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Case Study Based Questions on Partnership - Accountancy as Per CBSE Questions And Answers | Case Study Accountancy Class 12

 case study accountancy class 12, partnership.

Explanation: Given in the Case Study  "Their initial fixed capital contribution was ₹1,20,000 and ₹80,000 respectively."

When Fixed Capital is Given Remuneration will be transferred to Partners Current Account.

Question 2:

Upon the admission of Sundaram the sacrifice for providing his share of profits would be done:

(a) by Amit only.

(b) by Mahesh only.

(c) by Amit and Mahesh equally.

(d) by Amit and Mahesh in the ratio of 3:2.

Answer: (D)   by Amit and Mahesh in the ratio of 3:2.

Explanation: In the Case Study only new Partners Profit Share is given and Sacrifice made by the old partners is not given.

In this case, it is assumed that the new partner has acquired his share from old partners in their old profit sharing ratio.

Question 3 :

Sundaram will be entitled to a remuneration of _____________at the end of the year.

Answer: ₹ 15000

Explanation: Given in the Case Study "............. Sundaram as a new partner and offered him 20% as a share of profits along with monthly remuneration of ₹ 2,500."

2500 X 12 = 15000

Question 4 :

While taking up the accounting procedure for this reconstitution the accountant of the firm Mr.  Suraj Marwaha faced a difficulty. Solve it be answering the following:

For the amount of loan that Sundaram has agreed to provide, he is entitled to interest thereon at  the rate of ____________.

Answer: 6% p.a.

Explanation: In the Case Study the Rate of Interest for Loan is not mentioned.

and According to the Indian Partnership Act 1932, in the absence of information about  Interest on Loan, it will be given @ 6% p.a.

Case Study 2 (Not for Profit Organisation)

Case Study 3 (Coming Soon)

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Case Study Questions Chapter 3 Reconstitution Of A Partnership Firm – Admission Of A Partner

Students can read the Case Study questions given below for Reconstitution Of A Partnership Firm – Admission Of A Partner Class 12 Accountancy. All Reconstitution Of A Partnership Firm – Admission Of A Partner Class 12 Notes and questions with solutions have been prepared based on the latest syllabus and examination guidelines issued by CBSE, NCERT and KVS. You should read all Case Study Questions provided by us and the Class 12 Accountancy Case Study Questions provided for all chapters to get better marks in examinations.

Case Study Questions of Reconstitution Of A Partnership Firm – Admission Of A Partner Class 12

Question.Any changes in the relations of partnership will result in the reconstitution of the partnership firm. All the reserves and surplus will be distributed among the partners into existing profit-sharing ratio. when it is decided by the partners to make changes in the existing ratio, a separate account is opened, which is known as profit and loss adjustment or revolution account to make the revaluation of assets and reassessment of liabilities With a motive to calculate actual economic benefits.

Question.In case of change in profit-sharing ratio, the accumulated profits are distributed to the partners in (a) new ratio (b) old ratio (c) sacrificing ratio (d) equal ratio

Question.Revaluation Account is a: (A) Real Account (B) Nominal Account (C) Personal Account (D) None of the Above

Question.Any change in the relationship of existing partners which results in an end of the existing agreement and enforces making of new agreement is called: (a) Revaluation of partnership (b) Reconstitution of partnership (c) Realization of partnership (d) None of the above

Question.The Need of revaluation of assets and liabilities: (A) Assets and Liabilities should appear at revised values (B)Any profit and loss an account of change in values belong to old partners (C) All unrecorded assets and liabilities get recorded (D) None of Above

Question.Increase and decrease in the value of assets and liabilities are recorded through: (a) Partners’ Capital Account (b) Revaluation Account (c) Profit and Loss Appropriation (d) Balance Sheet

Read the following paragraph and answer the following Question from 1 to 3. 40 .Bhavya and Naman were partner in a firm carrying on a tiffin service in Hyderabad. Bhavya noticed that a lot of food is left at the end of the day. To avoid wastage, she suggested that it can be distributed to the needy. Naman wanted that It should be mixed with the food being served the next day. Naman then give a personal that if his share in the profit increased, he will not mind free distribution of leftover food. Bhavya happily agreed. So they decided to change their profit sharing ratio 1:2 with immediate effect. On that date revaluation of assets and reassessment of liability was carried out that resulted into a gain of Rs. 18,000. On that day at the Goodwill of the firm was valued at Rs. 1,20,000. Based on the above information you are required to answer the following questions.

Question. sacrificing ratio equal to: (A) Old ratio minus new ratio (B)New share minus old share (C) Old share plus new share (D) Old share

Question.at the time of change in profit sharing ratio gaining partner capital account is………….. ….and sacrificing partner is…………………… For the adjustment of goodwill (A) Credited debited (B) Debited credited (C) Increased or decreased (D) Decreased or increased

Question. sacrificing /gain of Bhavya and Naman will be (A)Bhavya sacrifice 1/6 , Naman gains 1/6 (B) Bhavya gains 1/6 , Naman sacrifice 1/6 (C) Only Bhavya gains 1/6 (D) Only Naman sacrifice 1/6

Question.Pass the journal entry for adjustment of Goodwill. (A) Naman’s Capital a/c Dr. 1,20,000 To Bhavya’s Capital a/c 1,20,000 (B) Bhavya’s Capital a/c Dr. 60,000 To Naman’s Capital a/c 60,000 (C) Naman’s Capital a/c Dr. 20,000 To Bhavya’s Capital a/c 20,00 0 (D) Naman’s Capital a/c Dr. 1,00,000 To Bhavya’s Capital a/c 1,00,000

Case Based Questions I. Read the given extract and answer the following questions: Sometimes the existing partners decide to change their profit sharing ratio. The change is necessitated due to the change in capital contribution or because of inactive participation in management. As a result of change in profit sharing ratio, one or more of the existing partners may acquire extra share in profits at the cost of one or more of other partners. In such a case, in order to maintain equity among the partners, it is necessary to make adjustments for goodwill, revaluation of assets and liabilities, reserves, accumulated profits and losses etc.

Question. State the ratio in which the partners share profits or losses on revaluation of assets and liabilities, whenthere is a change in profit sharing ratio amongst existing partners. (a) Old Ratio (b) Gaining Ratio (c) New Ratio (d) Sacrificing Ratio

Question. Which of the following will cause a change in profit-sharing ratio (a) Change of Capitals of the Firm (b) Change in Responsibilities of the partners (c) Mutual Agreement (d) Change in Profitability of a Firm

Question. X, Y and Z are in a partnership firm sharing profits in the ratio 4 : 3 : 1. The partners agreed to sharefuture profits in the ratio 5 : 4 : 3. Each partners’s gain or sacrifice due to change in ratio will be:

(a) X’s Sacrifice 2/24;Y’sSacrifice 1/24; Z’s Gain 3/24 (b) X’s Gain 2/24;Y’sGain 1/24; Z’s Sacrifice 3/24 (c) X’s Sacrifice 1/24;Y’sSacrifice 2/24; Z’s Gain 3/24 (d) X’s Sacrifice 2/24;Y’sGain 3/24; Z’s Sacrifice 1/24

Question. A, B and C are partners in a firm sharing profits in the ratio of 3 : 3 : 2. From 1st April 2021, they decided toshare profits equally. On that date following balances appeared in their books: Investment Fluctuation                 Reserve `10,000 Investment (at cost)                     `2,00,000 It was agreed that investment be valued at `1,70,000 Calculate the amount of Revaluation A/c to be debited. (a) `1,60,000 (b) `30,000 (c) `2,40,000 (d) `40,000

II. Read the given extract and answer the following questions: Goodwill means the ‘good-name’ or the reputation earned by a firm through the hardwork and honesty of its owners. If a firm renders good service to the customers, the customers who feel satisfied will come again and again and the firm will be able to earn more profits in future. Thus, goodwill is the value of the reputation of a firm which enables it to earn higher profits in comparison to the normal profits earned by other firms in the same trade.

Question. Total assets of a firm including fictitious assets of `5,000 are `85,000. The net liabilities of the firm are`30,000. The normal rate of return is 10% and the average profits of the firm are `8,000. Calculate thegoodwill as per capitalisation of super profits. (a) `20,000 (b) `30,000 (c) `25,000 (d) None of these

Question. The Goodwill of the firm is NOT affected by: (a) Location of the firm (b) Reputation of the firm (c) Better customer service (d) None of the above

Question. The profits earned by a business over the last 5 years are as follows: `12,000; `13,000; `14,000; `18,000 and`2,000 (loss). Based on 2 years’ purchase of the last 5 years’ profits, value of Goodwill will be: (a) `23,600 (b) `22,000 (c) `1,10,000 (d) `1,18,000

Question. Avya, Divya and Kavya were equal partners. They decided to change the profit sharing ratio to 4 : 3 : 2.For this purpose the goodwill of the firm was valued at `90,000. The journal entry for the treatment ofGoodwill on change in profit sharing ratio will be: 

III. Read the given information and answer the following questions:P, Q and R were equal partners in a firm. From 1st April, 2020 they decided to change their profit andsharing ratio to 4 : 3 : 2. It was also decided that P, who was getting remuneration of `1,000 per month willnot get any remuneration henceforth. They also decided to value the Goodwill of the firm at 150% of the average annual profits of the last threeyears, which were as follows:Year ended: 31st March, 2019 `17,000 31st March, 2020 `14,000 31st March, 2021 `28,800 On scrutiny of accounts the following errors were discovered: (i) On 1st October, 2019, 2 Motorbikes costing `5,000 each were purchased and were wrongly debited to Travelling Expenses. Depreciation on Motorbikes be charged @ 20% p.a. on written down value basis. (ii) On 1st January, 2019 a fire broke out which resulted into a loss of goods of `20,000. A claim of `75% was received from the insurance company. (iii) The closing stock for the year ending on 31st March 2020 was over-valued by `3,000.

Question.Calculate the adjusted profits of the firm. (a) `22,000, `20,000, `30,000 (b) `17,000, `14,000, `28,800 (c) `22,000, `24,000, `27,000 (d) None of the above

Question.What will be the value of firm’s goodwill? (a) `20,000 (b) `22,000 (c) `24,000 (d) `36,000

Question. Calculate the Depreciation on motorbikes for the years 2020 and 2021. (a) `2,000 and `2,000 (b) `1,000 and `1,800 (c) `2,000 and `3,600 (d) None of the above

Question.Give the Journal entry for Goodwill. (a) Dr. A’s Capital A/c `4,000; Cr. C’s Capital A/c `4,000 (b) Dr. B’s Capital A/c `2,000; Cr. A’s Capital A/c `2,000 (c) Dr. A’s Capital A/c `4,000; Cr. B’s Capital A/c `4,000 (d) Dr. B’s Capital A/c `4,000; Cr. C’s Capital A/c `4,000

Question.Read the given information and answer the following questions: Raka, Seema and Mahesh were partners sharing profits and losses in the ratio of 5 : 3 : 2. With effect from1st April, 2020, they mutually agreed to share profits and losses in the ratio of 2 : 2 : 1. On that date, therewas a workmen’s compensation fund of `90,000 in the books of the firm. It was agreed that: (i) Goodwill of the firm be valued at `70,000. (ii) Claim for workmen’s compensation amounted to `40,000. (iii) Profit on revaluation of assets and re-assessment of liabilities amounted to `40,000.  

Question.Write the amount of surplus of Workmen’s Compensation Reserve transfered to Partners’ Capital Accounts. (a) `25,000; `15,000; `10,000 (b) `20,000; `20,000; `10,000 (c) `5,000; `5,000 (d) None of the above

Question.Calculate the amounts of profit on Revaluation to be distributed among old partners. (a) `16000; `16000; `8,000 (b) `8,000; `8,000; `24,000 (c) `4,000; `4,000; `32,000 (d) `20,000; `12,000; `8,000

Question.What is the Sacrificing/Gaining Ratio of Partners? (a) 1/20(Rak(a); -/20(Seem(a) (b)1/10/Rak(a);1/10(Seem(a) (c) -2/5(Rak(a));2/5 (Seem(a) (d) None of the above

IV. Read the given information and answer the following questions: P, Q and R are partners sharing profits and losses in the ratio of 3 : 3 : 2. Their balance sheet as at 31st March 2021 was as follows: Partners decided that with effect from 1st April 2021 they would share profits and losses in the ratio of 4 : 3 : 2. It was agreed that: (i) Stock be valued at `1,10,000. (ii) Machinery is to be depreciated by 10%. (iii) A provision for doubtful debts is to be made on debtors @ 5%. (iv) Building to be appreciated by 20%. (v) A liability for `2,500 included in sundry creditors is not likely to arise. Partners agreed that the revised values are to be recorded in the books. They do not, however want todistribute the General Reserve.  !VQUE

Question.Find the missing values of A, B and C. (a) `10537.5; `10537.5, `7025 (b) `15900; `10,000; `2,200 (c) `9367; `9369; `9366 (d) `10,000; `15,900; `2,200

Question.Find the missing values of F, G and H. (a) `6,400; `4,800; `3,200 (b) `5,400; `5,400; `3,600 (c) `4,800; `4,800, `4,800 (d) `5,760, `4,320; `4,320

Question.Find the missing values of D and E. (a) `21,000; `21,500 (b) `16,000; `26,500 (c) `2,000; `500 (d) `40,000; `2,500

Question. Find the missing values of I, J and K. (a) `2,500; `1,500; `1,000 (b) `36,000; `21,600; `14,400 (c) `36,000; `18,000; `18,000 (d) `2,500; `1,000; `1,500

Read the following information carefully and answer the questions that follow:X and Y are partners in 3:2. Their capital balances as on 1st April 2020 amounting to ₹2,00,000 each. On 1st February, 2021, X contributed an additional capital of ₹1,00,000. Following are the terms of deed: (a) Interest on capital @ 6% per annum (b) Interest on drawings @ 8% per annum (c) Salary to X ₹1500 per month (d) Commission to Y @10% on net profit after charging interest on capital, salary and his commission. Drawings of the partners were ₹20,000 and ₹30,000 respectively during the year. Net profit earned bythe firm was ₹2,08,000.

Question. What is the amount of interest on drawings of X and Y: (a) ₹ 1200 and ₹ 1800 respectively (b) ₹ 800 and ₹ 1200 respectively (c) ₹ 1200 and ₹ 800 respectively (d) ₹ 1600 ₹ 2400 respectively

Question. What is X’s share in the net divisible profit? (a) ₹ 124400 (b) ₹ 83600 (c) ₹ 91200 (d) ₹ 60800

Question. What is the amount of commission payable to Y? (a) ₹ 15000 (b) ₹ 16500 (c) ₹ 20800 (d) None of these

Question. What is the amount of Interest on capitals of X and Y: (a) ₹12,000 each (b) ₹12,000 to X and ₹ ₹13,000 to Y (c) ₹13,000 to X and ₹12,000 to Y (d) None of the above.

Question. What will be the closing capital of X after all adjustments (a) ₹ 422200 (b) ₹ 401400 (c) ₹ 300000 (d) ₹ 423000

Read the following information carefully and answer the questions that follow: A, B and C were partners sharing profits in the ratio of 1:2:3. Their fixed capitals on 1st April, 2020 were: A ₹3,00,000; B ₹4,50,000 and C ₹10,00,000. Their partnership deed provided the following: i. A provides his personal office to the firm for business use charging yearly rent of ₹1,50,000. ii. Interest on capitals @8% p.a. and interest on drawings @ 10% p.a. iii. A was allowed a salary @ 10,000 per month. iv. B was allowed a commission of 10% of net profit as shown by Profit and Loss account, after charging such commission. v. C was guaranteed a profit of ₹3,00,000 after making all adjustments. The net profit for the year ended 31st march, 2021 was ₹10,30,000 before making above adjustments. You are informed that A has withdrawn ₹5,000 in the beginning of each month, B has withdrawn ₹5,000 at the end of each month and C has withdrawn ₹ 24,000 in the beginning of each quarter. Choose the correct option based on the above information:

Question. Net profit for the year is: (a) ₹10,30,000 (b) ₹11,80,000 (c) ₹7,30,000 (d) ₹8,80,000

Question. What will be the total interest on drawings? (a) ₹24,000 (b) ₹12,000 (c) ₹36,000 (d) 48,000.

Question. What will be the divisible profit? (a) ₹5,56,000 (b) ₹5,50,000 (c) ₹5,52,000 (d) ₹5,53,000.

Question.What will be the commission of B? (a) ₹8,00,000 (b) ₹96,000 (c) ₹80,000 (d) ₹72,000.

Question.A’s rent will be shown in: (a) Profit and loss account (b) Profit and Loss Appropriation account (c) A’s Capital account (d) None of the above.

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Class 12th Accountancy - Accounting for Partnership - Basic Concepts Case Study Questions and Answers 2022 - 2023

By QB365 on 08 Sep, 2022

QB365 provides a detailed and simple solution for every Possible Case Study Questions in Class 12 Accountancy Subject - Accounting for Partnership - Basic Concepts, CBSE. It will help Students to get more practice questions, Students can Practice these question papers in addition to score best marks.

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Accounting for partnership - basic concepts case study questions with answer key.

12th Standard CBSE

Final Semester - June 2015

Accountancy

Case Study 

Read the following hypothetical text and answer the given questions: Amit and Mahesh were partners in a fast-food corner sharing profits and losses in ratio 3:2. They sold fast food items across the counter and did home delivery too. Their initial fixed capital contribution was Rs.1,20,000 and Rs.80,000 respectively. At the end of first year their profit was Rs. 1,20,000 before allowing the remuneration of Rs..3,000 per quarter to Amit and Rs..2,000 per half year to Mahesh. Such a promising performance for first year was encouraging, therefore, they decided to expand the area of operations. For this purpose, they needed a delivery van, a few Scotties and an additional person to support. Six months into the accounting year they decided to admit Sundaram as a new partner and offered him 20% as a share of profits along with monthly remuneration of Rs. 2,500. Sundaram was asked to introduce Rs.1,30,000 for capital and Rs..70,000 for premium for goodwill. Besides this Sundaram was required to provide Rs.1,00,000 as loan for two years. Sundaram readily accepted the offer. The terms of the offer were duly executed and he was admitted as a partner 1.Remuneration will be transferred to _______________ of Amit and Mahesh at the end of the accounting period.

2.Upon the admission of Sundaram the sacrifice for providing his share of profits would be done

3.Sundaram will be entitled to a remuneration of _____________at the end of the year. 4.While taking up the accounting procedure for this reconstitution the accountant of the firm Mr. Suraj Marwaha faced a difficulty. Solve it be answering the following: For the amount of loan that Sundaram has agreed to provide, he is entitled to interest thereon at the rate of ____________.

*****************************************

Accounting for partnership - basic concepts case study questions with answer key answer keys.

1. (c) Current Account 2 2. (d) By Amit and Mahesh in the ratio of 3: 2 3 Rs.15,000 4. 6% p.a.

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Accounting for Partnership: Basic Concepts Class 12 Notes: CBSE 12th Accountancy Chapter 1, Download PDF

Cbse class 12 accounting for partnership basic concepts notes: here, students can find revision notes of cbse class 12 accountancy chapter 1 accounting for partnership: basic concepts along with a pdf download link for the same..

Accounting for Partnership Basic Concepts Class 1 2  Notes: In this article, students can find accounting for Partnership Basic Concepts class 12 notes along with a PDF downloadable link. This CBSE accounting for partnership basic concepts class 12 short notes will assist students in preparing for their CBSE Board Examinations. These handwritten notes are specifically for students of the current academic session 2023-2024, who are going to sit for their Board Exams in 2024.

Revision Notes are the compilation of all the necessary and relevant information from the chapter required by a student to prepare for the examination. This accounting for partnership basic concepts class 12 handwritten notes consist of all the important information along with journal entries and formulas required by students from the exam’s point of view.

Notes are quite handy to refer to whenever required. At the same time, students can also utilize it to do quick revisions during examinations. Class 12 Accountancy Chapter 1 notes will clear your doubts related to the chapter and solutions.

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  Accounting for Partnership Basic Concepts C lass 1 2   R evision N otes

Find here complete   Accounting for Partnership Basic Concepts Class 12 Notes based on the CBSE Class 12 Accountancy Part 1 Chapter 1, Accounting for Partnership Basic Concepts:

  What is Partnership?

A partnership can be defined as “ Relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all”.

• Two or more persons are required to form a partnership
• It is created by an agreement
• The agreement should be for carrying on some legal business
• sharing of profits and losses
• relationship of mutual agency among the partners
• Each partner is equally liable for all the losses, profits, and decisions

  Which law governs Partnerships in India?

Indian Partnership Act of 1932  is applied in India to look at the peculiarities of partnership firms and governing the methods of partnership in the country .

What is a Partnership Deed?

The document that consists of terms of agreement for a partnership is called a partnership deed. It does not necessarily have to be written, but a written one is preferred. A partnership can come into existence only after all the partners have signed the deed.

• Names and Addresses of the firm and its main business
• Names and Addresses of all partners
• Amount of capital to be contributed by each partner
• The accounting period of the firm
• The date of commencement of partnership
• Rules regarding the operation of Bank Accounts
• Profit and loss sharing ratio
• Rate of interest on capital, loan, drawings, etc
• Mode of auditor’s appointment, if any
• Salaries, commission, etc., if payable to any partner
• The rights, duties, and liabilities of each partner
• Treatment of loss arising out of insolvency of one or more partners
• Settlement of accounts on the dissolution of the firm
• Method of settlement of disputes among the partners
• Rules to be followed in case of admission, retirement, or death of a partner
• Any other matter relating to the conduct of business. Normally, the partnership deed covers all matters affecting the relationship of partners amongst themselves. However, if there is no express agreement on certain matters, the provisions of the Indian Partnership Act, of 1932 shall apply
• If the partnership deed is silent on the profit-sharing ratio, all the partners will receive equal profits irrespective of their capital distribution in the firm
• No interest on capital is payable if the partnership deed is silent on the issue
• No interest is to be charged on the drawings made by the partners if there is no mention in the Deed
• If any partner has advanced loan to the firm for the purpose of business, he/she shall be entitled to get an interest on the loan amount at the rate of 6 percent per annum.
• No partner is entitled to get a salary or other remuneration for taking part in the conduct of the business of the firm unless there is a provision for the same in the Partnership Deed.
• If a partner derives any profit for him/herself from any transaction of the firm or from the use of the property or business connection of the firm or the firm name, he/she shall account for the profit and pay it to the firm.
• If a partner carries on any business of the same nature as 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.
• Maintenance of Partners’ Capital Accounts- The Capital accounts of partners are maintained by two methods. Fixed Capital Method and Fluctuating Capital Method.
• Distribution of Profit and Loss among the partners
• Adjustments for Wrong Appropriation of Profits in the Past
• Reconstitution of the Partnership Firm
• Dissolution of Partnership Firm

  What is Fixed Capital method?

In the fixed capital method, the capital of the partners remains the same unless additional capital is introduced or withdrawn as per the partnership deed. The capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners. They always appear on the liabilities side of the balance sheet.

What is Partner’s Current Account?

The account that maintains a record of all items like a share of profit or loss, interest on capital, drawings, interest on drawings, etc. is called the Partner’s Current Account. It shows the debit as well as the credit balance. Partners’ current account balance shall be shown on the liabilities side if they have a credit balance and on the assets side if they have a debit balance.

What is Fluctuating Capital method?

In the fluctuating capital method, only one account i.e. capital account is maintained.  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. This makes the balance in the capital account fluctuate from time to time.

Differences between Fixed and Fluctuating Capital method

What is Profit and Loss Appropriation Account?

Profit and Loss Appropriation Account is an extension of the Profit and Loss Account of the firm. It shows how the profits are appropriated or distributed among the partners. All adjustments in respect of the partner’s salary, partner’s commission, interest on capital, interest on drawings, etc. are made through this account. It starts with the net profit/net loss as per the Profit and Loss Account. 

Guarantee of profit to a partner

Sometimes a partner is admitted into the firm with a guarantee of a certain minimum amount by way of his share of profits of the firm. Such assurance may be given by all the old partners in a certain ratio or by any of the old partners, individually to the new partner. The minimum guaranteed amount shall be paid to such a new partner when his share of profit as per the profit sharing ratio is less than the guaranteed amount.

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• How to Download CBSE Class 12 Accounting for Partnership Basic Concepts Notes PDF? + Students can easily download the CBSE Class 12 Accounting for Partnership Basic Concepts Notes PDF by clicking on the PDF download link attached to this article. These are handwritten revision notes specially prepared for students of CBSE Class 12 who are going to appear for Board examinations in 2024.
• What is CBSE Class 12 Accountancy Chapter 1 all about? + CBSE Class 12 Accountancy Chapter 1 is about basic concepts of partnership. Some important topics from the chapter are: What is Partnership, what is a partnership deed, contents present in the partnership deeds, adjustments made in the entry, distribution of profits and losses amongst partners, and much more. Students can refer to the revision notes presented in the article for clearing all your doubts about the subject.
• What is Partnership? + According to the Indian Parliament Act of 1932, the partnership can be defined as "Relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all”. For easy understanding, partnership is collaboration of two or more people to conduct a legal business with the motive of earning profits.
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NCERT Solutions for Class 12 Accountancy Chapter 2 Accounting for Partnership : Basic Concepts

September 29, 2019 by Sastry CBSE

TEST YOUR UNDERSTANDING – I

1. Mohan and Shyam are partners in a firm. State whether the claim is valid if the partnership agreement is silent in the following matters: (i) Mohan is an active partner. He wants a salary of Rs. 10,000 per year;

Answer Invalid I In the absence of partnership agreement, no interest on capital, interest on drawings, salary, commission is to be allowed to partners.

(ii) Shyam had advanced a loan to the firm. He claims interest @ 10% per annum; Answer Invalid Interest on partners loan to be allowed @ 6% pa,

(iii) Mohan has contributed Rs. 20,000 and Shyam Rs. 50,000 as capital. Mohan wants equal share in profits. Answer Valid Profit and losses are to be shared equally.

(iv) Shyam wants interest on capital to be credited @ 6% per annum. Answer Invalid No interest on capital is to be allowed to partners. 2. State whether the following statements are true or false: (i) Valid partnership can be formulated even without a written agreement between the partners; Answer True

(ii) Each partner carrying on the business is the principal as well as the agent for all the other partners; Answer True

(iii) Maximum number of partners in a banking firm can be 20; Answer True

(iv) Methods of settlement of dispute among the partners can’t be part of the partnership deed; Answer False

(v) If the deed is silent, interest at the rate of 6% p.a. would be charged on the drawings made by the partner; Answer False

(vi) Interest on partner’s loan is to be given @ 12% p.a. if the deed is silent about the rate. Answer False

DO IT YOURSELF

TEST YOUR UNDERSTANDING – II

1 . Raju and Jai commenced business in partnership on April 1, 2006. No partnership agreement was made whether oral or written. They contributed Rs. 4,00,000 and Rs. 1,00,000 respectively as capitals. In addtion, Raju advanced Rs. 2,00,000 as loan to the firm on October 1, 2006. Raju met with an accident on July 1, 2006 and could not attend the business up to september 30, 2006. The profit for the year ended March 31, 2007 amounted to Rs, 50,600. Disputes have arisen between them on sharing the profits of the firm. Raju Claims: (i) He should be given interest at 10% p.a. on capital and so also on loan. (ii) Profit should he distributed in the proportion of capitals. Jai Claims: (i) Net profit should be shared equally. (ii) He should be allowed remuneration of Rs, 1,000 p.a. during the period of Raju’s illness. (iii) Interest on capital and loan should be given @ 6% p.a.

State the correct position on each issue as per the provisions of the partnership Act. 1932.

Answer Raju’s Claims (i) He cannot claim interest on capital and he is entitled only for 6A interest on loan. (ii) In absence ot any agreement profits are distributed equally Jai’s Claims (i) It will be accepted. (ii) He is not entitled for any remuneration. (iii) No interest on capital is allowed whereas 6% interest for loan should be given.

TEST YOUR UNDERSTANDING -III

1 .Rani and Suman are in partnership with capitals of Rs, 80,000 and Rs. 60,000, respectively. During the year 2006-2007, Rani withdrew Rs. 10,000 from her capital and Suman Rs. 15,000. Profits before charging interest on capital was Rs. 50,000. Ravi and Suman shared profits in the ratio of 3:2. Calculate the amounts of interest on their capitals @ 12% p.a. for the year ended March 31, 2007.

1 . Govind is a partner in a firm. He withdrew the following amounts during the year 2006-07: DATE                                (Rs.) April 30, 2006                6,000 June 30, 2006                4,000 Sept. 30, 2006                8,000 Dec. 31, 2006                 3,000 Jan. 31, 2007                 5,000 he interest on drawings is to be charged @ 6% p.a. The books are closed on March 31, every year.

3 . Leela, Meera and Neha are partners and have omitted interest on capital @9% p.a. for three years ended March 31, 2007. Their fixed capitals on which interest was to be allowed throughout were: Leela Rs. 80,000, Meera Rs. 60,000 and Neha Rs. 1,00,000. Their profit sharing ratio during the last three years were:

SHORT ANSWER TYPE QUESTIONS

Question 1. Define Partnership Deed. Answer A partnership deed is a agreement among the partners which contains ai! the terms of the Partnership. It generally contains the details about all the aspects affecting the relationship between the partners including the objective of business, contribution of capita! by each partner, -atio in which the profits and the losses will be shared by the partners and entitlement of partners to interest on capital, interest on loan etc.

Question 2. Why it is considered desirable to make the partnership agreement in writing? Answer As .per Partnership Act 1932 it is not necessary that a partnership agreement must be in writing but still it is always suggested that it should be in written form Because today there are very good relationship among the partners but n future if there may be any dispute regarding any issue, a written partnership agreement will help in avoiding disputes and misunderstandings among the partners.

Question 3 . List the items which may be debited or credited in capital accounts of the partners when (i) Capitals are fixed (ii) Capitals are fluctuating

Question 4 . Why is Profit and Loss Adjustment Account prepared? Explain. Answer Profit and loss adjustment account is prepared to record those transaction or omissions and errors which were left while preparing the final accounts and they are found after the final accounts have been prepared and the profits distributed among the partners. The omission may be in respect of interest on capital, interest on drawings, interest on partners’ loan, partner’s salary, partner’s commission or outstanding expenses. There may also be some changes in the provisions of partnership deed or system of accountings having impact with retrospective effect. All these acts of omission and commission need adjustments for correction of their impact. These omission errors and corrections can be recorded in partners’ capital account directly but still it seems convenient to prepare the profit and loss adjustment account. Question 5. Give two circumstances under which the fixed capitals of partners may change. Answer Under the fixed capital method the capital of partners may change in the following two circumstances (i) First, when fresh capital is introduced by the partner with the consent of other partners. (ii) Second, when a part of capital is withdrawn by the partner with the consent of other partners.

Question 6 . If a fixed amount is withdrawn on the first day of every quarter, for what period the interest on total amount withdrawn will be calculated? Answer When fixed amount of money is withdrawn quarterly, it can be withdrawn either at the beginning or at the end of each quarter, if the amount is withdrawn at the end of each quarter, the interest is calculated on the total money withdrawn during the period of seven and half months .

Question 7 . In the absence of partnership deed, specify the rules relating to the following (i) Sharing of profits and losses (ii) Interest on partner’s capital (iii) Interest on partner’s drawings (iv) Interest on partner’s loan (v) Salary to a partner Answer :(i)Sharing of Profit and Losses In the absence of partnership deed profit sharing ratio among the pad maw will be equal. (ii) Interest on Partner’s Capital In the absence of paonemnio oeeu interest on partners capital will not be given. (iii) Interest on Partner’s Drawings In the absence of partnership deed no interest will be charged on partners drawings . (iv) Interest on Partners Loan In the absence of partnership deed if partner gives any loan to the firm he/she will be entitled to get fixed percentage of interest @6% of annum. (v) Salary of Partner In the absence of the patnership deed a partner will be entitled for getting any salary for his work even if the other are non working.

Long Answer Type Questions

Question 1. What is partnership? What are its chief characteristics? Explain. Answer According to the Section 4 of the Partnership Act, 1932 Partnership is an agreement between two or more persons who have agreed to share profits or losses of a business that will be carried by all or any one of them acting for all. Person who joined their hands to set up the business are called ‘partners individually and ‘firm’ collectively and the name under which they carry out their business is termed as ‘firm name’. The following are the important characteristics of partnership (i) Two or More Persons In order to form partnership, there should be at least two person coming together for a common goal In other words, the minimum number of partners in a firm can be two. There is however, a limit on their maximum number, if a firm is engaged in the banking business, it can have a maximum of ten partners while in case of any other business, the maximum number of partners can be twenty. (ii) Partnership Deed A partnership deed is an agreement among the partners which contains all the terms of the partnership. It generally contains the details about all the aspects affecting the relationship between the partners including the objective of business, contribution of capital by each partner, ratio in which the profits and the losses will be shared by the partners and entitlement of partners to interest on capital, interest on loan, etc. (iii) Business One of the important characteristics of a partnership is that it is formed to carry out a legal business. Partnership in case of illegal business is not valid. (iv) Sharing of Profit In case of a partnership the partners are suppose to share profit or loss on an agreed ratio or as per the provisions of the Partnership Act, 1932, as per which they will share profit equally. (v) Liability In the case of a partnership liability of partners are unlimited. If there is any obligation against the third party the partner will have to pay it out of his personal property.

Question 2 . Discuss the main provisions of the Indian Partnership Act, 1932 that are relevant to partnership accounts if there is no partnership deed. Answer It is always suggested that there must be a partnership deed among the partners before getting into any partnership venture. But sometimes a partnership is started without signing any such document. In this case the rules of partnership will be applicable as per the provisions of the Indian Partnership Act, 1932. The following are the provisions that are relevant to the partnership accounts in absence of partnership deed. (i) Profit Sharing Ratio When a partnership deed is not made or even if it is made and silent on sharing of profit or losses among the partners of a firm, then according to the Partnership Act 1932, profits and losses are to be shared equally among all the partner of the firm. (ii) Interest on Capital When there is absence of partnership deed or the partnership deed is silent on the issue related to interest on partner’s capital, then according to the Partnership Act 1932, no interest on partners’ capital will be provided. However, if they mutually agree on this issue than they are free to give interest on capital out of the profit of the firm. (iii)Interest on Drawings   there is no partnership Peed the issue ‘elated h die interest on drawing will be handled according to the provisions Partnership Act. 1932 According sc which no Interest on drawing will be charge loan the orders on withdraw in the form of drawings. (iv) Interest on Partner’s Loan When there is no partnership deed among the partners or the partnership deed is silent on interest on partner’s loan then according to the Partnership Act, 1932. the partners are entitled for 6% pa interest on the loan forwarded by them to the firm (v) Salary to Partner When partnership deed is not there or it is silent on the issue related to salary to a partner, then as per the rules of the partnership Act. 1932. no partner will be entitled to any salary.

Question 3 . Explain why it is considered better to make a partnership agreement in writing. Answer As per Partnership Act. 1932, it is not necessary that a partnership agreement must be in writing but still it is always suggested that it should be in written form. Because today there are very good relationship among the partners but in future there may be any dispute regarding any Issue a written partnership agreement will help in avoiding dusputes and misunderstandings among the partners. In this way a written partnership deed is more desirable than the ora agreements. A written partnership agreement ensures the smooth functioning of the business of the partnership firm It aiso helps in settling the disputes among the partners. Moreover a duly signed and registered partnership deed can be used as evidence in the court of law. Therefore, it s desirable to form partnership deed in writing because of the moots associated with written documents over its oral counterparts.

Question 4 . Illustrate how interest on drawings will be calculated under various situations. Answer When a partner withdraws any amount, either in cash or in any other form, from the firm for his/her personal use, then it is termed as drawings. The interest charged by the firm on the amount of drawings is termed as interest on drawings. The method of calculating interest on drawings depends on the information available for time and frequency of the drawings made by the partner. The following different situations of drawings made illustrate the calculation of interest charged on drawings. Situation I When ail the information regarding amount, date and rate of interest on drawings is given When a partner withdrew Rs 10,000 on July 01 and interest on drawings is charged at 12% pa and the firm closed its books on December 31 every year then interest on drawings amount to Rs 600.

Numerical Type Problems

1. Triphati and Chauhan are partners in a firm sharing profits and losses in the ratio of 3:2. Their capitals were Rs.60,000 and Rs.40,000 as on January 01, 2005. During the year they earned a profit of Rs. 30,000. According to the partnership deed both the partners are entitled to Rs. 1,000 per month as Salary and 5% interest on their capital. They are also to be charged an interest of 5% on their drawings, irrespective of the period, which is Rs. 12,000 for Tripathi, Rs. 8,000 for Chauhan. Prepare Partner’s Accounts when, capitals are fixed.

Answer Decisions according to partnership Act,1932, if there is no agreement . Decission on Harshads Claim (i) Interest on partners capital will not be allowed to partners (ii) Profits shall be distributed equally among all the partners Decission on Dhimans Claim (i) Profits should be distributed equally among all the partners, fii) No salary shall be allowed to any partner if there is no agreement regarding remuneration. (iii) Interest shall be allowed on partner’s Loan @ 6% pa whereas no interest is allowed on capital.

14.Sunflower and Pink Rose started partnership business on April 01, 2006 with capitals of Rs. 2,50,000 and Rs.1,50,000, respectively. On October 01, 2006, they decided that their capitals should be Rs. 2,00,000 each. The necessary adjustments in the capitals are made by introducing or withdrawing cash. Interest on capital is to be allowed @ 10% p.a. Calculate interest on capital as on March 31, 2007.

15. On March 31, 2006 after the close of accounts, the capitals of Mountain, Hill and Rock stood in the books of the firm at Rs. 4,00,000,Rs.3,00,000 and Rs. 2,00,000, respectively. Subsequently, it was discovered that the interest on capital @ 10% p.a. had been omitted. The profit for the year amounted to Rs. 1,50,000 and the partner’s drawings had been Mountain: Rs. 20,000, Hill Rs. 15,000 and Rock Rs. 10,000. Calculate interest on capital.

17.Rishi is a partner in a firm. He withdrew the following amounts during the year ended March 31, 2007. May 01, 2006 Rs. 12,000 July 31, 2006 Rs. 6,000 September 30, 2006 Rs. 9,000 November 30, 2006 Rs. 12,000 January 01, 2007 Rs. 8,000 March 31, 2007 Rs. 7,000 Interest on drawings is charged @ 9% p.a. Calculate interest on drawings

18. The capital accounts of Moli and Golu showed balances of Rs.40,000 and Rs. 20,000 as on April 01, 2006. They shared profits in the ratio of 3:2. They allowed interest on capital @ 10% p.a. and interest on drawings, @ 12 p.a. Golu advanced a loan of Rs. 10,000 to the firm on August 01, 2006. During the year, Moli withdrew Rs. 1,000 per month at the beginning of every month whereas Golu withdrew Rs. 1,000 per month at the end of every month. Profit for the year, before the above mentioned adjustments was Rs.20,950. Calculate interest on drawings show distribution of profits and prepare partner’s capital accounts.

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Case Study Accountancy Class 12- Partnership

11/08/2021 One Mark Solution Accountancy 0

Read the following hypothetical Case Study Accountancy text and answer the given questions:

Amit and Mahesh were partners in a fast-food corner sharing profits and losses in ratio 3:2. They sold fast food items across the counter and did home delivery too. Their initial fixed capital contribution was ₹ 1,20,000 and ₹ 80,000 respectively.

At the end of first year their profit was ₹ 1,20,000 before allowing the remuneration of ₹.3,000 per quarter to Amit and ₹  2,000 per half year to Mahesh. Such a promising performance for first year was encouraging, therefore, they decided to expand the area of operations.

For this purpose, they needed a delivery van, a few Scotties and an additional person to support. Six months into the accounting year they decided to admit Sundaram as a new partner and offered him 20% as a share of profits along with monthly remuneration of ₹ 2,500. Sundaram was asked to introduce ₹1,30,000 for capital and ₹ 70,000 for premium for goodwill. Besides this Sundaram was required to provide Rs.1,00,000 as loan for two years. Sundaram readily accepted the offer. The terms of the offer were duly executed and he was admitted as a partner.

Answer: (C) CURRENT ACCOUNT

Explanation:  Given in the Case Study  “Their initial fixed capital contribution was ₹1,20,000 and ₹80,000 respectively.”

When Fixed Capital is Given Remuneration will be transferred to Partners Current Account.

Question 2:

Upon the admission of Sundaram the sacrifice for providing his share of profits would be done:

(a) by Amit only.

(b) by Mahesh only.

(c) by Amit and Mahesh equally.

(d) by Amit and Mahesh in the ratio of 3:2.

Answer: (D) by Amit and Mahesh in the ratio of 3:2.

Explanation:  In the Case Study only new Partners Profit Share is given and Sacrifice made by the old partners is not given.

In this case, it is assumed that the new partner has acquired his share from old partners in their old profit sharing ratio.

Question 3:

Sundaram will be entitled to a remuneration of _____________at the end of the year.

Answer: ₹ 15000

Explanation: Given in the Case Study “…………. Sundaram as a new partner and offered him 20% as a share of profits along with monthly remuneration of ₹ 2,500.”

₹ 2500 X 12 = ₹ 15,000

Question 4:

While taking up the accounting procedure for this reconstitution the accountant of the firm Mr. Suraj Marwaha faced a difficulty. Solve it be answering the following:

For the amount of loan that Sundaram has agreed to provide, he is entitled to interest thereon at the rate of ____________.

Answer: 6% p.a.

Explanation: In the Case Study the Rate of Interest for Loan is not mentioned.

and According to the Indian Partnership Act 1932, in the absence of information about  Interest on Loan, it will be given @ 6% p.a.

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Accounting for partnership firms fundamentals class 12 Notes Accountancy

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Class 12 Accountancy notes Chapter 1 Accounting for partnership firms fundamentals

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CBSE Class 12 Accountancy Revision Notes Chapter 1 Accounting for partnership firms fundamentals

According to Section -4 of the Indian Partnership Act, 1932:

“Partnership is the relations between two or more persons who have agreed to share the profits of a business carried on by all or any one of them acting for all”

Features of Partnership

1. Two or more persons: There must be at least two persons to form a valid partnership. The maximum number of partners cannot exceed the number of partners prescribed by Companies Act, 2013 which is 50 in any business whether banking or non- banking.

2. Agreement: Partnership comes into existence by an agreement (either written or oral among the partners. The written agreement among the partners is called Partnership Deed.

3. Existence of business and profit motive: A partnership can be formed for the purpose of carrying on legal business with the intention of earning profits. A joint ownership of some property by itself cannot be called a partnership.

4. Sharing of Profits: An agreement between the partners must be aimed at sharing the profits. If some persons join hands to run some charitable activity, it will not be called partnership. Futher, if a partner is deprived of his right to share the profits of the business, he cannot be called as partner.

5. Buiness carried on by all or any of them acting for all: It means that each partner can participate in the conduct of business and each partner is bound by the acts of other partners in respect to the business of the firm.

6. Relationship of Principal and Agent: Each partner is an agent ad well as a partner of the firm. An agent, because he can bind the other partners by his acts and principal, because he himself can be bound by the acts of the other partners.

Partnership Deed

Since partnership is the outcome of an agreement, it is essential that there must be some terms and conditions agreed upon by all the partners. Such terms and conditions mat be either written or oral. The law does not make it compulsory to have a written agreement. However, in order to avoid all misunderstandings and disputes, it is always the best course to have a written agreement duly signed and registered under the Act.

The partnership deed is a written agreement among the partners which contains the terms of agreement. It is also called ‘ Articles of Partnership’. A partnership deed should contain the following points:

• Name and address of the firm as well as partners.
• Name and addresses of the partners.
• Nature and place of the business.
• Duration, if any of partnership.
• Capital contribution by each partner.
• Interest on capital.
• Drawings and interest on drawings.
• Profit sharing ratio.
• Interest on loan.
• Partner’s Salary/commission etc.
• Method for valuation of goodwill and assets.
• Accounting period of the firm and duration of partnership
• Rights and duties of partners how disputes will be settled.
• Decisions taken if some partner becomes insolvent.
• Opening of Bank Account – whereas it will be in the name of firm or partners.
• Rules to be followed in case of admission & Settlement of accounts or retirement or death of partner.
• Revaluation of assets & liabilities, if any to be done.
• Method of recording of firm’s accounts
• Date of commencement of partnership

Benefits of Partnership Deed

(1) It regulates the rights, duties and liabilites of each partner.

(2) It helps to avoid any misunderstanding amongst the partners because all the terms and conditins of partnership have been laid down beforehand in the deed.

(3) Any dispute amongst the partners may be settled easily as the partnership deed may be readiy referred to.

Hence, it is always best course to have a written partnership deed duly signed by all the partners and registered under the Act.

Rules applicable in the absence of partnership deed

Distribution of Profits among Partners

Transactiions of the partnerhsip firm are recorded according to the principles of Double-entry book keeping system, and as in the case of a sole proprietorship concern a partnership firm will also prepare Trading account, Profit & Loss account and Balance Sheet at the end of every year. The only difference between accounting of a sole trader and partnership firm is that the profits of the partnership firm ar divided amongst the partners.

A Profit and Loss Appropriation Account is prepared to show the distribution of profits among partners as per the provision of Partnership Deed (or as per the provision of Indian Partnership Act, 1932 in the absence of Partnership Deed). It is an extension of profit and Loss Account. It is nominal account. It records entries for interest on capital, Interest on Drawings, Salary to the partner, and division of profits among the partners.

The Journal Entries regarding Profit and Loss Appropriation Account are as follows:

1.For transfer of balance of Profit and Loss Account

Profit and Loss A/cDr.

To Profit and Loss Appropriation A/c

2.For Interest on Capital

For allowing Interest on capital

1. Interest on Capital A/c

To Partner’s Capital/Current A/cs

(Being interest on capital allowed @ % p.a.)

2. For transferring Interest on Capital to p&L appropriation A/c.

Profit and Loss Appropriation A/cDr.

To Interest on Capital A/c.

(Being interest on capital transferred to p&L Appropriation A/c)

3. For Salary or Commission payable to a partner

i. For allowing Salary or Commission to a partner:

Partners Salary/Commission A/cDr.

(Being salary/commission payable to a partner)

ii. For transferring Partner’s Salary/Commission A/c to Profit and Loss

Appropriation A/s:

To Partner’s Salary/Commission A/c

4. For transfer of Reserves:

To Reserve A/c

(Being reserve created)

5. For Interest on Drawings:

1. For charging interest on a partner’s drawings:

Partner’s Capital/Current A/c.Dr.

To Interest on Drawings A/c

(Being interest on drawings charged @ % p.a.)

2. For transferring interest on drawings to Profit and Loss Appropriation A/c

Interest on Drawings A/cDr.

(Being interest on drawings transferred to P&L appropriation A/c)

6. For transfer to Profit (i.e. Credit Balance of Profit and Loss Appropriation Account

To Partners Capital/Current A/cs

(Being profits distributed among partners)

SPECIMEN OF PROFIT AND LOSS APPROPRIATION ACCOUNT

Profit and Loss Appropriation Account

For the year ending on ___________________

Partner’s  Capital Accounts

Partner’s  Capital Accounts: It is an account which represents the partners interest in the business.

In case of partnership business, a separate capital account is mainted for each partner. The capital accounts of partners may be maintained by any of the following two methods.

1. Fixed Capital Accounts

2. Fluctuating Capital Accounts

Under this method the original capitals invested by the partners remain constant, unless additional capital is introduced by an agreement. All entries relating to drawings, interest on capitals, interest on drawings, salary to partner, share of profits/losses are made in separate account whihc is called as Current Account. Thus the following two accounts are maintained when capitals are fixed.

(i) Capital Account

This account will always show a credit balance: Balance of Capital account remains fixed, it does not change every year that is why it is called fixed capital method and only the following two transactions are recorded in the Fixed Capital Accounts:

Permanent·Additional Capital Introduced

·Permanent Capital Withdrawn or Drawings out of Capital only

Partner’s Capital A/Cs

(ii) Current Account

The Current account may show a debit or credit balance. All the usual adjustments such as interest on Capital, partner’s salary/commission, drawings (out of profits), interest on drawings and share in profits or losses etc. are recorded in this account.All the Current Year’s adjustments are recorded in this account, that is why it is called Current account.

Partner’s Current A/Cs

1. Debit balance of Current Account is shown in Assets side of Balance Sheet.

2. Credits balance of Current Account A/c is shown in Liabilities side of balance Sheet.

3. Balance of Fixed Capital Accounts are always shown in Liabilities side of Balance Sheet as it will be always be credit balance.

In this method only one account i.e., Capital Account of each and every partner is prepared and all the adjustment such as interest on capital interest on drawings etc, are recorded in this account under this method, Capital account may show a debit or credit balance and the balance of this account changes frequently from time to time therefore it is called fluctuating Capital Account.In this method the capitals are not fixed. In the absence of information, the Capital Accounts should be prepared by this method.

Partner’s Capital

INTEREST ON CAPITAL

Interest on partners capital will be allowed only when it has been specifically mentioned in the partnership deed. If interest on capital is to be allowed as per the agreement, it should be calculated with respect to the time, rate of interest and the amount of capital. Interest on Capital can be treated as either:

a. An Appropriation of profit; or

b. A charge against profit.

A. Interest on Capital: An Appropriation of Profits:

B. Interest on Capital: As a Charge against Profits:

Interest on Capital is always allowed in full irrespective of amount of profits of losses.

Interest on Capital is always calculated on the OPENING CAPITAL.

Il’ Opening Capital is not given in the question, it should be ascertained as follows:

INTEREST ON DRAWINGS

Interest on drawing is charged by the firm only when it is clearly mentioned in Partnership Deed. It is calculated with reference to the time period for which the money was withdrawn. There are two cases in which calulation of interest on drawings may arise:

Case 1: When Rate of Interest on Drawings is given in %

Interest on Drawings is calculated on flat rate irrespective of period.

Case 2: When Rate of Interest on Drawings is given in % p.a.

1. When date of Drawing is not given

Note: Interest is calculated for a period of 6 months, we assume drawings have been done evenly during the year, that is why we take average six months tenure.

2. When date of Drawings is given

Case 3: When different amount are withdrawn on different dates:

We have the following two methods to calculate the amount of interest on Drawing:

1. Simple Interest Method

In this method, interest on drawing is calculated for each amount of drawing individually on the basis of periods for which it remained withdrawn till the close of accounting period.

2. Product Method

In this method, the amounts of drawings are multiplied by the period for which it remained withdrawn during the period;Thereafter the products are added and interest is calculated on the total of products so arrived at for one month. The advantage of this system is that separate calculations are not required each time.

We can explain the above mentioned two methods with the help of an example.

Interest on drawings is to be charged @ 9% p.a

SIMPLE METHOD

PRODUCT METHOD

Interest = Total of products * 9/100* 1/12= 306000*9/100*1/12 = Rs 2295/-.

Case 4: When an equal amount is withdrawn regularly

Interest on Drawing can be calculated using either Product Method or Direct Method (i.e. Short Cut Method)

Direct Method will be used only if all the following three conditions are satisfied:

1. Amount should be same throughout the period

2. Date of Drawings should be same throughout the period

3. Drawings should be made regularly without any gap.

Value of T under Different circumstances will be as under:

INTEREST ON PARTNERS LOAN

If a partner has given loan to the firm, he is entittled to receive interest on such loan at an agreed rate.

It is a charge against profits. It is provided irrespective of profits or loss. It will also be provided in the absence of Partnership Deed @ 6% per annum.

The following entries are passed to record the interest on partner’s loan

1. For allowing Interest on loan:

Interest on Partner’s Loan A/cDr.

To Partner’s Loan A/c

(Being interest on loan allowed @ % p.a.)

2. For transferring Interest on Loan to Profit and Loss A/c:

To Interest on Loan A/c

(Being Interest on loan transferred to P & L A/c)

It is always DEBITED to Profit and Loss A/c

Rent Paid to Partner .

Rent paid to a partner is also a charge against profits and it will also be

DEBITED to Profit and Loss A/c

Interest on A’s Loan =

PAST ADJUSTMENTS

If, after preparation of Final Accounts of firm, it is found that some errors or commission in accounts has occurred than such errors or omissions are rectified in the next year by passing an adjustment entry.

A statement is prepared to ascertain the net effect of such errors or omissions on partner’s capital/current accounts in the following manner.

Statement showing adjustment

+ Indicates Amount to be Credited to Partner’s Capital Account – Indicates Amount to be Debited to Partners Capital Account

During Past Adjustment it is not compulsory that capital accounts of all partners are affected. More than one partners Capital Account may be debited or credited but amount of debit & credit should be equal.

GUARANTEE OF PROFITS TO A PARTNER

Guarantee is an assurance given to the partner of the firm that at least a fixed amount shall be given to him/her irrespective of his/her actual share in profits of the firm. If actual share in profits is less than the guaranteed amount in that case the deficit amount shall be borne either by the firm or by any partner as the case may be or as may have been decided bya na agreement.

Guarantee to a partner is given for minimum share in profits. If the actual share in profits is more than the minimum share in profits, then the actual profits will be allowed to the partner.

Case: 1. When guarantee is given by FIRM (i.e. by all the Partners of the firm)

1. If share in actual profits is less than the guaranteed amount then. Guaranteed amount to a partner is first written off against the profits and then,

2. Remaining profits are distributed among the remaining partners in the remaining ratio.

Case: 2. When guarantee is given by a partner or partners to another partner.

1. Calculate the share in profits for the partner to whom guarantee is given.

2. If share in profits is more than the guaranteed amount, distribute the profit as per the profit and loss sharing ratio in usual manner.

3. If share in profits is less than the guaranteed amount, find the difference between the share in profits and the guaranteed amount and the difference known as deficiency.

Deficiency is contributed by the partner or partners who guaranteed in certain ratio and subtracted from his or their respective shares.      

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12th Class Accountancy Fundamentals of Partnership Question Bank

Done case based - accounting for partnership firm - fundamental total questions - 78.

A) 6,000  done clear

B) 10,000 done clear

C) 5,000 with average period done clear

D) No interest will be paid done clear

question_answer 2) How much interest on loan is to be paid to Peter"?

A) 4,000 done clear

B) 2,000 with average period done clear

C) 3,000 done clear

question_answer 3) How much interest on loan is to be paid to Mrs. David?

A) 16,000 done clear

B) 20,000  done clear

C) 10,000 done clear

D) 8,000 done clear

question_answer 4) In the absence of partnership deed, interest on David's Drawings is to be Calculated for Average Period of 6 months.

A) True      done clear

B) False done clear

question_answer 5) Morgan can admit his nephew as a new partner because out of three partners, two agreed to it.

question_answer 6) Identify the correct statement:

A) Only David and Peter will get interest on capital done clear

B) Interest on capital is to be calculated @10% p.a. done clear

C) No interest on capital as there is no partnership deed done clear

D) Interest on capital and interest on drawings will be calculated @ 6% p.a. in the absence of partnership deed done clear

question_answer 7) In the absence of partnership deed, interest on loan to Morgan will be calculated @6% p. a.

A) 60,000 done clear

B) 50,000 done clear

C) 55,000 done clear

D) 45,000 done clear

question_answer 9) How much interest on capital is to be allowed to Gagan?

A) 40,000 done clear

B) 45,000 done clear

C) 51,000 done clear

D) 55,000 done clear

question_answer 10) How much interest on capital is to be allowed to Kamlesh?

A) No Interest done clear

B) 50,000  done clear

C) 22, 500 done clear

D) 25,000 done clear

question_answer 11) Identify the wrong statement from the following:

A) Vinod has withdrawn Rs.1,00,000 out of his capital done clear

B) Gagan has introduced Rs.1,00,000 as additional capital done clear

C) Kamlesh has introduced Rs.4,50,000 as additional capital done clear

D) Total interest allowed by the firm Rs.1,25,000 done clear

A) 1,20,000 done clear

B) 1,32,000 done clear

C) 1,00,000 done clear

D) 1,15,000 done clear

question_answer 13) Profit share of Y will be:

A) 81,000 done clear

B) 30,500 done clear

C) 40,500 done clear

D) 50,000 done clear

question_answer 14) Profit share of X will be:

B) 40,500 done clear

C) 60,000 done clear

D) 72,000 done clear

question_answer 15) Balance of Y's Current Account:

A) Credit Balance Rs.18,550 done clear

B) Debit Balance Rs.18,550 done clear

C) Credit Balance Rs.65,550 done clear

D) Debit Balance Rs.65,550 done clear

question_answer 16) Balance of X's Current Account:

A) Credit Balance of Rs.1,65,550 done clear

B) Debit Balance of Rs.1,65,550 done clear

C) Credit Balance of Rs.1,35,550 done clear

D) Debit Balance of Rs.1,35,550 done clear

A) 600 done clear

B) 300 done clear

C) 500 done clear

D) 250 done clear

question_answer 18) Interest on Gagan's Drawings will be:

A) 300 done clear

B) 350 done clear

C) 375 done clear

D) 400 done clear

question_answer 19) Interest on Rajni's Drawings will be:

B) 625 done clear

C) 650 done clear

D) 675 done clear

question_answer 20) Interest on Simran's Drawings will be:

A) 900 done clear

B) 925 done clear

C) 950  done clear

D) 975 done clear

question_answer 21) Interest on Drawings is not calculated in ease of loss.

A) True done clear

question_answer 22) Vinod's Capital will be reduced by Rs.20,000 immediately at the time of withdrawal.

Harshit and Aniket both are childhood friends. After completing their education, they decided to start a partnership firm. They signed a document (partnership deed) which contains all the terms and conditions. They also decided to maintain books of accounts themselves.

On 31st March 2021 Their Balance Sheet was as follows:

Liabilities Amount Assets Amount Capitals: Harshit 4,00,000 Fixed Assets                         7,20,000 Aniket 2,80,000 Current Assets 80,000 Creditors 1,20,000 8,00,000 8,00,000 A) 6,80,000  done clear B) 8,20,000 done clear C) 6,20,000 done clear D) 8,80,000 done clear question_answer 24) Profit sharing ratio between Harshit and Aniket _______ A) 2:1 done clear B) 3:2 done clear C) 1:1 done clear D) 4:3 done clear question_answer 25) Interest on Capital to Harshit Rs._______ and Aniket Rs.________ A) 13,000 and 18,000 done clear B) 18,000 and 13,000 done clear C) 15,000 and 15,000 done clear D) 10,000 and 10,000 done clear question_answer 26) Interest on Drawings of Harshit Rs._____ and Aniket Rs._______ A) 3,600 and 4,800 done clear B) 4,800 and 3,600 done clear C) 3,600 and 3,600  done clear D) 4,800 and 4,800 done clear question_answer 27) Net Divisible Profit (corrected) after all adjustments will be: A) 1,70,000 done clear B) 1,77,000 done clear C) 1,67,400 done clear D) 1,77,400 done clear question_answer 28) Identify the correct statement from the following: A) Rectifying Entry: Aniket's Capital A/c Dr. 3,100 and Harshit's Capital A/c Cr. 3,100 done clear B) Rectifying Entry: Harshit's Capital A/c Dr.3,100 and Aniket's Capital A/c Cr. 3,100 done clear C) Rectifying Entry: Aniket's Capital A/c Dr.2,100 and Harshit's Capital A/c Cr. 2,100 done clear D) Rectifying Entry: Harshit's Capital A/c Dr.2,100 and Aniket's Capital A/c Cr. 2,100 done clear VK, GK and MK are partners sharing profits in the ratio of 5:3:2. Their capitals on 1st April, 2019 were Rs.2,00,000; Rs.2,00,000 and Rs.1,00,000 respectively. MK is an active partner and looking after the firm. The partnership deed provides that: (i) Active partner is to be paid a salary of Rs.5,000 per month as a charge (irrespective of profit). (ii) Rent is paid to VK Rs.4,000 per month (for the use of a portion of his building for the firm, starting from 1st October, 2019). (iii) VK has advanced a loan of Rs.50,000 to the firm on 1st April 2019 on which he gets interest @ 8% p.a. Firm has advanced a loan to MK Rs.40,000 @ 10% p.a. on 1st October 2019. (iv) Manager is entitled to a commission of 10% on the net profit after charging such commission. (v) Interest on capital @ 5% p.a. (as an appropriation). Trading profit of the firm on 31st March 2020 was Rs.99,750. Interest on MK's Loan: A) 1,000 done clear B) 1,500  done clear C) 2,000 done clear D) 2,500 done clear question_answer 30) Interest on VK's Loan: B) 2,000 done clear D) 4,000 done clear question_answer 31) Manager's Commission to be given: A) 950 done clear B) 1,250  done clear C) 1,375 done clear D) 1,500 done clear question_answer 32) Net profit transferred to Profit and Loss Appropriation Account: A) 12,500 done clear B) 99,750 done clear C) 80,000 done clear D) 12,375 done clear question_answer 33) Identify the correct Statement: A) Interest on Capital: VK Rs.10,000; GK Rs.10,000 and MK Rs.5,000 done clear B) Interest on Capital: VK Rs.5,000; GK Rs.5,000 and MK Rs.5,000 done clear C) Interest on Capital: VK Rs.5,000; GK Rs.5,000 and MK Rs.2,500 done clear D) Interest on Capital: VK Rs.6,250; GK Rs.3,750 and MK Rs.2,500 done clear question_answer 34) X, Y and Z started a business in partnership on 1st October 2020. The profit sharing ratio was decided among the partners 2:1:1. Z was guaranteed a profit of Rs.28,000 p. a. Deficiency amount (if any) will be borne by X and Y in the ratio of 3:2. The firm earned profit for the year ending 31st March 2021 Rs.20,000. How much deficiency is borne by X and Y? A) X Rs.12,000 and Y Rs.6,000 done clear B) X Rs.10,800 and Y Rs.7,200 done clear C) X Rs.13,800 and Y Rs.9,200 done clear D) X Rs.5,400 and Y Rs.3,600 done clear PK and AK were sharing profits in the ratio of 2:3. The following was the balance sheet of the firm as at 31st March 2021: Liabilities Amount Assets Amount Capitals: Non-current Assets 1,80,000 PK 90,000 Current Assets 20,000 AK 1,10.000 2,00,000 Creditors 10,000 2,10,000 2,10,000 B) 1,22,000 done clear C) 1,24,000 done clear D) 1,26,000 done clear question_answer 36) Opening Capital of PK was: A) 1,00,000 done clear B) 1,02,000 done clear C) 1,04,000 done clear D) 1,06,000 done clear question_answer 37) in final adjustment PK's Capital Account will be: A) Debit by Rs.5,200 done clear B) Debit by Rs.6,200 done clear C) Debit by Rs.1,000 done clear D) Credit by Rs.1,000 done clear question_answer 38) in final adjustment AK's Capital Account will be: A) Debit by Rs.1,000 done clear B) Debit by Rs.6,300 done clear C) Debit by Rs.9,300 done clear X, Y and Z running business in partnership since last 8 years. They are sharing profits in the ratio of 2:1:1. It was observed in the current year that there was problem in their accounts. It was discovered that the interest on capital and interest on drawings had been omitted. On 31st March 2021, the balances in their capital accounts after making adjustments for profits and drawings were Rs.1,60,000; Rs.1,20,000 and Rs.80,000 respectively. The profit for the year ended 31st March 2021 was Rs.40,000. During the year X and Y each withdrew a total sum of Rs.24,000 in equal instalments in the beginning of each month and Z withdrew a total sum of Rs.48,000 in equal instalments at the end of each month.. The interest on drawings was to be charged @5% p.a. and interest on capital was to be allowed @ 10% p.a. Opening Capital of Z was: A) 1,64,000 done clear B) 1,34,000 done clear C) 1,18,000 done clear D) 1,20,000 done clear question_answer 40) Opening Capital of Y was: D) 1,40,000 done clear question_answer 41) Opening Capital of X was: B) 1,60,000 done clear C) 1,50,000 done clear D) 1,66,000 done clear question_answer 42) At the time of final adjustment, Y's Capital Account will be: A) Credited with Rs.2,950 done clear B) Credited with Rs.900 done clear C) Credited with Rs.3,850  done clear D) Credited with Rs.13,400 done clear question_answer 43) At the time of final adjustment, Z's Capital Account will be: A) Debited with Rs.900 done clear C) Credited with Rs.2,950     done clear D) Credited with Rs.3,850 done clear question_answer 44) At the time of final adjustment, X's Capital Account will be: A) Credited with Rs.3,850     done clear C) Credited with Rs.2,950 done clear D) Debited with Rs.3,850 done clear X, Y and Z are partners. Fixed Capitals balance on 1st April 2020: X Rs.2,00,000; Y Rs.75,000 and Rs.3,50,000. Partnership deed provides: (i) Interest on capital @ 9% p.a. and Interest on drawings 6% p.a. (ii) Salary of 6,000 per month to Y (iii) Profit (if any) in equal ratio. X withdrew during the year Rs.25,000 and Y Rs.15,000. Z withdrew Rs.62,500 for his personal use on 1st December 2020. Firm earned a profit of Rs.1,70,000 for the year ending 31st March 2021.. Total interest on drawings to be shown in Profit and Loss Appropriation Account: A) 2,450 done clear B) 3,650 done clear C) 2,650 done clear D) 3,850 done clear question_answer 46) Total Interest on Capital to be shown in Profit and Loss Appropriation Account: A) 54,250 done clear B) 55,250 done clear C) 56,250 done clear D) 57,250 done clear question_answer 47) Salary payable to Y: A) 6,000 done clear B) 60,000 done clear C) 70,000 done clear question_answer 48) Profit share of Z will be: A) 20,000 done clear B) 18,000 done clear C) 12,400 done clear D) 11,400 done clear question_answer 49) Profit share of X will be: A) 15,400 done clear B) 16,400 done clear C) 17,400 done clear D) 18,400 done clear question_answer 50) Profit share of Y will be: A) 14,400 done clear B) 13,400 done clear Four friends, A, B, C and D were working in a company, after their retirement they started a business in partnership. They are sharing profits and losses in the ratio of 4:3:3:2. Their fixed capitals on 31st March 2021 were Rs.60,000; Rs.90,000 ; Rs.1,20,000 and Rs.90,000. After closing the accounts for the year ending 31st March 2021, it was discovered that interest on capital @ 12% p.a. was not allowed and interest on drawings @10% p.a. was not charged. Drawings of the partners during the year: A Rs.40,000; B Rs.50,000; C Rs.30,000 and D Rs.20,000. While passing the adjustment entry, B's Current Account will be: A) Debited by Rs.6,867 done clear B) Credited by Rs.750 done clear C) Debited by 3,767 done clear D) Debited by Rs.750 done clear question_answer 52) While passing the adjustment entry, C's Current Account will be: A) Credited by Rs.3,850 done clear B) Credited by Rs.6,867 done clear C) Debited by Rs.3,767 done clear D) Debited by Rs. 3,850 done clear question_answer 53) While passing the adjustment entry, A's Current Account will be: question_answer 54) While passing the adjustment entry, D's Current Account will be: B) Credited by Rs.3,850 done clear D) Credited by 3,767 done clear question_answer 55) You are required to answer the following questions 55 to 57: Three Partners A, B and C are doing well in business since last 8 years. B has provided his personal storeroom to the firm for the purpose of business, monthly Rent of Rs.2,000 to be paid by the firm for the same. They share profits in the ratio of 2:3:5. A was guaranteed a minimum profit of Rs.1,00,000. Any deficiency on this account was to be borne by B and C as 60% and 40%. The net profit of the firm for the year ended 31st March 2021 was Rs.4,74,000. Net profit transferred to Profit and Loss Appropriation Account: A) 4,50,000 done clear B) 4,74,000 done clear C) 4,60,000 done clear D) 4,98,000 done clear question_answer 56) Deficiency borne by C: B) 5,000  done clear C) 6,000 done clear D) 3,000 done clear question_answer 57) Deficiency borne by B: B) 5,000 done clear On 1st may, 2021, A, B and C started a business with capitals of Rs.5,00,000, Rs.4,50,000 and Rs.4,00,000 respectively. According to partnership agreement: (i) Profit earned in any year will be distributed as under: Upto Rs.1,80,000 equally. Excess over Rs.1,80,000 in ratio of 1:2:2 (ii) Allow interest on capital @ 12% p.a. (Charge Against profit) and charge interest on drawings @ 9% p.a. (iii) Business is being carried from the property owned by A on a monthly rent of Rs.5,000. Drawings of the partners during the year were: A withdrew regularly Rs.6,000 at the end of every month starting from 31.05.2021. B withdrew regularly Rs.21,000 at the beginning of every Quarter starting from 01.07.2021. C withdrew regularly 50,000 at the beginning of each six months starting from 01.06.2021. Capital of the partner during the year were On 01.10.2021 they decided that their capital should be 4,50,000 each On 01.01.2022 Mr. C withdrew the amount of Rs.50,000 from his capital The profit of the firm for the year before charging all of the above adjustments was Rs.5,00,000. Interest on capital of C will be A) 45,500 done clear B) 49,500 done clear C) 47,000 done clear D) 51,000 done clear question_answer 59) Net profit transferred from Profit & loss account to Profit & Loss appropriation account will be A) 4,45,000 done clear B) 2,98,000 done clear C) 3,53,000  done clear D) 2,93,000 done clear question_answer 60) Interest on drawings of C A) 5000 done clear B) 4500 done clear C) 5250     done clear D) 3750 done clear question_answer 61) Average period for calculation of interest on drawings of A A) 5 months done clear B) 6 months done clear C) 5.5 months done clear D) Not possible to calculate average period because Drawings are not made from starting date done clear question_answer 62) B's share of profit will be A) 1,11,424 done clear B) 1,23,424 done clear C) 1,02,853 done clear D) 85,712 done clear A, B and C were partners in a firm sharing profits and losses in the ratio of 3 : 3 : 4. Their partnership deed provided for the following: (i) Interest on capital @5% p. a. (ii) Interest on drawing @ 12% p. a. (iii) B was allowed a commission of 10% of net profit after charging Interest on capital (iv) C is entitled to a commission of 10% of net profit after charging interest on capital and B commission. Their capitals were A: Rs.5,00,000; B: Rs.8,00,000 and C: Rs.4,00,000. On 1st April, 2021 C advance a loan of Rs.1,00,000 to the firm. The net profit of the firm for the year ended 31st March, 2021 before interest on c's loan was Rs.4,50,000. Drawings during the year are as follows; A withdrew Rs.5,000 at the end of each month, B withdrew Rs.10,000 at the end of each quarter and C withdrew Rs.40,000 at the end of each half year. C Commission will be A) 32,310 done clear B) 35,900 done clear C) 44,400 done clear D) 32,636 done clear question_answer 64) Net profit transferred from Profit & loss account to Profit & Loss appropriation account will be A) 4,44,000 done clear B) 4,50,000 done clear C) 4,56,000 done clear D) 4,52,000 done clear question_answer 65) B's Interest on drawings will be A) 3,300 done clear B) 1,800 done clear C) 2,400 done clear D) 6,000 done clear question_answer 66) B's Interest on drawings will be question_answer 67) C's Share of profit will be A) 89,487 done clear B) 1,19,316 done clear C) 1,20,000 done clear D) 88,000 done clear Gagan and Juhi are partners in a firm for last 2 years. On 1st April, 2020 their capitals are Rs.4,00,000 and Rs.7,00,000 respectively. On 1st Sep, 2020 they decided to keep their capitals Fixed at Rs.5,00,000 each. On 1st Oct, 2020 they took loan of Rs.4,00,000 from Axis Bank @ 9% p.a. On 1st Jan, 2021 firm gave a loan to Juhi of Rs.2,00,000 @ 6% p.a. Gagan is to be given monthly salary of Rs.3,500 and Juhi is to be given quarterly salary of Rs.4,000. Gagan Withdrawn Rs.24,000 in the Beginning of every quarter and Juhi withdrawn Rs.5,500 at the end of every month for personal use against the anticipated profits. Partners are to be allowed interest on capital @ 6% per annum and Interest on Drawings is to be charged @10 % p.a. Gagan is entitled to commission @ 8% on the profit (after considering all charge items, appropriations and interest on drawings) before charging such commission. Juhi is entitled to commission @ 8% on the final profit (after considering charge items, appropriations, interest on drawings and Gagan's commission) after charging such commission. The profit was calculated Rs.5,04,475 (before considering charge items). Calculate the amount of Net profit to be transferred to Profit and loss Appropriation Account? A) Rs.5,07,475 done clear B) Rs.4,86,475 done clear C) Rs.4,98,475 done clear D) Rs.4,89,475 done clear question_answer 69) Calculate the total amount of Interest on Drawings to be shown in the Profit and loss Appropriation Account? A) Rs.6,000 done clear B) Rs.6,600 done clear C) Rs.9,025 done clear D) Rs.9,600 done clear question_answer 70) Calculate the total amount of Interest on Capital to be shown in the Profit and loss Appropriation Account? A) Rs.62,500 done clear B) Rs.63,000 done clear C) Rs.35,000 done clear D) Rs.63,500 done clear question_answer 71) Calculate the total amount of partners Salary to be shown in the Profit and loss Appropriation Account? A) Rs.42,000 done clear B) Rs.58,000 done clear C) Rs.48,000 done clear D) Rs 90,000 done clear question_answer 72) Calculate the total partners commission to be shown in the Profit and loss Appropriation Account? A) Rs.27,821 done clear B) Rs.56,000 done clear C) Rs.30,240 done clear D) Rs.59,758 done clear question_answer 73) Calculate the divisible profit? A) Rs.2,15,100 done clear B) Rs.3,22,000 done clear C) Rs.2,24,125 done clear D) Rs.2,21,100 done clear A and B are partners. Their Capitals on 1st April, 2020 capitals of Rs.5,00,000 and Rs.3,00,000 respectively. On August 1, 2020 they introduced further capitals of Rs.50,000 and Rs.40,000 respectively. B withdrew Rs.15,000 from his capital on March 1, 2021. The profit for the year ended 31st March 2021 was Rs.4,00,000 before allowing interest on partner's loan. According to partnership agreement: (i) A has given a Loan of Rs.1,50,000 to the firm on 1st July, 2020. (ii) Interest on capital to be allowed @ 12% p.a. (iii) Interest on drawings @ 6% p.a. Drawings were A Rs.60,000 and B Rs.40,000. (iv) B is to be allowed a Commission (Charge) of 2% on sales. Sales for the year were Rs.30,00,000. (v) Profit is to be distributed in the following manner (a) Upto 1,00,000: Equally. (b) Above 1,00,000: in the ratio of 3:2 Interest on capital of B will be: A) 64,500  done clear B) 64,000 done clear C) 39,050 done clear D) 38,050 done clear question_answer 75) Interest on loan of A will be A) 9,000 done clear B) 6,750 done clear D) 4,750 done clear question_answer 76) Amount of net profit transferred to Profit & Loss appropriation account will be A) 3,33,250 done clear B) 3,40,000 done clear C) 3,93,250 done clear D) 4,00,000 done clear question_answer 77) Profit to be credited to B's capital account will be A) 1,29,920 done clear B) 1,03,280 done clear C) 1,16,600 done clear D) 93,280 done clear question_answer 78) Interest on drawings of B will be: A) 1800 done clear B) 1200 done clear C) 3600 done clear D) 2400 done clear Study Package Case Based - Accounting for Partnership Firm - Fundamental Related question. Reset Password. OTP has been sent to your mobile number and is valid for one hour Mobile Number Verified Your mobile number is verified. 181 IMAGES Case Study Accountancy Class 12- Partnership Partnership fundamental of partnership Case study Partnership Principles #1 Partnership||Fundamentals||Basic Concepts||Class 12|| Part 1 Features of partnership VIDEO How to Solve Case Study in MINIMUM Time like a Pro!🔥 Class 12 Maths most important case study class 12 th maths #cbseboard #hbse Case Study Questions for CBSE Class 12th Maths Board Exam 2024 @AkashDashClasses ADMISSION OF A PARTNER #CASESTUDY-9 CLASS12TH #ADMISSIONCASESTUDY CLASS12TH #PARTNERSHIPCASESTUDY Case study based question 2024 sample paper physics/case study on lens/case study on ray optics 2024 🔴 Fundamentals of Partnership / Case Study Based Questions / Term 1 Class 12 Accountancy COMMENTS Case Study Based Questions on Partnership Case Study Accountancy Class 12 Partnership Case Study. Read the following hypothetical text and answer the given questions: Amit and Mahesh were partners in a fast-food corner sharing profits and losses in ratio 3:2. They sold fast food items across the counter and did home delivery too. Their initial fixed capital contribution was ₹ 1 ... Case Study Questions Chapter 2 Accounting for Partnership Firms Case Study Questions of Accounting for Partnership Firms - Basic Concepts Class 12. Read the following information carefully and answer the questions that follow: X and Y are partners in 3:2. Their capital balances as on 1st April 2020 amounting to ₹2,00,000 each. On 1st February, 2021, X contributed an additional capital of ₹1,00,000. Case Study Questions for Class 12 Accountancy with Answers Chapter Wise Important Questions for Class 12 Accountancy with Answers. Part 1. Chapter 1 Accounting For Not For Profit Organisation. Chapter 2 Accounting for Partnership Firms - Basic Concepts. Chapter 3 Reconstitution Of A Partnership Firm - Admission Of A Partner. Chapter 4 Reconstitution Of A Partnership Firm - Retirement/Death Of A ... Case Study Questions Chapter 3 Reconstitution Of A Partnership Firm Students can read the Case Study questions given below for Reconstitution Of A Partnership Firm - Admission Of A Partner Class 12 Accountancy. All Reconstitution Of A Partnership Firm - Admission Of A Partner Class 12 Notes and questions with solutions have been prepared based on the latest syllabus and examination guidelines issued by CBSE, NCERT and KVS. 12th Accountancy Accounting for Partnership Accounting for Partnership - Basic Concepts Case Study Questions With Answer Key. 12th Standard CBSE. Reg.No. : Accountancy. Time : 00:10:00 Hrs. Total Marks : 5. Case Study. Read the following hypothetical text and answer the given questions: Amit and Mahesh were partners in a fast-food corner sharing profits and losses in ratio 3:2. Class 12 Accountancy Case Study Questions Students can download CBSE Class 12 Accountancy Case Study Questions from the CBSE website. But this question bank has very limited questions from each chapter. ... Accounting for Partnership Firms and Companies: Unit 1. Accounting for Partnership Firms: 105: 36: Unit 2. Accounting for Companies: 45: 24: 150: 60: Part B: Accounting for Partnership: Basic Concepts Class 12 Important Questions NCERT Solutions for Class 12 Business Studies; NCERT Solutions for Class 12 Accountancy; NCERT Solutions for Class 12 Micro Economics; ... Since, the partnership deed is silent on the payment of salary to partners, in that case provisions of Partnership Act will be followed which prohibits payment of salary to the partners. Question 7. NCERT Solution for Class 12 Accountancy Chapter 3 NCERT Solution for Class 12 Accountancy Chapter 3 - Reconstitution Of A Partnership Firm - Admission Of A Partner covers all the questions provided in NCERT Books for 12th Class Accountancy Subject. ... NCERT Solutions are said to be an extremely helpful book while preparing for the CBSE Class 12 Accountancy examinations. This study material ... NCERT Solution for Class 12 Accountancy Chapter 2 Accounting for NCERT Solutions for Class 12 Accountancy Chapter 2 - Accounting for Partnership Firms - Basic Concepts furnishes us with all-inclusive data for all the concepts. As the students would have learnt the basic fundamentals about the subject of Accountancy in Class 11, the NCERT Class 12 Solutions is a continual part of it, which explains the ... Fundamentals of Partnership / Case Study Based Questions ... Fundamentals of Partnership / Case Study Based Questions / Term 1 Class 12 AccountancyJoin this channel to get access to perks:https://www.youtube.com/channe... CBSE Class 12 Accountancy Chapter 1 Accounting for Partnership: Basic Students can easily download the CBSE Class 12 Accounting for Partnership Basic Concepts Notes PDF by clicking on the PDF download link attached to this article. These are handwritten revision ... NCERT Solutions for Class 12 Accountancy Chapter 2 Accounting for NCERT Solutions for Class 12 Business Studies; NCERT Solutions for Class 12 Accountancy; NCERT Solutions for Class 12 Micro Economics; ... In case of a partnership the partners are suppose to share profit or loss on an agreed ratio or as per the provisions of the Partnership Act, 1932, as per which they will share profit equally. ... Extra Questions of Class 12 Accountancy Fundamentals of partnership and Practice Test for Class 12 Accountancy. Ch-2 Fundamentals of partnership and Goodwill. Goodwill is capitalized valued of ____. Normal Profit. Super Profit. Capital employed. Gross Profit. A, B, and C were partners in a firm having no partnership agreement. A, B and C contributed ₹2,00,000, ₹3,00,000 and ₹1,00,000 respectively. Extra Questions For Class 12 Accountancy Admission of a Partner Class 12 Accountancy Extra Questions. Ch-4 Admission of a Partner. Kamal and Rahul are partner's in a firm sharing profits and losses in the ratio of 7:3. They admit Kaushal as a partner for 1/5th share. Kaushal acquires his share from Kamal and Rahul in the ratio of 3:2. The goodwill of the firm has been valued at Rs.25000. TS Grewal Solutions Class 12 Accountancy Chapter 2- Accounting for TS Grewal Solutions Class 12 Accountancy Vol 1 Chapter 2: TS Grewal Solutions for Class 12 Accountancy Chapter 2 Accounting for Partnership Firms- Fundamentals is considered to be an important concept to be learnt thoroughly by the students. Here, we have provided. TS Grewal Accountancy solutions for Class 12. PDF CHAPTER-2 Class XII www.vedantu.com TS Grewal Solutions (Volume 1) CHAPTER-2 - Accounting for Partnership Firms - Fundamentals . Solution 1 In the absence of the Partnership Deed: (a) Partners are not entitled to any salary. (b) No interest will be charged on partner's capital. ... Y's loan interest = 40,000 x 6% x 6/12 = ₹ 1,200. Case 1: Please ... Case Study Accountancy Class 12- Partnership Case Study Accountancy Class 12- Partnership. Read the following hypothetical Case Study Accountancy text and answer the given questions: Amit and Mahesh were partners in a fast-food corner sharing profits and losses in ratio 3:2. They sold fast food items across the counter and did home delivery too. 12th Class Accountancy Fundamentals of Partnership Question Bank The terms of partnership were as follows: [a] Tom, Tim and Ram will share profit in 2: 2:1 ratio. [b] Interest on capital will be provided to Tom and Tim @ 6% p.a. [c] Tim advanced a loan of Rs. 10,000 to the partnership firm on 1st October. [d] Tom will be entitled to a salary of Rs.1,000 per month. [e] Interest on loan to Tim was allowed @ 6% ... Accounting for partnership firms fundamentals class 12 ... These are the Accounting for partnership firms fundamentals class 12 Notes prepared by team of expert teachers. The revision notes help you revise the whole chapter 1 in minutes. Revision notes in exam days is one of the best tips recommended by teachers during exam days. Download Revision Notes as PDF. 12th Class Accountancy Fundamentals of Partnership Question Bank A, B and C were partners in a firm sharing profits and losses in the ratio of 3 : 3 : 4. Their partnership deed provided for the following: (i) Interest on capital @5% p. a. (ii) Interest on drawing @ 12% p. a. (iii) B was allowed a commission of 10% of net profit after charging Interest on capital ALL CHAPTER CASE BASED ACCOUNTANCY CLASS 12 1 .pdf KVS ZIET BHUBANESWAR 12/10/2021 1 CHAPTER 2 - ACCOUNTING FOR PARTNERSHIP: FUNDAMENTALS CASE STUDY BASED QUESTIONS CASE STUDY-I Sl.No. Read the passage given below and answer the following questions: Arav and Bhart are partners in a firm sharing profits and losses. Their capitals on 1 April, 2015 were Rs.4,80,000 and Rs.5,40,000. On 1 October, 2015, they decided that the total capital of the ... Case Study Based Questions of Fundamentals of Partnership Attachments (1) Ask a question. Knowledge Score: N/A. 0.00. Class 12 Accountancy Chapter 1 CASE STUDY BASED QUESTIONS OF FUNDAMENTALS OF PARTNERSHIP with answers. View similar Attachments and Knowledge in calculation of regression class 12, Chartered Accountancy, chapter 1, CASE STUDY BASED QUESTIONS OF FUNDAMENTALS OF PARTNERSHIP. assignment essay homework paper phd report resume review speech thesis