Treating Manager as Partner

Q.

What is partnership ? What are its chief characteristics? Explain.

Q.

Where there is no partnership agreement exists between partners, what will be the profit sharing ratio between the partners?

1. It will depend on experience.

2. Unequal

3. It will depend on partner`s capital

4. Equal

Q. Given below are two statements; one is labelled as Assertion (A), and the other is labelled as Reason (R).

Assertion (A) - Partners share profits and losses equally.

Reason (R) - Partnership is the relation between persons who have agreed to share the profit of the business carried on by all or anyone of them acting for all

[0.88 marks]

1. Both A and R are true, and R is the correct explanation of A.
2. Both A and R are true, but R is not the correct explanation of A.
3. A is true, but R is false.
4. A is false, but R is true.

Q. account will be debited when the interest on drawings is charged, and partner's follow fixed capital method

1. Partner's capital
2. Partner's current
3. Interest
4. Profit & Loss

Q.

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

1. Interest on capital

2. Share of loss

3. Interest on drawings

4. Drawings

Q.

State two elements of the partnership deed.

Q.

What is Fluctuating Capital Method?

Q. shall have an effect on the capital account of partners under the fixed capital method.

1. Capital withdrawal
2. Interest on drawings
3. Partners' salary
4. Partner's commission

Q. difference between oral partnership deed and written partnership deed

Q.

Which of the following shall have effect on the capital account of partners under fixed capital method?

1. Interest on drawings

2. Interest on capital

3. Drawings

4. None of the above

Q. State one difference between Fixed Capital Account and Fluctuating Capital Account of partners.

Q. Accounting entry for interest on drawings is __________.

1. Profit and Loss A/c Dr.
   To Capital A/c
2. Capital A/c Dr.
   To Profit and Loss A/c
3. Interest A/c Dr.
   To Capital A/c
4. None of the above

Q.

Which of the following is the journal entry for transferring interest on capital to a partner under a fluctuating capital account method?

[2 marks]

1. Dr. Interest on Capital A/c and Cr. Profit and Loss Appropriation A/c
2. Dr. Profit and Loss Appropriation A/c and Cr. Interest on Capital A/c
3. Dr. Interest on Capital A/c and Cr. Partners’ Capital A/c
4. Dr. Interest on Capital A/c and Cr. Partners’ Current A/c

Q. Explain the procedure for registration of partnership firm. What are the consequences of non registration?

Q. Naina and Sunaina are partners sharing profits and losses in the ratio of 3 : 4 contributing capital of ₹ 30, 000 each. During the year Naina withdrew ₹ 1, 500, and Sunaina withdrew ₹ 3, 000 on which interest was charged at ₹ 150 and ₹ 300 respectively. Pass the journal entry for charging interest if accounts are maintained under a fixed capital method.

[0.88 marks]

1. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Naina's Capital A/c}& \text{Dr.}& & \text{150}& \\ & \text{Sunaina's Capital A/c}& \text{Dr.}& & \text{300}& \\ & \text{To Interest on Drawings A/c}& & & & \text{450}\end{array}$
2. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Interest on Drawings A/c}& \text{Dr.}& & \text{450}& \\ & \text{To Naina's Capital A/c}& \text{Dr.}& & \text{150}& \\ & \text{To Sunaina's Capital A/c}& & & & \text{300}\end{array}$
3. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Naina's Current A/c}& \text{Dr.}& & \text{150}& \\ & \text{Sunaina's Current A/c}& \text{Dr.}& & \text{300}& \\ & \text{To Interest on Drawings A/c}& & & & \text{450}\end{array}$
4. $\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ & & & & & \\ & \text{Interest on Drawings A/c}& \text{Dr.}& & \text{450}& \\ & \text{To Naina's Current A/c}& \text{Dr.}& & \text{150}& \\ & \text{To Sunaina's Current A/c}& & & & \text{300}\end{array}$

Q. In partnership under fixed capital account method, which of the following account is opened?

1. Partner's Capital Account
2. Partner's Current Account
3. (A) or (B)
4. (A) & (B)

Q. is credited to the partner's capital account when capitals are fluctuating.

1. Drawings
2. Interest on drawings
3. Interest on capital
4. Share of loss

Q. In partnership under fluctuating capital account method, recording the transactions relating to drawings, interest on capital, commission, salary, share of profit or loss are made in.

1. Partner's Capital Account
2. Partner's Current Account
3. A or B
4. A & B

Q. Which of the following are included in a partnership deed?

1. Distribution of profits and losses
2. All of the Above
3. Terms governing admission, retirement and expulsion of a partner
4. Duties and obligations of the partners

Q. Under which Capital Account Method, Current Accounts of partners are not maintained?

Q.

Which of the following account will be debited when the interest on drawings is charged and partner's follow fixed capital method?

1. Interest account

2. Profit & Loss account

3. Fixed capital account

4. Partner`s Current account

Q. State whether the following statements are True or False.

Partner’s current account is opened when fluctuating capital method is adopted.

Q. In normal trading circumstances, which of the following would not be found in a partner's capital account?

1. Drawings
2. Interest on revaluation
3. Profits on revaluation
4. None of the above

Q. To constitute a partnership agreement, it _____________.

1. Must be in writing
2. Can be oral or written
3. Either oral or written
4. Only oral

Q. State a difference between fixed method and fluctuating method on the basis of balance of partners capital account.

Q. Jaspal and Rosy were partners with capital of 10 lakh and 5 lakh each. They dont have a partnership deed. Jaspal wants that profits be shared in the capital ratio. Rosy convinced him that they should be shared equally. Explain how Rosy would have convinced Jaspal for sharing profits equally?

Q. Objective type questions :-
Answer in one sentence only.

When is partner’s current account opened?

Q. Name the partnership firm which is formed to carry on a special task or project.

Q. Partners Capital Account(Fluctuating) is a combination of which two accounts ? Capital and Capital or Capital & Current??

Q.

is withrawal from capital considered as drawings while calculating interest on drawings ?