Partnership accounts - fundamentals, final accounts, admission, retirement, death of partners, dissolution of partnership firms, consignment accounts, joint venture accounts - Question Bank

1. The profit on consignment is calculated in the books of the:
A) Consignee
B) Consignor
C) Both Consignor and Consignee
D) Customer
2. In the absence of specific instructions, unsold goods with the consignee are valued at:
A) Cost price
B) Market price
C) Cost price plus proportionate expenses
D) Cost price less provision for obsolescence
3. If a partner's loan account is paid during dissolution, it is debited to:
A) Realization Account
B) Partner's Loan Account
C) Bank Account
D) Partner's Capital Account
4. When goodwill is raised at the time of admission of a partner, it is debited to:
A) Goodwill Account
B) Partner's Capital Accounts
C) Revaluation Account
D) Profit and Loss Appropriation Account
5. Which account is prepared to ascertain the final profit or loss on dissolution of a firm?
A) Partner's Capital Account
B) Realization Account
C) Profit and Loss Account
D) Bank Account
6. The final settlement of a deceased partner's dues is made to:
A) The deceased partner's family
B) The deceased partner's legal representative/executor
C) The surviving partners
D) The firm's bank account
7. When a partner retires, their share of profit up to the date of retirement is credited to:
A) Retiring Partner's Capital Account
B) Continuing Partners' Capital Accounts
C) Profit and Loss Appropriation Account
D) General Reserve
8. In a Joint Venture, if separate books are maintained, a Joint Bank Account is usually opened and debited with:
A) Capital contributed by co-venturers
B) All expenses paid from the joint bank
C) All incomes received into the joint bank
D) All of the above
9. What is the primary objective of preparing a Consignment Account?
A) To ascertain the profit or loss on consignment
B) To record the sales made by the agent
C) To track expenses incurred by the principal
D) To manage inventory
10. In the case of insolvency of a partner, the deficiency of that partner is borne by the solvent partners in their:
A) Old profit-sharing ratio
B) New profit-sharing ratio
C) Gaining ratio
D) Fixed capital ratio
11. When a partner is appointed as liquidator, he is usually paid:
A) Salary
B) Commission
C) Interest on capital
D) Nothing
12. A partner can withdraw his private property during dissolution:
A) Only if the firm has surplus cash
B) Only if the firm is solvent
C) Only if the firm is insolvent
D) Never
13. Any profit or loss on realization is transferred to:
A) Partner's Capital Accounts in their profit-sharing ratio
B) Partner's Loan Accounts
C) Bank Account
D) Profit and Loss Appropriation Account
14. Any payment made to partners for their loans during dissolution is debited to:
A) Realization Account
B) Partner's Loan Account
C) Bank Account
D) Partner's Capital Account
15. Liabilities are transferred to Realization Account at their:
A) Book Value
B) Market Value
C) Estimated Value
D) Average Value
16. During dissolution, assets are realized and transferred to:
A) Realization Account
B) Partner's Capital Account
C) Bank Account
D) Profit and Loss Account
17. Which of the following is NOT a characteristic of dissolution of partnership?
A) Cessation of business relationship between partners
B) Winding up of the firm's affairs
C) Formation of a new partnership
D) Realization of assets and payment of liabilities
18. The profit or loss on Joint Venture is transferred to:
A) Trading Account
B) Profit and Loss Account
C) Co-venturers' Capital Accounts
D) Consignment Account
19. When separate books of accounts are not maintained for a Joint Venture, the Venturer's personal transactions are recorded in:
A) Joint Venture Account
B) Venturer's Personal Account
C) Bank Account
D) Cash Account
20. In the books of a Co-venturer, the Joint Venture Account is debited with:
A) Expenses incurred by the co-venturer
B) Sales made by the co-venturer
C) Profit earned
D) Capital contributed
21. In a Joint Venture, each party involved is called a:
A) Agent
B) Consignor
C) Co-venturer
D) Partner
22. A Joint Venture is:
A) A permanent business relationship
B) A temporary association of two or more parties for a specific undertaking
C) A merger of two companies
D) A sole proprietorship business
23. Del-credere commission is paid to the consignee to cover the risk of:
A) Loss of goods in transit
B) Bad debts
C) Damage to goods
D) Low sales
24. Abnormal loss on consignment is debited to:
A) Consignment Account
B) Consignee's Account
C) Profit and Loss Account
D) Consignor's Capital Account
25. Normal loss on consignment is borne by:
A) Consignor
B) Consignee
C) Both Consignor and Consignee
D) The customer
26. In the books of the Consignee, the Consignor's Account is credited with:
A) Cost of goods sold
B) Expenses incurred
C) Advance paid to the Consignor
D) Sales made to customers
27. In the books of the Consignor, the Consignment Account is debited with:
A) Cost of goods sent on consignment
B) Expenses incurred by the consignee
C) Sales made by the consignee
D) Commission paid to the consignee
28. In consignment accounts, the Consignor's account is prepared in the books of the:
A) Consignor
B) Consignee
C) Both Consignor and Consignee
D) Neither Consignor nor Consignee
29. The person to whom goods are consigned is known as the:
A) Principal
B) Consignee
C) Agent
D) Merchant
30. The person who consigns goods is known as the:
A) Agent
B) Factor
C) Consignor
D) Commission Agent
31. Consignment means:
A) Selling goods on credit
B) Selling goods through an intermediary who sells on behalf of the principal
C) Selling goods in bulk
D) Selling goods for cash only
32. If a partner's capital account shows a debit balance, it means the partner has:
A) More capital invested than withdrawn
B) Withdrawn more than invested
C) No share in profits
D) A liability to the firm
33. What is the purpose of the Revaluation Account?
A) To record the profit or loss on the sale of assets
B) To record the profit or loss arising from changes in the value of assets and liabilities
C) To distribute profits among partners
D) To record drawings of partners
34. Under the fluctuating capital method, all transactions related to partners (capital introduced, drawings, salary, interest, profit share) are recorded in:
A) Partner's Capital Account only
B) Partner's Current Account only
C) Profit and Loss Appropriation Account and Balance Sheet
D) Trading Account and Profit and Loss Account
35. Under the fixed capital method, partner's salary, interest on capital, and drawings are recorded in:
A) Partner's Capital Account
B) Partner's Current Account
C) Profit and Loss Appropriation Account
D) Cash Account
36. Profit and Loss Appropriation Account is used to distribute:
A) Gross Profit
B) Net Profit or Net Loss
C) Operating Profit
D) Sales Revenue
37. The final accounts of a partnership firm include:
A) Trading Account
B) Profit and Loss Account
C) Balance Sheet
D) All of the above
38. When a partner dies, the executor of the deceased partner is entitled to:
A) His share of profit till the date of death
B) Interest on his capital
C) Interest on his drawings
D) All of the above
39. In case of retirement of a partner, if the partnership deed is silent about the treatment of accumulated profits and reserves, they are:
A) Distributed among all partners in their old profit-sharing ratio
B) Distributed among the continuing partners in their new profit-sharing ratio
C) Carried forward to the new Balance Sheet
D) Ignored
40. When a retiring partner is paid his dues, the amount is usually paid from:
A) The continuing partners' capital accounts
B) The firm's cash balance
C) A loan taken by the firm
D) All of the above
41. Gaining Ratio is calculated as:
A) New Ratio - Old Ratio
B) Old Ratio - New Ratio
C) Old Ratio + New Ratio
D) New Ratio / Old Ratio
42. Sacrificing Ratio is calculated as:
A) New Ratio - Old Ratio
B) Old Ratio - New Ratio
C) Old Ratio + New Ratio
D) New Ratio / Old Ratio
43. Revaluation Account is prepared at the time of:
A) Preparation of final accounts
B) Admission of a new partner
C) Retirement of a partner
D) Dissolution of the firm
44. When a new partner is admitted, the profit-sharing ratio of the old partners:
A) Remains unchanged
B) Is always reduced
C) Is either reduced or remains unchanged
D) Is always increased
45. Goodwill is an intangible asset. In partnership accounts, it is:
A) Always shown in the Balance Sheet
B) Written off when a new partner is admitted
C) Valued and adjusted when there is a change in profit-sharing ratio or admission/retirement/death of a partner
D) Never shown in the Balance Sheet
46. Drawings made by a partner during the year are debited to:
A) Partner's Capital Account
B) Partner's Current Account
C) Profit and Loss Appropriation Account
D) Trading Account
47. If a partnership deed is silent on interest on loans advanced by a partner, what is the rate of interest applicable?
A) 12% per annum
B) 9% per annum
C) 6% per annum
D) No interest is payable
48. Interest on capital is paid to partners:
A) As a charge against profits
B) As an appropriation of profits
C) Only if the firm incurs a loss
D) Only if the partnership deed specifies it as a charge
49. In the absence of a partnership deed, what is the profit-sharing ratio among partners?
A) As decided by the majority of partners
B) Based on the capital contributed by each partner
C) An equal ratio
D) At the discretion of the senior-most partner
50. What is the primary characteristic of a partnership firm according to the Indian Partnership Act, 1932?
A) Unlimited liability for all partners
B) A separate legal entity distinct from its partners
C) An agreement between two or more persons to share profits of a business carried on by all or any of them acting for all
D) Limited liability for all partners