300+ TOP Partnership Accounting MCQs and Answers Quiz

Partnership Accounting Multiple Choice Questions

1. A firm has an average profit of 60,000. Rate of return on capital employed is 12.5% per annum. Total capital employed in the firm was rs. 4,00,000. Goodwill on the basis of two years’ purchases of super profit is
A. rs. 15,000

B. rs. 20,000

C. rs. 10,000

D. None of these

Answer: B

2. X and Y are partners in a firm sharing profits and losses in the ratio of 3:1. Z is admitted as a partner who pays rs. 4,000 as goodwill. The new profit sharing ratio is 2:1:1. Then goodwill is credited to
A. Y’s capital 7 4,000

B. X’s capital 4,000

C. X’s capital rs. 3,000 and Y’s capital rs. 1,000

D. None of the above

Answer: B

3. K and L are equal partners. They admitted M for 1/4th share in future profits. New profit sharing ratio will be
A. 2:2:1

B. 3:3:1

C. 3:3:2

D. None of these

Answer: C

4. X,Y and Z are partners sharing profits in the ratio of 4:3:2. Y retires and X and z decide to share future profits in the ratio of 5:3. Gaining ratio between X and Z will be
A. 12: 10

B. 10: 12

C. 13: 11

D. None of these

Answer: C

5. Sacrificing ratio is used to distribute . in case of admission of a partner.
A. goodwill

B. reserves

C. revaluation profit

D. balance in profit and loss account

Answer: A

6. Where will you record interest on drawings?
A. debit side of profit and loss appropriation account

B. credit side of profit and loss appropriation account

C. credit side of profit and loss account

D. debit side of capital/current account only

Answer: B

7. A partnership firm consisted of three partners A, B and C. If C pays rs. 10,000 against the liability of the firm from his private funds, then what will be the entry in the books of the firm?
A. No entry

B. Liability Account Debit, Partner’s Capital Account Credit

C. Partner’s Capital Account Debit, Liability Account Credit

D. None of the above

Answer: B

8. In the absence of an agreement, partners are entitled to
A. salary

B. commision

C. interest on loans and advances

D. profit share in capital ratio

Answer: C

9. Interest on partners’ capital is
A. an expenditure

B. an appropriation

C. a gain

D. None of the above

Answer: B

10. Fluctuating capital account is credited with
A. interest on capital

B. profit of the year

C. remuneration to the partners

D. All of the above

Answer: D

Partnership Accounting MCQs

11. A and B are partners sharing profits and losses in the ratio of 4:1. C was a manager who received a salary of 2,000 per month in addition to a commission of 5% on net profits after charging such commission. Profit for the year is rs. 3,39,000 before charging C’s salary. Find total remuneration of C.
A. rs. 39,000

B. rs. 44,000

C. rs. 43,500

D. rs. 38,000

Answer: A

12. A and B are partners, A’s capital is rs.10.000 and B’s capital is 6,000. Interest is payable @ 6% per annum. B is entitled to a salary of rs. 300 per month. Profit for the year before interest and salary to B is rs. 8,000. Profit sharing ratio is 1:2. Profits between A and B will be divided as
A. rs. 1,147 to A and rs 2,293 to B

B. rs. 2,000 to A and rs.1440 to B

C. rs. 1440 to A and rs. 2000 to B

D. None of the above

Answer: A

13. X.Y and Z are partners sharing profits and losses in the ratio 5:3:2. They decide to share the future profits in the ratio 2:3:5. What will be the treatment for workmen compensation fund appearing in the balance sheet on the date if no information is available for the same?
A. Distributed to the partners in old profit sharing ratio

B. Distributed to the partners in new profit sharing ratio

C. Distributed to the partners in capital ratio

D. Carried forward to new balance sheet without any adjustment

Answer: A

14. X and Y are partners in a firm with capitals of rs. 18,000 and rs. 20,000. Z was admitted for 1/3rd share in profits and brings rs. 34,000 as capital. Calculate the amount of goodwill.
A. rs. 24,000

B. rs. 30,000

C. rs. 15,000

D. rs. 10,000

Answer: B

15. Under capitalisation method, goodwill is calculated by
A. Average profits x Years of purchase

B. Super profits x Years of purchase

C. Average profits x Super profits

D. Super profits divided with expected rate of return

Answer: D

16. Weighted average method of calculating goodwill is used when
A. profits are unequal

B. profit has increasing trend

C. profit has decreasing trend

D. either B. or C.

Answer: D

17. Ravi and Suraj are partners having the profit sharing ratio 3:2 in a firm. They admitted Tarun in partnership and new profit sha ing ratio of Ravi, Suraj and Tarun was decided at 2:2:1 respectively. Tarun brings rs. 30,000 as goodwill. What would be the share of Ravi in goodwill?
A. rs. 30,000

B. rs. 6,000

C. rs. 26,000

D. None of these

Answer: A

18. Extra amount over and above the saleable values of the identifiable assets that could be fetched by selling an existing firm as a going concern is more commonly referred to as
A. goodwill

B. revaluation profit

C. super profit

D. surplus

Answer: A

19. When there is no goodwill account in the books and goodwill is raised. …… account will be debited.
A. partner’s capital

B. goodwill

C. cash

D. reserve

Answer: B

20. The opening balance of partner’s capital account is credited with
A. interest on capital

B. interest on drawings

C. profit

D. Both ‘a’ and ‘c’

Answer: D

21. The balance of memorandum revaluation account (second part) is transferred to the capital accounts of the partners in
A. new profit sharing ratio

B. old profit sharing ratio

C. capital ratio

D. sacrificing ratio

Answer: A

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