Free Partnership Accounts MCQs with Answers
34 Partnership Accounts MCQs from Accounting, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
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.
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- A. Rs. 54,000
- B. Rs. 36,000
- C. Rs. 60,000
- D. Rs. 84,000
Explanation: After deducting interest and salary of Rs. 30,000, the remaining profit is Rs. 90,000. A receives 3/5 of this amount, which is Rs. 54,000.
Correct answer: Rs. 54,000- A. Additional permanent capital
- B. Original capital contribution
- C. Drawings and interest on drawings
- D. Capital introduced at admission
Explanation: Under the fixed capital method, the capital account remains unchanged unless the agreed permanent capital changes.
Correct answer: Drawings and interest on drawings- A. 4:3:2
- B. 3:2:1
- C. 5:3:2
- D. 2:1:2
Explanation: C takes 1/10 from each existing partner. A's new share is 3/10 minus 1/10, or 2/10, while B's is 2/10 minus 1/10, or 1/10.
Correct answer: 2:1:2- A. Rs. 25,000
- B. Rs. 20,000
- C. Rs. 10,000
- D. Rs. 30,000
Explanation: C takes 1/10 of the total profit share from each of A and B, so both old partners sacrifice equally. Therefore, the Rs.
Correct answer: Rs. 25,000- A. New profit-sharing ratio
- B. Old profit-sharing ratio
- C. Sacrificing ratio of new partner
- D. Capital ratio after admission
Explanation: A revaluation profit arises from changes in the value of assets and liabilities before the new partner joins.
Correct answer: Old profit-sharing ratio- A. Rs. 6,500
- B. Rs. 7,800
- C. Rs. 7,200
- D. Rs. 8,400
Explanation: For equal monthly drawings made at the beginning of each month, the average period is 6.5 months. Interest is Rs.
Correct answer: Rs. 7,800- A. Profit of Rs. 18,000
- B. Profit of Rs. 22,000
- C. Loss of Rs. 18,000
- D. Loss of Rs. 22,000
Explanation: The asset produces a loss of Rs. 20,000 because it is sold below book value. Settling the liability for Rs.
Correct answer: Loss of Rs. 18,000- A. 1:1
- B. 2:1
- C. 3:1
- D. 4:1
Explanation: A's old share is 1/2 and new share is 2/3, so A gains 1/6. C's old share is 1/6 and new share is 1/3, so C also gains 1/6.
Correct answer: 1:1- A. Interest is allowed at 6% annually
- B. Interest is not allowed on capital
- C. Interest is allowed at the bank rate
- D. Interest is allowed at 10% annually
Explanation: When the agreement is silent, a partner is not entitled to interest on capital merely because capital has been invested.
Correct answer: Interest is not allowed on capital- A. A charge against gross profit
- B. A liability to outside creditors
- C. An appropriation of net profit
- D. A deduction from fixed capital
Explanation: A partner acts as an owner rather than an employee, so the partner's salary is normally an appropriation of profit.
Correct answer: An appropriation of net profit- A. Rs. 100,000
- B. Rs. 125,000
- C. Rs. 200,000
- D. Rs. 150,000
Explanation: Goodwill equals average profit multiplied by the agreed years' purchase. Therefore, Rs. 50,000 × 3 gives Rs. 150,000.
Correct answer: Rs. 150,000- A. Rs. 6,000
- B. Rs. 10,000
- C. Rs. 12,000
- D. Rs. 20,000
Explanation: C's normal share is one-fifth of Rs. 100,000, or Rs. 20,000. The guarantee creates a deficiency of Rs. 10,000, which A must bear.
Correct answer: Rs. 10,000- A. Debit A Rs. 400 and credit B Rs. 400
- B. Debit A Rs. 4,000 and credit B Rs. 4,000
- C. Credit A Rs. 400 and debit B Rs. 400
- 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.
Correct answer: Credit A Rs. 400 and debit B Rs. 400- A. Rs. 100,000
- B. Rs. 75,000
- C. Rs. 25,000
- D. Rs. 400,000
Explanation: The new partner's Rs. 100,000 represents one-fourth of total capital, so the implied total capital is Rs. 400,000.
Correct answer: Rs. 100,000- A. Partners' capitals, partner loans, outside liabilities
- B. Outside liabilities, partner loans, partners' capitals
- C. Partner loans, partners' capitals, outside liabilities
- D. Outside liabilities, partners' capitals, partner loans
Explanation: Firm assets are first used to pay outside creditors. Any remaining amount pays partner loans, and the balance is then applied to partners'…
Correct answer: Outside liabilities, partner loans, partners' capitals- A. 5 percent
- B. 6 percent
- C. 8 percent
- D. 10 percent
Explanation: A partner is generally entitled to interest at 6 percent per annum on a loan or advance made to the firm when the agreement is silent.
Correct answer: 6 percent- A. Interest on partners' drawings
- B. Share of profit transferred to partners
- C. Commission received from partners
- D. Interest on partners' capital
Explanation: Interest on partners' capital is an appropriation of profit and is debited to the Profit and Loss Appropriation Account.
Correct answer: Interest on partners' capital- A. Debit continuing partners in gaining ratio and credit retiring partner
- B. Debit the retiring partner and credit continuing partners
- C. Debit all partners equally and credit the bank account
- D. Debit the revaluation account and credit outside creditors
Explanation: The continuing partners obtain the retiring partner's share of future profits, so they compensate the retiring partner for his share of…
Correct answer: Debit continuing partners in gaining ratio and credit retiring partner19. At dissolution, an unrecorded asset is sold for cash. Which entry correctly records the transaction?
- A. Debit Realisation Account and credit Cash Account
- B. Debit Cash Account and credit Realisation Account
- C. Debit Unrecorded Asset Account and credit Cash Account
- D. Debit Cash Account and credit Capital Accounts
Explanation: An unrecorded asset has no existing book balance to transfer. The cash received is debited, while the gain from its realization is…
Correct answer: Debit Cash Account and credit Realisation Account- A. Debit Cash and credit Goodwill
- B. Debit Goodwill and credit the existing partner
- C. Debit the new partner's capital and credit Cash
- D. No entry is made in the firm's books
Explanation: A private payment takes place outside the firm's books and does not change firm assets or liabilities.
Correct answer: No entry is made in the firm's booksPartnership Accounts MCQs: common questions
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