Partnership Deed

Q. X and Y are partners sharing profits and losses in the ratio of 2 : 3 with capitals ₹ 2, 00, 000 and ₹ 3, 00, 000 respectively. On 1st October, 2017, X and Y granted loans of ₹ 80, 000 and ₹ 40, 000 respectively to the firm. Show distribution of profits/losses for the year ended 31st March, 2018 in each of the following alternative cases:
Case 1 : If the profits before interest for the year amounted to ₹ 21, 000.
Case 2 : If the profits before interest for the year amounted to ₹ 3, 000.
Case 3 : If the profits before interest for the year amounted to ₹ 5, 000.
Case 4 : If the loss before interest for the year amounted to ₹ 1, 400.

Q. If nothing is mentioned about the rate of interest on the loan in the partnership deed, we pay interest at the rate of per annum.

1. 2%
2. 4%
3. 5%
4. 6%

Q.

The net profit of X, Y and Z for the year ended March 31, 2016 was Rs 60, 000 and the same was distributed among them in their agreed ratio of 3 : 1 : 1. It was subsequently discovered that the under mentioned transactions were not recorded in the books :

(i)	Interest on Capital @ 5% p.a.
(ii)	Interest on drawings amounting to X Rs 700, Y Rs 500 and Z Rs 300.
(iii)	Partner’s Salary : X Rs 1000, Y Rs 1500 p.a.

The capital accounts of partners were fixed as : X Rs 1, 00, 000, Y Rs 80, 000 and Z Rs 60, 000. Record the adjustment entry.

Q.

Assuming that the Debt-Equity Ratio is 2 : I, state, giving reasons, which of the following transactions would (I) Increase; (ii) Decrease; (ii.) Not alter the Debt-Equity Ratio :

(i) Issue of new shares (Preference/Equity) for Cash.

(ii) Issue of new shares (Preference/Equity) against purchase of fixed asset.

(iii) Buy-back of its own shares by a Company.

(iv) Issue of Debentures for Cash.

(v) Issue of Debentures against purchase of fixed asset.

(vi) Repayment of Long-term Borrowings.

(vii) Conversion of Debentures into Equity Shares/Preference Shares.

(viii) Sale of a fixed asset at par.

(ix) Sale of a fixed asset at profit.

(x) Sale of a fixed asset at loss.

(xi) Purchase of a fixed asset on a credit of 2 months.

(xii) Purchase of a fixed asset on long-term deferred payment basis.

(xiii) Issue of Bonus Shares.

Q.

X, Y, and Z are partners in a firm. At the time of division of profit for the year, there was a dispute between the partners. profits before interest on partner's capital was 12, 000 and Y determined interest @24% p.a. on his loan of 1, 60, 000. There was no agreement on this point. Calculate the amount payable to X, Y, and Z respectively.

1. 4800 to each partner

2. 800 for X, 10400 for Y and 800 for Z

3. loss of 8800 for X and Z & Y will take home 25600

4. 4000 to each partner

Q.

Every promise and every set of promises forming the consideration for each other is (A) acceptance (B) agreement (C) arrangement (D) all of these (E) none of these

Q. If the profit sharing ratio is not mentioned in the partnership deed, then profits will be shared .

1. equally
2. randomly
3. in fixed ratio
4. in agreed ratio

Q.

What are the two main sources of capital?

Q.

Under fluctuating capital account, the interest on capital is credited to ___

1. Fixed capital account

2. Current account

3. Fluctuating capital account

4. Floating capital account

Q.

Explain why it is considered better to make a partnership agreement in writing.

Q.

Why it is considered desirable to make the partnership agreement in writing ?

Q.

Give The Journal Entry To Distribute investment Fluctuation Reserve Of Rs.24, 000 At The Time Of Admission Of Z, When Investment (Market Value Rs.1, 10, 000) Appears At Rs.1, 20, 000. The Firm Has Two Partners X And Y.

Q. X and Y contribute ₹ 20, 000 and ₹ 10, 000 respectively towards capital. They decide to allow interest on capital @ 6% p.a. Their respective share of profits is 2 : 3 and the net profit for the year is ₹ 1, 500. Show distribution of profits:
(i) where there is no agreement except for interest on capitals; and
(ii) where there is an agreement that the interest on capital as a charge.

Q.

X, Y, and Z are partners in a firm. At the time of division of profit for the year, there was a dispute between the partners. Profits before interest on partner's capital was 24, 000 and Z demanded minimum profit of 10, 000 as his financial position was not good. However, there was no written agreement on this profit. Show how profit will be distributed amongst the partners.

1. Rs 8, 000 to each of the partners

2. X & Y will take 7, 000 each and Z will take 10, 000

3. Other partners will pay Z the minimum profit and will suffer loss in capital ratio

4. Other partner will pay Z the minimum profit and will suffer loss equally

Q.

Why should a firm have a partnership deed?

Q.

Fluctuating capital account is credited with:

1. Interest on capital

2. Profits

3. Salaries & remuneration

4. All of the above

Q.

Which of the following is debited to Partner`s capital account when capitals are fluctuating?

1. Salaries & remuneration

2. All of the above

3. Interest on capital

4. Share of loss

Q.

Partnership type of business is formed by the mutual agreement of partners. What kind of agreement is it?

1. Oral or written agreement

2. Oral agreement

3. Written agreement

4. None of the above

Q. What is meant by partner by estoppel?

Q. Which of the following is the difference between a partnership deed and partnership agreement?

1. Partnership deed is in writing and partnership agreement is oral.
2. Partnership deed is signed by all the partners but partnership agreement is signed by majority of the partners.
3. Partnership deed is registered in the court of law whereas partnership agreement is not registered.
4. Partnership deed is not subject to changes unless all partners to it. Partnership agreement can be amended with the consent of more than 50% partners.

Q. As per Table A to the Companies Act, a company pays interest on calls in advance at the rate of __________.

1. $5$%
2. $6$%
3. $10$%
4. $12$%

Q. When there is no agreement among the partners, the profit or loss of the firm will be shared in their capital ratio.

1. True
2. False

Q. Which Section of the Partnership Act, 1932 defines the term 'Partnership'?

1. Section 1
2. Section 2
3. Section 3
4. Section 4

Q. X and Y are partners sharing profits and losses in the ration of 3:2 having the capital of Rs. 1, 60, 000 and Rs. 1, 00, 000 respectively. They are entitled to 9% p.a. interest on capital before distributing the profits. During the year firm earned Rs.15, 600 before allowing any interest on capital. Profits apportioned among X and Y is ___________.

1. Rs. 9, 360 and Rs. 6, 240
2. Rs. 9, 600 and Rs. 6, 000
3. Rs. 10, 000 and Rs. 5, 600
4. None of these

Q. Contingent liabilities is shown as __________ in Balance Sheet.

1. liability
2. equity shareholders fund
3. footnote
4. none of the above

Q. In case of non-registered partnership firm ___________.

1. a partner can file a suit against the firm
2. a partner can file a suit against any partner of the firm
3. the firm can file a suit against third parties
4. third party can file a suit against the firm

Q. State any four features of a Partnership.

Q. A person not being a partner but represents himself to be a partner is called a __________.

1. Sub-partner
2. Partner by estoppels
3. Sleeping partner
4. Dormant partner

Q. Invariably_____is included in partnership deed.

1. Name of firm
2. Power of the partner
3. Salary payable to partner
4. All of me above

Q. If the deed is silent, and we have to charge against profit in what ratio we will charge??