he is
not qualified to enter into a contract. However, he may be admitted to the benefits of partnership with the
mutual consent of all the partners. His liability is limited to the extent of his share in the capital and profits
of the firm. He cannot file a suit against the firm or its partners to get his share except when he wants to
disassociate himself from the firm.
v.
Partner in Profits only:
This type of a partner only shares in the profits of the firm. However, his liability for the firms debts is
unlimited. He is not allowed to take part in the management of the firm. A partnership firm may associate
with such a partner for their money and goodwill.
vi. Partner by Estoppel:
A Partner by Estoppel neither contributes capital nor is entitled to any share in the profits. He is actually not
a partner in the firm. However, any person who represents himself in front of a third party as a partner of
the firm becomes a Partner by Estoppel. He becomes liable to the third parties that presume him to be a
partner of the firm.
1.3
Partnership Deed
Partnership Deed is the written agreement between or among the partners. It is also known as Articles of
Partnership. Partnership Deed lays down the terms and conditions of partnership and the rights, duties and
obligations of partners for the internal management of the firm. A partnership deed is very helpful in situations of
conflicts or disputes arising between partners. The relations of partners are governed by the Partnership Deed. A
Partnership Deed generally contains the following important contents:
i.
Names and addresses of the Partnership Firm.
ii.
Nature of business to be conducted and its duration.
iii. Names, Addresses and other information about the partners.
2
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
xiii.
xiv.
xv.
1.4
The Indian Partnership Act is in force since 1932. This act is applicable in the absence of partnership deed or if
the partnership deed is silent on any specific point. Stated below are the important provisions of this act:
i.
Distribution of Profits:
In the absence of partnership deed, all the partners are treated as equal and they will be entitled to equal
share in the Profits and Losses of the business. However, if profit sharing ratio is given, then Profits /
Losses should be shared by partners in the agreed ratio only.
ii.
Interest on Capital:
According to the Act, no interest is to be allowed on Partners Capital. However, if a provision is made in
the partnership deed, it should to be given to the partners as per the agreement.
iii. Interest on Drawings:
As per the Act, there is no provision for Interest on Drawings. However, if the partnership deed states that
Interest on Drawings is to be charged, then it should be charged as per the agreement.
Interest on Drawings is to be charged for a period of six months in cases where the total amount of
Drawings is given but the dates of withdrawals are not available.
iv. Interest on Partners Loan:
Interest on Loan should be allowed at the rate of 6% per annum as per the Act. If a separate provision is
made in the partnership deed then interest should be allowed as per the agreement.
v.
Salary or Commission to Partners:
Partners are not entitled to any Salary or Commission for doing any additional or extra work for the firm.
However, if any special provision is made in the partnership deed then it should be provided as per the
agreement.
vi. Admission of a New Partner:
According to the Act, a person can be admitted into partnership only with the consent of all the existing
partners.
1.5
An amount contributed by a partner either in the form of cash or kind into the business of a partnership firm is
known as Partners Capital. This amount may be equal or it may be in the profit sharing ratio or as per the
common understanding among partners. Capital Accounts of partners can be maintained in two ways:
i.
Fixed Capital Method:
Under the Fixed Capital Method, the amount of capital of the partners remains fixed unless some additional
capital is introduced or some amount of capital is withdrawn by an agreement among the partners. Thus,
under fixed capital method, two accounts are maintained for each partner namely Partners Capital Account
and Partners Current Account.
a.
Partners Capital Account: The below items are recorded in this account:
1.
Amount contributed by a partner at the beginning.
2.
Additional Capital introduced by a partner during the year.
3.
Part of capital amount withdrawn during the year.
3
Journal Entries recorded in Partners Capital Account under Fixed Capital Method:
Date
i.
ii.
iii.
Particulars
L.F.
Dr.
xxx
xxx
xxx
xxx
Credit
`
xxx
xxx
Dr.
xxx
xxx
Dr.
xxx
xxx
Debit
`
Cr.
X
`
xxx
xxx
Y
`
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
[Note: Generally Partners Capital Account shows a Credit Balance and is shown on the Liability side of the
Balance sheet. If the account has a Debit Balance, it is shown on the Asset side of the Balance sheet.]
b.
Partners Current Account: This account is maintained when partners adopt the Fixed Capital
Method. Below items are recorded in this account:
1.
Amount withdrawn by partners for their personal use.
2.
Goods withdrawn by partners for their personal use.
3.
Interest on Partners Capital.
4.
Interest on Partners Drawings.
5.
Salary or Commission to Partners.
6.
Distribution of Profit or Loss of the Firm.
Journal Entries recorded in Partners Current Account under Fixed Capital Method:
Date
i.
ii.
Particulars
Interest on Capital allowed to Partners
Interest on Capital A/c
To Partners Current A/c
(Being interest on capital allowed to partners)
Transfer of Interest on Capital to Profit & Loss Account
Profit & Loss A/c
To Interest on Capital A/c
(Being interest on capital transferred to Profit & Loss A/c)
L.F.
Dr.
Debit
`
Credit
`
xxx
xxx
Dr.
xxx
xxx
iv.
v.
vi.
vii.
viii.
ix.
x.
a.
b.
Dr.
xxx
xxx
Dr.
xxx
xxx
Dr.
xxx
xxx
Dr.
xxx
xxx
Dr.
xxx
xxx
Dr.
xxx
xxx
Dr.
xxx
xxx
Dr.
xxx
xxx
Net Loss
Partners Current A/c
To Profit & Loss A/c
(Being net loss transferred to Current Account)
Dr.
xxx
xxx
X
`
xxx
xxx
xxx
xxx
xxx
Y
`
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
Particulars
X
`
xxx
xxx
xxx
xxx
xxx
xxx
Cr.
Y
`
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
Particulars
[Note: Partners current account can either have a Debit Balance or a Credit Balance. If Partners Current
Account has a Debit Balance, it should be shown on the Asset side of the Balance sheet and if it has a Credit
Balance, it should be shown on the Liability side of the Balance sheet.]
ii.
X
`
xxx
xxx
xxx
xxx
xxx
Y
`
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
Particulars
By Balance b/d
(Credit Balance)
By Cash/Bank A/c
(Additional Capital)
By Assets A/c
(Capital in Kind)
By Interest on Capital A/c
By Interest on Loan A/c
By Salary A/c
By Commission A/c
By Profit and Loss A/c
(Share of Profit)
By Balance c/d (Debit Balance)
X
`
xxx
Cr.
Y
`
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
Notes:
i.
Credit Balance of Partners Capital Account is shown on the Liability side of the Balance sheet and Debit
Balance of Partners Capital Account is shown on the Asset side of the Balance sheet.
ii.
In the absence of information, partners follow Fluctuating Capital Method.
iii. Interest on Capital is paid on the Opening Balance only if date of additional capital is not given. If the date of
additional capital is given, then interest on capital will be given on total capital and will be calculated as under
a.
On Opening Balance for 12 months.
b.
On Additional Capital from date of additional capital to date of Balance Sheet i.e., 31st Mar.
Interest on Capital is paid only if there is a profit in the business.
iv.
Interest on Drawings is provided as under:
a.
If Drawings are made at the beginning of every month, Interest is charged for 6.5 months.
b.
If Drawings are made in the middle of every month, Interest is charged for 6 months.
c.
If Drawings are made at the end of every month, Interest is charged for 5.5 months.
d.
In absence of information, Interest is charged for 6 months.
6
Solved Examples
Q.1. Ram and Shyam are partners with their capital ` 30,000 and ` 20,000. Net Profit of the firm is ` 40,000,
what will be each partners share if:
i.
Partnership deed is silent or in the absence of information.
ii.
They share in the ratio of their capital.
iii. They share in ratio of 3 : 4.
iv. The profit is ` 19,001 and partners share equally.
Solution:
i.
If the partnership deed is silent or in the absence of information both partner will share Profits &
Losses equally i.e. 50 : 50
Rams Share
= ` 20,000
Shyams Share = ` 20,000.
ii.
If they share Profits & Losses in the ratio of their capital, then the Profit sharing ratio will be
calculated as under:
Ram : Shyam
30,000 : 20,000
i.e. 3 : 2
So, their profit will be
20, 000
3 = ` 12,000
Rams Share
=
5
20, 000
2 = ` 8,000
Shyams Share =
5
iii. If they share Profits & Losses in the ratio of 3 : 4 then profit will be calculated as under:
40, 000
3 = ` 17,143
Rams Share
=
7
40, 000
4 = ` 22,857
Shyams Share =
7
iv. If the profit is `19,001 and partners share equally, profit will be distributed as under:
Ram : Shyam
1
:
1
19, 001
i.e.
= ` 9,500.5
2
In this case, Profit will be shared as under
Rams Share = ` 9,501
Shyams Share = ` 9,500
` 1 is given more to Ram because he had contributed more capital as compared to Shyam.
Q.2. Calculate the Interest on Capital in the following situation:
Rate of interest is 12%. Capital of Ram ` 40,000, Laxman ` 60,000 and Shyam ` 30,000. Shyam was
admitted on 01-10-11 for year ending 31-3-12.
Solution:
No. of Monthsin the Firm
Interest on Partners Capital = Capital Rate of Interest
12
12 12
= ` 4,800
Interest on Rams Capital
= 40,000
100 12
12 12
= ` 7,200
Interest on Laxmans Capital = 60,000
100 12
12
6
= ` 1,800
Interest on Shyams Capital = 30,000
100 12
7
Q.3. Capital of Arjun is ` 20,000 and that of Kailash is ` 30,000 as on 01-04-11. Arjun introduced additional
capital of ` 15,000 on 01st Jan, 2012 and Kailash introduced additional capital of ` 10,000 on 01-07-2011.
What will be the amount of interest for the year ending 31-03-12, if rate of interest is 12%.
Solution:
i.
Interest on Arjuns capital will be calculated as under
12 12
a.
Arjuns Old Capital = 20,000
= ` 2,400
100 12
12
3
b.
Arjuns New Capital = 15,000
= ` 450
100 12
Total Interest on Arjuns Capital = 2,400 + 450 = ` 2,850
ii.
Interest on Kailashs Capital will be calculated as under
12 12
= ` 3,600
a.
Kailashs Old Capital = 30,000
100 12
12
9
b.
Kailashs New Capital = 10,000
= ` 900
100 12
Total Interest on Kailashs Capital = 3,600 + 900 = ` 4,500
Q.4. Bunty has a capital of ` 50,000 and Chunky has a capital of ` 30,000 as on 01-04-11. If the rate of interest
is 12% and Bunty had reduced his capital to ` 30,000 on 01-10-11, what will be interest on their capital as
on 31-03-2012.
Solution:
Interest on Buntys Capital will be calculated in two parts:
i.
Interest on ` 30,000 for 12 months
12
12
= 3,600
30,000
100 12
ii.
Interest on ` 20,000 for 6 months
12
6
= 1,200
20,000
100 12
Total Interest on Buntys capital = 3,600 + 1,200 = ` 4,800.
Interest on Chunkys Capital
12
= ` 3,600.
30,000
100
Q.5. Calculate the Interest on Drawings at the rate of 10% per annum in the following situations:
Drawings of Laxman ` 2,000 p.m.
i.
Made at the beginning of the month.
ii.
Made during the middle of the month.
iii. Made at the end of each month.
iv. If problem is silent about the date of withdrawal.
Solution:
i.
If ` 2,000 p.m. is withdrawn at the beginning of each month then interest will be calculated for
6.5 months.
10 6.5
2,000 12
= ` 1,300
100 12
ii.
If ` 2,000 p.m. is withdrawn during the middle of the month then interest on drawing will be
calculated for 6 months.
10
6
= ` 1,200
2,000 12
100 12
8
iv.
If ` 2,000 p.m. is withdrawn at the end of each month then interest on drawing will be calculated for
5.5 months.
10
5.5
= ` 1,100
2,000 12
100 12
If the problem is silent about the date of drawings then interest on drawings will be charged for 6 months.
10
6
= ` 1,200
2,000 12
100 12
Q.6. Gross profit of the firm is ` 60,000 and Vijay is paid 10% commission on gross profit then what will be his
commission?
Solution:
Vijays Commission will be:
10
= ` 6,000
60,000
100
Q.7. Net Profit of the firm is ` 18,000 after paying commission at the rate of 10% to Raman, a partner. What is
his commission and what is the profit before commission?
Solution:
Profit before commission (100) = Net Profit (90) + Ramans Commission (10)
100
= ` 20,000
= 18,000
90
10
Ramans Commission = 20,000
= ` 2,000
100
Q.8. Rahul and Sumit are partners sharing profits and losses in the ratio 2:1. On 1st April, 2012 their Capital
balances are Rahul ` 60,000 and Sumit ` 30,000, their drawings are ` 6,000 and ` 4,000 respectively.
According to the partnership deed, 10% interest is allowed on partners capital and 12% interest is charged
on their drawings. Rahul gets salary of ` 3,000 per month and Sumit is entitled to receive commission @
5% on sales which is ` 5,00,000. The profit of the firm is ` 30,000.
Prepare Partners Capital Account and Partners Current Account for the year ended 31st March, 2013 in the
below situations:
A. Fixed Capital Method
B.
Fluctuating Capital Method
Solution:
A.
Fixed Capital Method:
Partners Capital Account
Dr.
Cr.
Rahul
Sumit
Rahul
Sumit
Particulars
Particulars
`
`
`
`
By Balance b/d
60,000
30,000
To Balance c/d
60,000
30,000
60,000
30,000
60,000
30,000
Rahul
`
6,000
36,000
20,000
Cr.
Sumit
`
3,000
25,000
10,000
62,000
38,000
To Drawings A/c
To Interest on Drawings A/c
To Balance c/d
Rahul
`
6,000
360
Sumit
`
4,000
240
55,640
33,760
62,000
38,000
Particulars
Dr.
To Drawings A/c
To Interest on Drawings A/c
Rahul
`
6,000
360
Sumit
`
4,000
240
To Balance c/d
1,15,640
63,760
1,22,000
68,000
Particulars
Working Notes:
i.
Dr.
Particulars
ii.
iii.
Particulars
By Balance b/d
By Interest on Capital A/c
By Salary A/c
By Commission A/c
By Profit & Loss A/c
Rahul
`
60,000
6,000
36,000
20,000
Cr.
Sumit
`
30,000
3,000
25,000
10,000
1,22,000
68,000
Amount
`
Cr.
Amount
`
360
240
600
Amount
`
6,000
3,000
20,000
10,000
9,000
36,000
25,000
Particulars
30,000
Interest on Capital:
10
10
= ` 6,000; Sumit = 30,000
= ` 3,000
Rahul = 60,000
100
100
Interest on Drawings:
12
6
12
6
= ` 240
Rahul = 6,000
100 12
100 12
[Note: When the amounts of total drawings are given but date of withdrawals are not given then for calculation of
interest on drawings, the period would be taken as six months.]
iv.
v.
vi.
Distribution of Profits:
Rahuls Share = 30,000
5
= ` 25,000
100
2
1
= ` 20,000; Sumits Share = 30,000 = ` 10,000
3
3
Q.9. Sona and Mona are partners. They started their business on 1-04-2012 on which date they contributed ` 3,00,000
each as their capital. On 1-07-2012, Sona purchased furniture of ` 60,000 for the firm from her personal
resources. On 1-10-2012, Mona supplied her own Machinery Costing ` 70,000 for the business of the firm. On
1-01-2013 Sona and Mona had withdrawn ` 30,000 & ` 40,000 respectively for their personal use.
The Partnership Deed provides for Interest on Capital @ 7% p.a. and Interest on Drawings @ 10% p.a.
Sona is to get salary of ` 2,000 per month starting from 1-07-2012 and Mona is to get commission on sales
@ 10%. Sales for the year is ` 2,00,000 and Net Profit for the year is ` 50,000.
Prepare Capital and Current Account of the Partners in the following situations:
A. Fixed Capital Method
B.
Fluctuating Capital Method
10
Solution:
A.
Fixed Capital Method:
Partners Capital Account
Dr.
Particulars
Sona
`
Mona
`
Particulars
By Cash/Bank A/c
By Furniture A/c
By Machinery A/c
To Balance c/d
3,60,000
3,70,000
3,60,000
3,70,000
Sona
`
3,00,000
60,000
Cr.
Mona
`
3,00,000
70,000
3,60,000
3,70,000
Sona
`
24,150
18,000
25,000
Cr.
Mona
`
23,450
20,000
25,000
67,150
68,450
Sona
`
3,00,000
60,000
24,150
18,000
25,000
Cr.
Mona
`
3,00,000
70,000
23,450
20,000
25,000
4,27,150
4,38,450
Sona
`
30,000
750
Mona
`
40,000
1,000
To Balance c/d
36,400
27,450
67,150
68,450
Particulars
B.
Particulars
Dr.
Particulars
To Drawings A/c
To Interest on Drawings A/c
To Balance c/d
Sona
`
30,000
750
Mona
`
40,000
1,000
3,96,400
3,97,450
4,27,150
4,38,450
Particulars
By Cash/Bank A/c
By Furniture A/c
By Machinery A/c
By Interest on Capital A/c
By Salary A/c
By Commission A/c
By Profit & Loss A/c
Working Notes:
i.
Interest on Capital:
a.
Calculation of Interest on Capital for Sona
7
12
= ` 21,000
Opening Capital = 3,00,000
100 12
7
9
Additional Capital = 60,000
= ` 3,150
100 12
Total Interest on Capital payable to Sona = 21,000 + 3,150 = ` 24,150
b.
Calculation of Interest on Capital for Mona
7
12
= ` 21,000
Opening Capital = 3,00,000
100 12
7
6
= ` 2,450
Additional Capital = 70,000
100 12
Total Interest on Capital payable to Mona = 21,000 + 2,450 = ` 23,450
11
Interest on Drawings:
iii.
10
3
= ` 750
100 12
10
3
= ` 1,000
b.
Mona = 40,000
100 12
Sonas Salary:
2,000 9 = ` 18,000
Monas Commission:
10
= ` 20,000
2,00,000
100
a.
iv.
Sona = 30,000
[1 mark each]
At what rate is the Interest on Partners Loan is paid in the absence of provision in partnership
deed?
Ans: In the absence of a provision in partnership deed, Interest on Partners Loan is paid at 6% p.a.
12
Write the word/ term/ phrase which can substitute each of the following statements:
[1 mark each]
*1.
*2.
3.
4.
*5.
6.
*7.
8.
*9.
A partners who contributes only capital for the business but does not take any active part.
*10. A partner who provides only his name to the partnership firm. [Mar 08]
*11. A partner below the age of 18 years.
12.
Capital method in which both, Capital Account and Current Account are maintained for each partner.
*20. Method of capital account in which capital balances of partners changes every year.
21.
Partnership
Partnership Deed
Dissolution
Active Partner
Sleeping Partner/Dormant Partner
Minor Partner
Partner in Profit Only
Partners Capital
Fixed Capital Method
Fixed Capital Method
Fluctuating Capital Method
2.
4.
6.
8.
10.
12.
14.
16.
18.
20.
Partnership Deed
Ten
Principal and Agent
Working Partner
Nominal Partner
Minor Partner
Partner by Estoppel
Drawings
Fixed Capital Method
Fluctuating Capital Method
Select the most appropriate alternative from those given below and rewrite the statements:
[1 mark each]
*1. Partnership is an association of _______ or more persons.
(A) two
(B) seven
(C) ten
(D) twenty
2.
(B)
(D)
illegal
immoral
3.
*4.
Maximum _______ persons are required to form a partnership having trading business.
(A) twenty
(B) fifty
(C) seven
(D) ten
*5.
Maximum _______ persons are required to form a partnership having banking business.
(A) two
(B) seven
(C) ten
(D) twenty
*6.
limited
proportionate
7.
*8.
9.
A partner who does not take active part in the management of business is known as _______.
(A) Working Partner
(B) Sleeping Partner
(C) Nominal Partner
(D) Partners in Profit only
*10. A partner who lends only his name to the firm is called as _______ partner.
(A) partner in profits only
(B) partner by estoppel
(C) nominal
(D) minor
*11. A partner below 18 years of age is called as _______ partner.
(A) active
(B) sleeping
(C) nominal
(D) minor
14
In the absence of partnership deed the partners share profits and losses in the _______ ratio.
(A) capital
(B) equal
(C) 1 : 2
(D) initial contribution
*13. The Indian Partnership Act is in force since _______. [Mar 10, Oct 10]
(A) 1932
(B) 1956
(C) 1960
(D) 1984
*14. The Interest on capital of a partner is credited to _______ Account.
(A) Trading
(B) Profit and Loss
(C) Partners Capital
(D) Cash
*15. The drawings of partners are transferred to _______ Account.
(A) Trading
(B) Profit and Loss
(C) Partners Capital
(D) Balance Sheet
*16. The interest on drawings is transferred to _______ side of Partners Current Account.
(A) debit
(B) credit
(C) asset
(D) liability
*17. If dates of drawings are not given interest on drawings is charged for _______ months.
(B) six
(A) three
(C) nine
(D) twelve
*18. Under fixed capital method, Capital Account and _______ Account is opened for each partner.
(A) Partners Drawing
(B) Partners Salary
(C) Partners Current
(D) Partners Commission
*19. Under Fixed Capital Method, salary or commission to partner is credited to _______ Account.
(A) Partners Capital
(B) Partners Current
(C) Partners Drawings
(D) Partners Salary
*20. A debit balance of Partners Current Account will appear on the _______ side of the Balance Sheet.
(A) Assets
(B) Liability
(C) Debit
(D) Credit
IV.
21.
22.
*1.
*2.
*3.
*4.
5.
6.
*7.
*8.
If the partnership deed is silent, partners share profits and losses equally.
[1 mark each]
15
9.
10.
Partners not taking an active part in the business is called sleeping partner.
11.
*12. A partner who provides only capital to the firm is called as nominal partner.
13.
A partner who gives only his name to the business is called nominal partner.
16.
16
Adjustments to partners capital are passed through Current Account when the capitals are fluctuating.
True
2.
True
3.
False
4.
False
False
6.
False
7.
False
8.
True
True
10. True
11. False
12. False
True
14. True
15. True
16. True
True
18. True
19. False
20. True
False
22. False
23. False
24. False