Principals of Accounting ICOM Part 02 Top 500 + MCQS Download Pdf Chapter 04

written by Assad Javaid | April 26, 2021

Chapter – 4

Partnership Account

Encircle the most appropriate answer among the following

1.The relationship between persons who have agreed to share the profit of a business carried on by all or any of them acting for all, is called:

  1. Sole ownership          
  2. Partnership   
  3. Joint stock company 
  4. None of these

2.The law governing partnership is contained in the partnership act:

  1. 1932   
  2. 1984
  3. 1832
  4. 1956

3.In partnership business there should be more than:

  1. 20 persons
  2. 35 persons
  3. 25 persons
  4. I person

4.In a partnership the maximum limit of partners:

  1. 50
  2. 20       
  3. 30
  4. 35

5.In case of banking business, the number of persons must not exceed:

  1. 10       
  2. 20
  3. 25       
  4. 50

6.The persons who have entered into a partnership are individually called:

  1. Agents
  2. Partners
  3. A firm 
  4. Vendors

7.The persons who have entered into a partnership are collectively called:

  1. Agents
  2. Partners
  3. Promoters
  4. A firm

8. The partnership agreement in writing is called:

  1. Partnership registration
  2. Partnership at will
  3. Partnership deed
  4. Partnership certificate

9.if no provision  is made in the agreement regarding the duration of the partnership it is called:

  1. Limited partnership
  2. Partnership-at-will
  3. Particular partnership 
  4. None of these

10.kind of partnership under which the liability of all the partners is unlimited, is

termed as:

  1. General partnership
  2. Limited partnership
  3. Sleeping partnership  
  4. None of these.

11.A takes an active part in the management of the firm is called:  

  1. Sleeping partner         
  2. Active partner          
  3. Nominal partner         
  4. Quasi partner

12.A partner who does not take an active part in the management of the firm is called:

  1. Active partner
  2. Senior partner
  3. Dormant or sleeping partner
  4. None of these

13. A partner who lends his name and reputation to the firm is called:

  1. Active partner
  2. Dormant partner
  3. Nominal partner       
  4. None of these

14.A person who declares by word of mouth as partner of the firm is called:

  1. Hold-out or Estoppel partner
  2. Dormant partner
  3. Active partner
  4. Nominal partner         

15.A partner who has a more investment in the firm, and receives a relatively more profit is called:

  1. Sleeping partner
  2. Dormant partner
  3. Estoppel partner
  4. Senior partner          

16.A partner who invests minor portion of capital in the business and so he has small share in the profits, is called:

  1. Senior partner
  2. Junior partner
  3. Quasi partner 
  4. None of these

17.A partner who shares the profits of the firm but is not liable for the losses, is called:

Senior partner

  1. Nominal partner
  2. Quasi partner
  3. Partner in profits only
  4. Senior partner

18.A partner who has retired from the running management life of the firm but he does not withdraw his capital from the business is known as:

  1. Active partner
  2. Secret partner
  3. Quasi partner
  4. None of these

19.A partner who receives a share of profits from one of the regular partners is called’.

  1. Secret partner
  2. Quasi partner
  3. Partner in profits only 
  4. Sub-partner

20.A partner who is active in the running life of the firm but public does not know him as partner of the firm, is called:

  1. Sleeping partner         
  2. Secret partner
  3. Dormant partner        
  4. None of these

21.A partner, who has not attained the age of majority is called a:

  1. Junior partner 
  2. Nominal partner
  3. Minor partner           
  4. None of these

22.A partner who goes out of a firm due to certain event or reason is known as:

  1. Retired or outgoing partner           
  2. Junior partner
  3. Senior partner
  4. Minor partner

23.A partner who is newly admitted to the firm with the consent of all the parties is called:

  1. Salaried partner         
  2. Incoming partner
  3. Junior partner
  4. Minor partner

24.A partner who has not to pay any obligation more than the share he holds in the firm is called:

  1. Retired partner           
  2. Estoppel partner
  3. Partners in profit only
  4. Limited partner

25.The agreement among the partners which sets out the terms on which they have agreed to form a partnership is called:

  1. Partnership deed     
  2. Arbitration clause       
  3. Partnership-at-will      
  4. None of these

26.If some property is owned jointly without any intention to carry on a business, it is called:

  1. Partnership     
  2. Co-ownership
  3. Sole-ownership
  4. Agency

27 partners contribution to business of the firm is called his:

Capital

  1. Profit
  2. Share 
  3. Property
  4. Capital

28.When the capitals of the partners are not allowed to change during the life-time the business except in extraordinary circumstances, then they are called: Fluctuating capitals

  1. Fixed capitals           
  2. Current capitals          
  3. None of these
  4. Fluctuating capital

29.When the partners do not agree to keep their capitals fixed, they are called:

Fixed capital   

  1. Currents capital
  2. Fluctuating capital
  3. None of these
  4. Fixed capital

30. In the absence of an agreement profits and losses are divided by partners in the ratio of:

Capital

  1. Time devoted by each partner
  2. Equally          
  3. Drawings
  4. Capital

31.In the absence of an agreement, interest on loan advanced by a partner to the firm is allowed at the rate of:

  1. Six percent   
  2. Five percent
  3. Ten percent    
  4. Twelve percent

32. In the absence of an agreement, partners shall:

  1.  be paid salaries
  2. not be paid salaries
  3. be paid salaries to those who works for the firm
  4. be paid salaries to the half of the partners of the firm

33.Current accounts of the partners should be opened when the capitals are:

  1. Fluctuating     
  2. Fixed
  3. Either fixed or fluctuating       
  4. Neither fixed nor fluctuating

34.Where a partner is entitled to interest on capital subscribed by him, such interest will be payable:

  1. Only out of profits   
  2. Only out of capitals
  3. Out of profits or out of capital
  4. None of these

35. The interest on partners capital accounts is to be credited to:

  1. Partners capital account     
  2. Profit and loss account
  3. Interest account         
  4. None of these

36. Every partner has a right to be consulted in all matters affecting the business of:

  1. Sole-proprietorship     
  2. Joint stock company
  3. Partnership
  4. Both 1 and 2

37.In the absence of any agreement to the contrary, the partners:

  1. Are entitled for 6 percent interest on their capitals only when there are profits
  2. are entitled for 9 percent interest on their capitals only when there are profits
  3. are entitled for interest on capital at the bank rate, only when there are profits
  4. are not entitled for any interest on their capitals

38.When interest is to be allowed on the capitals of the partners, it is calculated on the:

  1. Capital in the beginning of the year
  2. Capital at the end of the year
  3. Capital at the end less drawings if any
  4. Average capital

39.The current account of a partner:

  1. Will always have a credit balance     
  2. Will always have a debit balance       
  3. May have a debit balance or a credit balance
  4. None of these

40.Interest on drawings is debited to:

  1. Partner’s capital account
  2. Partner’s profit account
  3. Partner’s drawings account   
  4. None of these

41. Partners salaries to be debited to:

  1. Trading account         
  2. Profit & loss account
  3. Profit & loss appropriation a/c
  4. None of these

42. For the term interest on drawings is:

  1. Income          
  2. Expense
  3. Liability
  4. None of these

43. At the end of the financial year a partner’s drawing are transferred to the:

  1. Credit side of the partner’s capital account
  2. Credit side of the partner’s current account
  3. Debit side of the partnership bank account
  4. Debit side of the partner’s current account

44.the amount of drawing is the same for all the months and the amount is being withdrawn on the last day of the month the partner will pay interest in given year for the period of :

  1. 5 and 1/2 months     
  2. 7 and 1/2months
  3. 5 months
  4. None of these

45.The value attaching to the reputation of a business, is terminal

  1. Profit
  2. Loss
  3. Reserve
  4. Good will

46.Goodwill is:

  1. Tangible Asset
  2. Intangible Asset
  3. Fixed Asset
  4. None of these

47.Goodwill is an intangible asset bat not as a fixed asset:

  1. A fixed asset  
  2. A non-physical asset
  3. A fictitious asset      
  4. (a) and (b)

48.the sale of an established business its has:

  1. A marketable value
  2. Not a marketable value
  3. Not a reputation value
  4. (b) and (c)

49.The excess of actual earnings over the normal earnings is termed as:

Goodwill         

  1. Remuneration
  2. Super-grofit    
  3. None of these
  4. Super profit

50.A business running into losses will have generally:

A great good

  1. More goodwill than a normal business
  2. More goodwill then the value of the net tangible assets
  3. No goodwill
  4. None of these

51.Under which of the following method, the average profits of a given number Of past years is multiplied by an agreed number of years to arrive at the value Of

  1. profit method
  2. Average profits method
  3. Capitalization method
  4. None of these

52.If the profit earned during the last three years is Rs.10000 Rs.12000 Rs.11000 The value of goodwill. under average profit method, on 2 years purchase of the average profits of  last three years is to be

  1. Rs. 22.000
  2. Rs.11000
  3. Rs. 13000
  4. Rs. 23000

53.Under the capitalization method of goodwill valuation. the value of the business is found out by the formula:

  1. Reasonable or normal return /Profit x 100
  2. Actual profit/Reasonable,or normal return x 100
  3. Profit x Reasonable or normal return/ 100
  4. None of these

54.Under capitalization method of goodwill, the net asset of the firm are deducted from the value of business to find out the value of:

  1. Net profit        
  2. Super-profit
  3. Goodwill       
  4. None of these

55.Under capitalization method of a valuation of goodwill, the goodwill

  1. Net assets of the firm – Whole value of business
  2. Net assets of the firm + Whole value of business
  3. Whole value of business — Net profit
  4. Net profit and Net assets — Whole value of business

56.If the actual profit of the business is Rs. 30,000 and normal rate of return is 5, then the a value of the whole business is to be:

  1. Rs. 300,000    
  2. Rs. 600,000
  3. Rs 400,000     
  4. Rs. 140,000

57.Under the capitalization method of valuation of goodwill, if the value of the whole business is Rs. 600,000. Net asset or capital is Rs. 320,000. Hence the goodwill is:

  1. Rs. 280,000
  2. Rs. 920,000
  3. Rs. 560,000    
  4. Rs. 320,000

58.Old profit sharing ratio minus new profit sharing ratio is equal to:

  1. Sacrificing ratio       
  2. Ratio of gain
  3. Capital ratio    
  4. None of these

58.Depreciation fund at the time of admission of a new partner is transferred to:

  1. Revaluation account  
  2. Partner capital account
  3. Partner profit account
  4. None to be transferred anywhere

59.At the time of admission of a partners the contingent liability becoming a certain liability will be debited to:

  1. Revaluation accounts         
  2. Realization account
  3. Partner’s capital account
  4. All of the above

60.When memorandum revaluation account is prepared then all the assets and liabilities except cash appear in the balance sheet at their:

  1. New values
  2. Old values
  3. Half with new and half with old values
  4. Both new and old values

61.M and N are sharing profits and losses in the ratio of 3 : 2. M is admitted into the

firm with 1/6th share in the profits for which he brings. Rs. 5,000. Hence, M’s adjusted capital will be:

  1. Rs. 20,000      
  2. Rs. 30,000
  3. Rs. 12,000      
  4. Rs. 15,000

62.For any decrease in the value of a liability, the revaluation account is to be:

  1. Debited           
  2. Credited
  3. Both debit & credit
  4. Neither debit or credit

64.Accumulated losses are transferred to the capital accounts of the partners at the time of admission in their:

  1. Capital ratio    
  2. Profit sharing ratio
  3. Equal ratio      
  4. Both (a) and (b)

65.When the incoming partner brings his share of goodwill in cash, it is adjusted by crediting to:

  1. His capital account    
  2. New partner’s account
  3. Goodwill account       
  4. Old partner’s capital accounts

66.P and Q are partners in a business sharing profits in the ratio of 5 : 3. They admits as a partner with 1/4 share in the profits which he acquires 3/4 from P and 1/4 from Q He pays Rs. 4000 for his share of goodwill P and Q will be credited by:

  1. Rs. 2,500 and Rss _500 respectively
  2. Rse 3,500 and Rsv 2,000 respectively
  3. Rs. 3,000 and Rs. 1,000 respectively
  4. Rs. 2,000 each

67.The capital balances of A and B are Rss 25,000 and Rs. 20,000 respectively after making all the adjustments. If C, the incoming partner, is to being 1/3 of the total capital of the firm, then his share of capital will be:

  1. Rs. 22,500     
  2. Rs. 15,000
  3. Rs. 22,000      
  4. Rs. 20,500

68.C is admitted in a firm for a 1/4 share in the profits for which he brings Rs. 3,000 for goodwill. It will be taken away by the old partners in:

  1. Old profit sharing ratio
  2. New profit sharing ratio
  3. Sacrificing ratio       
  4. Equal ratio

69.Goodwill raised by the partners at the time of admission of a partner will be written off in:

  1. Old profit sharing ratio
  2. New profit sharing ratio
  3. Sacrificing ratio                      
  4. Equal ratio

70.The balance of memorandum revaluation account (second part), is transferred to the capital accounts of the partners in:

  1. Capital ratio    
  2. Old profit sharing ratio
  3. New profit sharing ratio      
  4. None of these

71. If the incoming partner is to bring his share of goodwill in cash, and there exists any balance in goodwill account, then this goodwill account is to be written off among old partners in:

  1. New profit sharing ratio          
  2. Old profit sharing ratio
  3. Sacrificing ratio          
  4. Equal ratio

72.Which one of the following journal entries will be passed. When the goodwill is paid to the old partners outside the business cash privately:

  1. Cash or bank A/c

To goodwill A/c           xx

  1. Goodwill A/c    xx

To old partners capital A/c      xx

  1. Goodwill          xx

will be passed

      4    No entry will pass in books

73.If the incoming partner bring his share of goodwill in cash and It decided to Show good will at 5,000 in book* of accounts. then the required to be shown in the balance sheet Will be raised in:

  1.  old profit sharing ratio
  2. New profit sharing ratio      
  3.  liqual profit sharing ratio
  4. Capital ratio

74.M and N are sharing profits in the ratio of 2 : l . They admit O into the 1/4 share to profit for which he brings Rs. 12,000 as his share of capita! hence the adjusted capital of N vall be:

  1. Rs, 12.000     
  2. Res. 16,000
  3. Rs. 24,000      
  4. Rs, 17.000

75.E the incoming partner, to bring Rs 6,000 by way of goodwill for share in the firm’s profits. total goodwill of the firm will be valued at Rs.

  1. 33000
  2. 30,000
  3. 17000
  4. 11000

76.S and T are sharing profits and losses in the ratio of 4 : 3. U is admitted into a firm With 1/4 share in profits. The new profit sharing ratio of the partners between S, T and U is 3 : 3 : 2. The adjusted capitals of S & T will be in the ratio of:

  1. 4:3
  2. 4:4
  3. 3:4
  4. 3:3

77.R and T are sharing profits and losses in the ratio of 5 : 4. Z is admitted into the firm with 1/10 share in profits for which he brings Rs. 10,000 is his capital. Hence T’s share of adjusted capital will be:

  1. Rs. 40,000     
  2. Rs- 50,000
  3. Rs. 61,000
  4. Rs. 33,000

78.In case of memorandum revaluation accounts if its first portion shows a loss then its second portion will show:

  1. Loss With double amount      
  2. Again Joss
  3. Profit 
  4. No balance

79.If, it is decided by the partners to show all the assets and liabilities at their Old values in the balance sheets, then the entries passed through revaluation account:

  1. Should be reversed 
  2. Are not to be reversed
  3. Never be reversed.
  4. Should be cancelled

 80. The balance in the  investment fluctuation fund, after meeting the loss on revaluation of investments, at the time of admission will be transferred to:

  1. Capital accounts of the partners
  2. Revaluation account reserve 
  3. General reserve
  4. None of these

81.The balance of revaluation account is transferred to the Old partners capital accounts in their:

  1. Sacrificing ratio          
  2. Old profits sharing ratio
  3. New profits sharing ratio        
  4. Equal profit sharing ratio

82.If goodwill account is not to be raised, debit is made to the capital accounts of the partners gaining and credit is given to:

  1. Capital accounts oF partners sacrificing their share
  2. Capital accounts of partners new sharing ratio
  3. Capital accounts of partners old sharing ratio
  4. None of these

83.Profit on revaluation is to be credited to old partners in their:

  1. Sacrificing ratio          
  2. New profit sharing ratio
  3. Old profit sharing ratio       
  4. Equal profit sharing ratio

84.A is admitted as a new partner and agrees to pay a premium of Rs. 3,500 but brings only Rs. 2,500 in cash. The balance of Rs. 1,000 must be debited to: 

  1. His current account
  2. Old partners capital account
  3. Goodwill account       
  4. Revaluation account

85. Any loss in the second part of the memorandum revaluation is to be debited to.

  1. Partner’s capital accounts
  2. Goodwill account
  3. Revaluation account  
  4. All of the above

86.Balance sheet items like profit and loss account balance and general reserve must be transferred to:

  1. Revaluation account  
  2. Old partners capital account          
  3. Goodwill account       
  4. None of the above

87.A and R are sharing profits in the ratio of 3 : 2. They admit C as a partner and the new profit sharing ratio is 2 : 2 : 1. If C pays Rs. 1,000 towards goodwill, R will get:

  1. Rs. 200           
  2. Rs. 400
  3. Rs. 500
  4. Nil

88.X and Y are sharing profits in the ratio of 3 : 2, they admit Z into the firm and he is given 1/5 share. If Z brings Rs. 10,000 as his share of capital, adjusted capital of Y will be:

  1. Rs. 10,000      
  2. Rs. 16,000
  3. Rs. 20,000      
  4. Rs. 26,000

89.When goodwill is brought in cash by the new partner, the method is known as.

  1. Revaluation method   
  2. Premium method
  3. Memorandum revaluation method
  4. None of these

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