Saturday, June 29, 2013

QUESTION CHAPTER NO. 1

12th BOOK KEEPING BY AJAYSANTHOSH MOURYA



QUESTIONS
I. Objective Type

a) Fill in the blanks:
1. A sole trader business is owned and managed by ________ person.
2. Indian Partnership Act was enacted in the year ________.
3. Mutual and ________ agency is the essence of a partnership.
4. The profits and losses of the business will be shared among the partners in the ________ ratio.
5. Under fluctuating capital method, profit or loss in a year, will be transferred to the respective ________ accounts.
6. The capital accounts of partners may be ________ or fluctuating.
7. Under __________ capital arrangement, current accounts will not be maintained.
8. The debit balance of the current account, will be shown in the ________ side of the balance sheet.
9. Interest on partners’ capital is allowed, only when the ________ specifically provides for it.
10. Money lent to the business by a partner is credited to his ________ account and not his capital account.
11. Interest on partners’ loan should be paid, even if there is no ________ in a year.
12. Goodwill is an _______ asset.
13. The excess of average profit over normal profit is _______.
14. In the absence of partnership deed, no interest is to be charged on ________.
15. A partnership can be formed only for a ________ business.
16. The persons who entered into partnership are collectively known as ________.

(Answers: 1. one; 2. 1932; 3. implied; 4. agreed; 5. capital; 6. fixed;
7. fluctuating; 8. assets; 9. partnership agreement; 10. loan;
11. profit; 12. intangible; 13. Super profit; 14. drawings;
15. legal; 16. firm)

b) Choose the correct answer:
1. The minimum number of persons in a partnership firm is ______
a) one
b) two
c) seven

2. In a partnership business, agreement is _______
a) compulsory
b) optional
c) not necessary

3. In a partnership, partners share their profits and losses in _______ ratio
a) their capital
b) equal
c) agreed

4. Under fixed capital system, the profits and losses of partners will be transferred to their _______ account
a) current
b) drawings
c) capital

5. Interest on capital is calculated on the
a) Opening Capital
b) Closing Capital
c) Average Capital

6. Current accounts for partners will be opened under
a) Fixed capital method
b) Fluctuating capital method
c) Either fixed capital method or fluctuating capital method

7. In the absence of an agreement profits and losses are divided
a) in the ratio of capitals
b) in the ratio of time devoted by each partner
c) equally

8. X and Y are partners sharing the profits and losses in the ratio of 2:3 with capitals of Rs.1,20,000 and Rs.60,000 respectively. Profits for the year are Rs.9,000. If the partnership deed is silent as to interest on capital. Show how profit is shared among X and Y.
a) Profit : X - Rs. 6,000; Y - Rs.3,000
b) Profit : X - Rs. 3,600; Y - Rs.5,400
c) Profit : X - Rs. 3,000; Y - Rs.6,000

9. Where a partner is entitled to interest on capital such interest will be payable,
a) Only out of profits
b) Only out of capital
c) Out of profits or out of capital

10. In the absence of partnership deed, partners shall
a) be paid salaries
b) not to be paid salaries
c) paid salaries to those who work for the firm

11. Under fixed capital method salary payable to a partner is recorded
a) in Current Account
b) in Capital Account
c) either in Current Account or Capital Account.

12. If a firm is maintaining both ‘Capital Accounts’ and ‘Current Accounts’ of the partners A and B. Additional capital introduced by B will be recorded in
a) B’s Current Account
b) B’s Capital Account
c) either B’s Capital Account or Current Account

(Answers : 1. (b); 2. (b); 3. (c); 4. (a); 5.(a); 6.(a); 7. (c); 8. (b); 9. (a);
10. (b); 11. (a); 12. (b))

II. Other Questions:
1. Define Partnership.
2. What is Drawings?
3. What is Goodwill?
4. What is Average profit?
5. What is Super profit?
6. What is Partner’s Current Account?
7. What is Profit and Loss Appropriation Account?
8. What are the features of a partnership?
9. Explain the methods by which the partners’ capital accounts are maintained.

10. In the absence of Partnership Deed, how are the following items dealt in the books of accounts of a firm?
a) Interest on Capital
b) Interest on drawings
c) Salaries to partners
d) Commission to partners
e) Interest on partners loan
f) profit sharing ratio

11. What are the differences between fixed capital account and fluctuating capital account?
12. What are the factors affecting goodwill?
13. Explain the methods of valuation of Goodwill.
14. If the Partners’ Capital Accounts are fixed, where will you record the following items:
a) Salary payable to a Partner
b) Drawings made by a Partner

15. If a firm is maintaining both Capital Accounts and Current Accounts of partners A and B where will the following be recorded
a) Fresh Capital introduced by B
b) Share of profits earned by A and B.

16. Mention the items that may appear on the credit side of the capital accounts of a partner when the capitals are fluctuating.

Question to be continued   : -III Problem

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