A and B share profits in the ratio of 3:2. A's interest on capital of Rs. 10,000 and B's interest on capital of Rs. 6,000 were omitted, although Rs. 50,000 profit had already been distributed in the profit-sharing ratio. What past adjustment is required?
Correct answer: B. Credit A Rs. 400 and debit B Rs. 400
- A. Debit A Rs. 400 and credit B Rs. 400
- B. Credit A Rs. 400 and debit B Rs. 400
- C. Debit A Rs. 4,000 and credit B Rs. 4,000
- D. Credit A Rs. 4,000 and debit B Rs. 4,000
Explanation
After allowing interest, the divisible profit is Rs. 34,000, giving A Rs. 20,400 and B Rs. 13,600. Their correct totals are A Rs. 30,400 and B Rs. 19,600, so A receives Rs. 400 more and B receives Rs. 400 less than required.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Partnership Accounts
Partnership accounts cover the partnership agreement, capital and current accounts, profit and loss appropriation, salaries, interest on capital, interest on drawings and profit-sharing ratios. They also address changes in partnership, including admission, retirement, goodwill, revaluation, dissolution and the settlement of partners’ balances.
Practise Partnership Accounts
34 free Partnership Accounts MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Partnership Accounts questions
A and B share profits in the ratio of 3:2. C is entitled to one-fifth of the profit, with a guaranteed minimum of Rs. 30,000. If the firm's profit is Rs. 100,000, and A gives the guarantee, how much does A bear as deficiency?
A firm's average annual profit is Rs. 50,000. If goodwill is valued at three years' purchase of average profit, what is the value of goodwill?
In partnership accounts, a partner's salary is generally treated as which type of item?
A new partner contributes Rs. 100,000 for a one-fourth interest in a firm. If this contribution represents his proportionate share of the firm's total capital, and the firm's net tangible assets are Rs. 300,000, what is the implied goodwill?
On dissolution of a partnership, which order is normally followed for settling claims from the firm's available assets?
When the partnership agreement is silent, at what annual rate is interest generally allowed on a loan advanced by a partner to the firm under the Partnership Act?