Accounting for Partnership Basic Concepts MCQ

Question 1

Salary paid to partner should be:

A.Debited to his current account

B.Credited to his current account

C.Credited to profit & loss appropriation A/c

D.None of these

SOLUTION

Solution : D

Salary paid to partner should be debited to profit & loss appropriation account.

Question 2

Net profit is shown in the ___ Side of profit & loss appropriation account.

A.Debit

B.Credit

C.Either debit or credit

D.None of the above

SOLUTION

Solution : B

Net Profit (From the income statement) is shown to the credit of profit & loss appropriation account.

Question 3

Profit & loss appropriation account is ___ for transfer of profit to general reserve.

A.Credited

B.Debited

C.Not entered

D.None of these

SOLUTION

Solution : B

Profit & loss appropriation account is debited for transfer of profit to general reserve.

Question 4

Under which capital method, there are 2 accounts opened for each partner?

A.Normal

B.Floating

C.Fixed

D.Fluctuating

SOLUTION

Solution : C

Under fixed capital method, there are 2 accounts opened for each partner i.e. capital account & current account.

Question 5

Under ___ Method, All adjustments for drawings, All adjustments for drawings, salary, interest on capital, salary interest on capital, etc. are made in the capital account.

A.Fixed capital account

B.Current account

C.Fluctuating capital account

D.Floating capital account

SOLUTION

Solution : C

Under Fluctuating Method, All adjustments for drawings, All adjustments for drawings, salary, interest on capital, salary interest on capital, etc. are made in the capital account account.

Question 6

Under ___ method , the capital account may have either debit or credit balances.

A.Fixed capital account

B.Fluctuating capital account

C.Interest on capital

D.None of these

SOLUTION

Solution : B

Under fluctuating method , the capital account may have either debit or credit balances.

Question 7

What change does profit makes to capital?

A.All of these

B.Profit gets added to the capital

C.Profit has no change to capital

D.Profit gets reduced from capital

SOLUTION

Solution : B

Profit gets added to the capital of the partners at the end of the financial year.

Question 8

Rent is a __________

A.Appropriation of profit

B.Charge against profit

C.Either A or B

D.None of these

SOLUTION

Solution : B

Rent is a charge against the profit.

Question 9

Under ___ method , the capital account always shows a credit balance.

A.Floating capital account

B.Fluctuating capital account

C.Current account

D.Fixed capital account

SOLUTION

Solution : D

Under fixed capital account method , the capital account always shows a credit balance.

Question 10

Appropriations are the transactions that happen between firm and partners in the capacity of ___________

A.Partner

B.Outsider

C.Either A or B

D.None of these

SOLUTION

Solution : A

Appropriations are the transactions that happen between firm and partners in the capacity of partners.