Chapter Exam

Chapter 1: Accounting for Partnership Basic Concepts — Online MCQ Test

Q: Under the Indian Partnership Act, 1932, what is the minimum number of partners required to form a partnership?

Answer: A. Minimum 2 partners — According to the Indian Partnership Act, 1932, a partnership requires a minimum of 2 partners to be formed.

Q: Under the Indian Partnership Act, 1932, what is the maximum number of partners allowed in a firm?

Answer: B. 20 partners — According to the Indian Partnership Act, 1932, the maximum number of partners is 20. This limit can vary for certain professional firms.

Q: Interest on Capital is credited to partners when:

Answer: A. It is provided in the Partnership Deed — Interest on Capital is only credited to partners if it is specifically mentioned in the Partnership Deed. It is not an automatic provision under the Indian Partnership Act.

Q: Which of the following is NOT a characteristic of a partnership as per the Indian Partnership Act, 1932?

Answer: B. Limited liability of all partners — In a general partnership, all partners have unlimited liability. Limited liability applies only to limited partners in a Limited Liability Partnership, which is different from a traditional partnership.

Q: In a partnership, if the Profit Sharing Ratio is not mentioned in the Partnership Deed, how is profit distributed?

Answer: A. Equally among all partners — According to the Indian Partnership Act, 1932, if the profit sharing ratio is not specified in the Partnership Deed, profits and losses are shared equally among all partners.

Q: Capital Account and Current Account are used when the partnership uses:

Answer: A. Fixed Capital System — In the Fixed Capital System, the Capital Account remains constant, and a separate Current Account records all adjustments like profit, loss, interest, and drawings.

Q: A partner's capital is Rs. 50,000 and he draws Rs. 5,000 every month. If interest on drawings is charged at 10% per annum, what is the interest on drawings for the year (using the product method)?

Answer: B. Rs. 2,750 — Using the product method: Total drawings = 5,000 × 12 = 60,000. Average period = 6.5 months. Interest = (60,000 × 6.5 × 10)/(12 × 100) = Rs. 2,750.

ACCOUNTANCY · Grade 12 · CBSE(NCERT)

Practice Chapter 1: Accounting for Partnership Basic Concepts with a free chapter-wise online MCQ test for CBSE(NCERT) Grade 12 ACCOUNTANCY. This chapter covers: Partnership firm Indian Partnership Act 1932 Partnership Deed Profit sharing ratio Interest on Capital Interest on Drawings Past Adjustments Profit and Loss Appropriation Account F.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 1: Accounting for Partnership Basic Concepts — Important Questions & Answers (FAQ)

Frequently asked questions from CBSE(NCERT) Grade 12 ACCOUNTANCY — Chapter 1: Accounting for Partnership Basic Concepts, with answers and explanations. These are sample questions; the exam has its own separate question set.

Under the Indian Partnership Act, 1932, what is the minimum number of partners required to form a partnership?

A. Minimum 2 partners ✓
B. Minimum 3 partners
C. Minimum 4 partners
D. Minimum 5 partners

Answer: A. Minimum 2 partners
According to the Indian Partnership Act, 1932, a partnership requires a minimum of 2 partners to be formed.

What is a Partnership Deed?

A. A legal document that defines the rights and obligations of partners ✓
B. A document filed with the Registrar of Companies
C. A certificate issued by the government
D. A bank document for opening partnership accounts

Answer: A. A legal document that defines the rights and obligations of partners
A Partnership Deed is a written agreement that outlines the terms and conditions under which partners will operate the business.

Under the Indian Partnership Act, 1932, what is the maximum number of partners allowed in a firm?

A. 10 partners
B. 20 partners ✓
C. 50 partners
D. Unlimited partners

Answer: B. 20 partners
According to the Indian Partnership Act, 1932, the maximum number of partners is 20. This limit can vary for certain professional firms.

What is meant by Profit Sharing Ratio?

A. The ratio in which partners share the total profits or losses of the business ✓
B. The ratio of profit to total sales
C. The ratio of capital invested by each partner
D. The ratio of drawings to profit

Answer: A. The ratio in which partners share the total profits or losses of the business
The Profit Sharing Ratio determines the proportionate share of profits or losses that each partner receives from the partnership business.

Interest on Capital is credited to partners when:

A. It is provided in the Partnership Deed ✓
B. The firm makes a profit
C. Partners contribute additional funds
D. At the end of every financial year

Answer: A. It is provided in the Partnership Deed
Interest on Capital is only credited to partners if it is specifically mentioned in the Partnership Deed. It is not an automatic provision under the Indian Partnership Act.

Interest on Drawings is:

A. Charged to partners as they withdraw money from the business ✓
B. Credited to partners' capital accounts
C. Added to profit before distribution
D. Paid to partners as additional income

Answer: A. Charged to partners as they withdraw money from the business
Interest on Drawings is charged to partners to compensate the firm for the funds withdrawn, reducing their share of profit.

Which of the following is NOT a characteristic of a partnership as per the Indian Partnership Act, 1932?

A. Unlimited liability of partners
B. Limited liability of all partners ✓
C. Agency relationship between partners
D. Mutual agency and co-ownership

Answer: B. Limited liability of all partners
In a general partnership, all partners have unlimited liability. Limited liability applies only to limited partners in a Limited Liability Partnership, which is different from a traditional partnership.

In a partnership, if the Profit Sharing Ratio is not mentioned in the Partnership Deed, how is profit distributed?

A. Equally among all partners ✓
B. In the ratio of their capital contribution
C. In the ratio of their time spent in business
D. As decided by the oldest partner

Answer: A. Equally among all partners
According to the Indian Partnership Act, 1932, if the profit sharing ratio is not specified in the Partnership Deed, profits and losses are shared equally among all partners.

Capital Account and Current Account are used when the partnership uses:

A. Fixed Capital System ✓
B. Fluctuating Capital System
C. Hybrid Capital System
D. Variable Capital System

Answer: A. Fixed Capital System
In the Fixed Capital System, the Capital Account remains constant, and a separate Current Account records all adjustments like profit, loss, interest, and drawings.

A partner's capital is Rs. 50,000 and he draws Rs. 5,000 every month. If interest on drawings is charged at 10% per annum, what is the interest on drawings for the year (using the product method)?

A. Rs. 3,000
B. Rs. 2,750 ✓
C. Rs. 3,250
D. Rs. 2,500

Answer: B. Rs. 2,750
Using the product method: Total drawings = 5,000 × 12 = 60,000. Average period = 6.5 months. Interest = (60,000 × 6.5 × 10)/(12 × 100) = Rs. 2,750.

Next Chapter →

Chapter 2: Reconstitution of a Partnership Firm Admission of a Partner