Revision Sheet

1. A firm follows fluctuating capital method. One of its partners takes a loan from the firm on which, as per the
partnership deed, the firm is entitled to receive interest.
What will be the adjusting entry for this interest on loan?
a) Dr Interest on loan a/c ; Cr Profit and loss appropriation a/c
b) Debit interest on loan a/c ; Cr Profit and loss a/c
c) Debit partners capital a/c; Cr Interest on loan a/c
d) Debit partners loan a/c ; Cr Interest on loan a/c (ISC 2022)

2. Arav, Rahil and Himmat are partners in a firm sharing profits and losses in the ratio 5:3:2. Arav guaranteed
guaranteed a minimum profit of 30,000 to Himmat. The trading loss during the year ending 31st March 2021 was
1,20,000.
In order to meet the deficiency in Himmat’s profits, Arav’s capital will be;
a) Debited by 30,000 b) Credited by 54,000
a) Debited by 54,000 d) Debited by 6,000 (ISC 2022)

3. The partnership deed of Sakshi and Tanu allowed an annual salary of 24,000 to Tanu. The trading profit of the
firm for the year 2020-21, after debiting Tanu’s salary was 60,000.
i) The partnership deed also provides for commission to Sakshi @ 5% of the correct trading profit of the firm
before charging commission. What will be Sakshi’s commission?
a) 1,800 b)3,000 c)5,200 d) 4,200

ii) Another provision in the partnership deed was that the partners are to be charged interest on drawings @ 4%
p.a. Tanu had withdrawn a fixed amount in the middle of every month and the interest on her drawings at the end
of the year was 600. What were the total drawings made by Tanu?
a) 6,000 b) 30,000 c) 15,000 d) 24,000

iii) What will be the entry to transfer trading profits of the firm to profit and loss appropriation account?
a) Dr P/L appropriation a/c; Cr Net profit a/c
b) Dr P/L appropriation a/c; Cr P/L a/c
c) Dr P/L a/c; Cr P/L appropriation a/c
d) Dr Trading profit a/c; Cr P/L appropriation a/c (ISC 2022)
4. Pick the odd one out from the following;
a) Interest allowed on a loan taken by the firm from a partner
b) Rent due to a partner of the firm for using his premises for business purposes
c) Salary due to the manager of the firm
d) Salary due to a partner of the firm (SP 2022)
5. Arif, Ravi and Ben are partners in a firm sharing profits and losses in the ratio 6:4:1. Arif guaranteed a
minimum profit of 16,000 to Ben. The trading profit of the firm for the year ending 31st March 2021 was
1,32,000. Arifs share in the profits of the firm will be;
a) 72,000 b) 68,000 c) 69,600 d) 16,000
b)
6 . Simi, Manu and Beena are partners in a firm sharing profits in the ratio 2:2:1. The balances of their fixed
capital accounts on 1st April 2020, were: Simi 1,00,000; Manu 1,00,000 and Beena 80,000.
After the accounts for the year ended 31st March 2021, were prepared, it was discovered that interest on capital
@ 10% p.a. had been credited to the partners current accounts even though it was not provided in the partnership
deed. The error in Simi’s capital account/ current account will be rectified by;
a) Debiting her capital account with 1,200 b) Crediting her current account with 1,200
b) Debiting her current account with 1,200 d) Crediting her capital account with 1,200
(SP 2022)
7. On 1st April, 2020, Pixie, Nixie and Gypsy entered into partnership with fixed capital of 60,000; 50,000 and
30,000 respectively. On 1st October, 2020, Pixie gave a loan of 12,000 to the firm.
The partnership deed contained the following clauses;
a) Interest on drawings to be charged @ 4% p.a.
b) Pixie to be entitled to a rent of 2,000 p.a. for allowing the firm to carry on business in his premises.
Nixie withdrew 1,000 at the end of the month for first 6 months.
Net profit of the firm for the year ending 31st March 2021 (before any interest but after rent on Pixie’s premises)
was 1,21,000.
i) The net profit of the firm will be;
a) 1,21,000 b)1,20,640 c) 1,18,640 d)96,640
ii) Interest on drawings charged from Nixie will be;
a) 340 b) 220 c) 170 18.33

8. A firm had given a loan to one of its partners. Give the journal entry to close this loan account at the time
of dissolution of the partnership firm. (ISC 2023)
9. Assertion (A): When the items are omitted it is necessary to prepare Profit and Loss Adjustment Account only.
Reason (R): For the purpose of correcting these omissions or mistakes, adjustment entries are passed through
Profit and Loss Adjustment Account in which adjustments in respect of each and every omission are to be made.
Mark the correct choice:
(a) Both assertion (A) and reason (R) are true and reason (R) is the correct explanation of assertion (A).
(b) Both assertion (A) and reason (R) are true but reason (R) is not the correct explanation of assertion (A).
(c) Assertion (A) is true but reason (R) is false.
(d) Assertion (A) is false but reason (R) is true.

10. Assertion: A loan given by a partner is considered as an external loan.

Reason: All amount contributed by a partner to a firm are external liabilities.
i. Assertion is True Reason is False.
ii. Assertion is False Reason is True.
iii. Both Assertion and Reason are True.
iv. Both Assertion and Reason are False.

11. Assertion : Goodwill is a fictitious asset.

Reason : Goodwill has a realisable value.
Which one of the following is correct?
(a) Both Assertion and Reason are correct, and Reason is the correct explanation for Assertion.
(b) Both Assertion and Reason are correct, but Reason is not the correct explanation for Assertion.
(c) Assertion is false and Reason is true.
(d) Assertion is true and Reason is false.