Chapter 1: Fundamentals of Partnership (10 MCQs)
1. In the absence of a partnership deed, partners share profits and losses:
a) Equally
b) In capital ratio
c) As per agreement
d) In salary ratio
Ans: a)
2. Interest on drawings is:
a) Credited to Profit & Loss A/c
b) Credited to Partner's Capital A/c
c) Debited to Profit & Loss A/c
d) None of these
Ans: a)
3. Maximum number of partners in a banking business is:
a) 10
b) 20
c) 50
d) No limit
Ans: b)
4. Which of the following is NOT a feature of a partnership firm?
a) Unlimited liability
b) Mutual agency
c) Separate legal entity
d) Sharing of profits
Ans: c)
5. A partner who contributes only capital is called:
a) Sleeping partner
b) Active partner
c) Nominal partner
d) Minor partner
Ans: a)
6. In the absence of agreement, interest on capital is:
a) 10% p.a.
b) 6% p.a.
c) Not allowed
d) 5% p.a.
Ans: c)
7. Profit and Loss Appropriation Account is prepared:
a) After Profit & Loss A/c
b) After Trading A/c
c) Before Trading A/c
d) None of these
Ans: a)
8. A minor can be:
a) A partner in a firm
b) Admitted to benefits of partnership
c) A sleeping partner
d) A nominal partner
Ans: b)
9. Commission to a partner is debited to:
a) Capital A/c
b) P&L Appropriation A/c
c) Revaluation A/c
d) Trading A/c
Ans: b)
10.Salary to a partner is allowed only if:
a) Partner demands it
b) Profit is available
c) Deed allows it
d) Business earns net profit
Ans: c)
Chapter 2: Change in Profit Sharing Ratio (10 MCQs)
11.A change in profit-sharing ratio is treated as:
a) Dissolution
b) Reconstitution
c) Admission
d) Retirement
Ans: b)
12.When the new ratio is the same as the old ratio, then sacrificing ratio is:
a) Equal to gaining ratio
b) Zero
c) Positive
d) Negative
Ans: b)
13.General Reserve is distributed among old partners:
a) In capital ratio
b) In new ratio
c) In old ratio
d) In gaining ratio
Ans: c)
14.Gaining partner compensates:
a) The retiring partner
b) The sacrificing partner
c) The incoming partner
d) The new firm
Ans: b)
15.Revaluation Account is also known as:
a) Realisation A/c
b) Profit & Loss A/c
c) Memorandum A/c
d) None of these
Ans: d)
16.Hidden goodwill is ascertained from:
a) Adjusted capital
b) Balance sheet
c) Total capital of new firm
d) Drawings
Ans: c)
17.When a partner sacrifices, it means:
a) He gains more share
b) He gives part of share
c) He retires
d) He is admitted
Ans: b)
18.A decrease in a partner’s share results in:
a) Gain
b) Sacrifice
c) No change
d) Loss
Ans: b)
19.Revaluation profit is shared in:
a) Sacrificing ratio
b) Gaining ratio
c) New ratio
d) Old ratio
Ans: d)
20.On change in profit sharing ratio, goodwill is adjusted among:
a) All partners
b) Sacrificing and gaining partners
c) Old partners only
d) Incoming partners only
Ans: b)
Chapter 3: Admission of a Partner (10 MCQs)
21.New partner brings capital and goodwill in:
a) Old ratio
b) New ratio
c) Sacrificing ratio
d) Equal ratio
Ans: c)
22.Unrecorded liabilities at the time of admission are:
a) Debited to Revaluation A/c
b) Debited to Capital A/c
c) Debited to Cash A/c
d) Debited to Goodwill A/c
Ans: a)
23.The share sacrificed by old partners is:
a) Old ratio – New ratio
b) New ratio – Old ratio
c) Old ratio + New ratio
d) None of these
Ans: a)
24.New partner gets share of:
a) Past profits
b) Future profits
c) Hidden profits
d) Unearned income
Ans: b)
25.Admission of a partner is a case of:
a) Reconstitution
b) Dissolution
c) Partnership at will
d) Limited liability
Ans: a)
26.When new partner brings goodwill in cash, it is credited to:
a) Revaluation A/c
b) Capital A/c
c) Sacrificing partners' Capital A/c
d) Bank A/c
Ans: c)
27.If goodwill is not brought in cash, it is adjusted through:
a) Revaluation A/c
b) Partners’ capital accounts
c) General Reserve
d) P&L A/c
Ans: b)
28.Unrecorded asset is:
a) Debited to Capital A/c
b) Credited to Revaluation A/c
c) Debited to Revaluation A/c
d) Ignored
Ans: b)
29.Accumulated profits are shared in:
a) Old ratio
b) New ratio
c) Sacrificing ratio
d) Equal ratio
Ans: a)
30.Premium for goodwill brought in by new partner is shared by:
a) All partners equally
b) Sacrificing partners
c) Only the incoming partner
d) In capital ratio
Ans: b)
Chapter 4: Retirement or Death of a Partner (10 MCQs)
31.On retirement, retiring partner is paid:
a) Only capital
b) Capital + Share of goodwill + Reserves + Revaluation profit/loss
c) Only share of profit
d) None of these
Ans: b)
32.Retiring partner’s share of goodwill is borne by:
a) Remaining partners in sacrificing ratio
b) Remaining partners in gaining ratio
c) All partners in new ratio
d) Retiring partner only
Ans: b)
33.Gaining Ratio =
a) Old Ratio – New Ratio
b) New Ratio – Old Ratio
c) Old Ratio + New Ratio
d) None of these
Ans: b)
34.On retirement, revaluation profit is shared among:
a) Old partners
b) Remaining partners
c) All partners
d) Retiring partner only
Ans: a)
35.Deceased partner’s legal heir gets:
a) Capital + Share of goodwill only
b) Only capital
c) His total share including accumulated reserves, revaluation profit/loss, etc.
d) Nothing
Ans: c)
36.If the continuing partners gain equally, the gaining ratio is:
a) Equal
b) Unequal
c) Old ratio
d) Capital ratio
Ans: a)
37.On retirement, goodwill not appearing in books is:
a) Debited to goodwill A/c
b) Debited to capital accounts of gaining partners
c) Credited to goodwill A/c
d) Ignored
Ans: b)
38.Revaluation loss is:
a) Credited to old partners
b) Debited to remaining partners
c) Debited to old partners
d) Debited to retiring partner only
Ans: c)
39.Executor of deceased partner gets interest on capital till the date of settlement at:
a) 6%
b) 10%
c) 12%
d) As per agreement
Ans: d)
40.Retirement leads to:
a) Dissolution
b) Reconstitution
c) Admission
d) Conversion
Ans: b)
