Accounting for Partnership Firms – Basic Concepts

A company invited applications for 20,000 shares of ₹10 each payable as: ₹3 on Application, ₹4 on Allotment, and ₹3 on First & Final Call. All money was duly received except allotment and call money on 500 shares. Total Calls-in-Arrears amount is:

1. ₹1,500
2. ₹2,000
3. ₹3,500
4. ₹5,000

Which of the following statements is INCORRECT regarding sweat equity shares?

1. Issued to employees or directors at a discount or for consideration other than cash.
2. Issued for providing know-how or making available intellectual property rights.
3. Cannot be issued under any provisions of the Companies Act, 2013.
4. Subject to a statutory lock-in period.

If a company forfeits 200 shares of ₹10 each (₹7 paid) and reissues only 100 of these shares at ₹6 per share as fully paid, what amount will be transferred to Capital Reserve?

1. ₹700
2. ₹300
3. ₹400
4. ₹1,400

A company offers to subscribe 50,000 shares of ₹10 each. Applications were received for 45,000 shares. All application money was accepted. What type of subscription is this?

1. Over-subscription
2. Under-subscription
3. Minimum subscription failure
4. Private placement

Under which heading is "Calls-in-Advance" shown on the Equity and Liabilities side of a Company's Balance Sheet according to Schedule III of Companies Act, 2013?

1. Share Capital
2. Reserves and Surplus
3. Other Current Liabilities
4. Long-term Provisions

If shares are issued at a premium, and the premium amount is not paid by a defaulting shareholder, how is Securities Premium treated at the time of forfeiture?

1. Ignored completely in forfeiture entry
2. Debited to Securities Premium Account
3. Credited to Share Forfeiture Account
4. Credited to Capital Reserve Account

XYZ Ltd. forfeited 100 shares of ₹10 each (₹8 called up) held by S for non-payment of allotment money of ₹3 per share. What amount will be credited to the Share Capital Account in the forfeiture journal entry?

1. ₹1,000
2. ₹800
3. ₹500
4. ₹300

According to Section 52(2) of the Companies Act, 2013, Securities Premium Account CANNOT be utilized for which of the following purposes?

1. Writing off preliminary expenses of the company
2. Issuing fully paid bonus shares to existing members
3. Payment of dividend to shareholders
4. Premium payable on redemption of preference shares

A company issued 1,000 equity shares of ₹100 each at a premium of 20%. The payment terms were: ₹30 on application, ₹50 on allotment (including premium), and the balance on final call. What is the share allotment amount excluding premium per share?

1. ₹50
2. ₹30
3. ₹20
4. ₹40

When shares are issued to promoters of a company for their services rendered during formation, which account is debited in the journal entry?

1. Promoters' Personal Account
2. Goodwill Account / Incorporation Costs Account
3. Share Capital Account
4. Preliminary Expenses Account

Minimum subscription as prescribed by the Securities and Exchange Board of India (SEBI) guidelines is what percentage of the issued amount?

1. 80%
2. 90%
3. 95%
4. 100%

A company forfeited 500 equity shares of ₹10 each, fully called up, for non-payment of final call of ₹3 per share. These shares were subsequently reissued as fully paid-up for ₹8 per share. What amount will be transferred to Capital Reserve?

1. ₹3,500
2. ₹2,500
3. ₹1,000
4. ₹1,500

Which part of the Authorized Capital can be called up by a company only in the event of and for the purpose of the company being wound up?

1. Capital Reserve
2. Reserve Capital
3. Uncalled Capital
4. Issued Capital

A company invited applications for 10,000 equity shares of ₹10 each at par. Applications were received for 15,000 shares. Shares were allotted on a pro-rata basis to all applicants. Applicant X applied for 300 shares. How many shares were allotted to X?

1. 300 shares
2. 450 shares
3. 200 shares
4. 150 shares

According to the Companies Act, 2013, what is the maximum rate of interest that a company can charge on Calls-in-Arrears if Table F is adopted and the Articles of Association are silent?

1. 6% per annum
2. 10% per annum
3. 12% per annum
4. 5% per annum

What is the legal nature of liability of partners in a general partnership firm in India?

1. Limited to the extent of their capital contribution
2. Unlimited, joint, and several
3. Limited to the guaranteed amount
4. Equal to the firm's total bank borrowings

Which of the following items is classified as an "Appropriation of Profit" rather than a "Charge against Profit"?

1. Interest on Partner's Loan
2. Rent paid to a Partner
3. Manager's Commission
4. Interest on Partner's Capital

In the absence of a Partnership Deed, how are the profits and losses of a firm shared among partners who contributed unequal amounts of capital?

1. In the ratio of their capital contributions
2. In equal shares
3. In the ratio of time devoted to the business
4. 2:1 ratio favoring the senior partner

When dates of drawings made by a partner during the financial year are not specified in the question, interest on total drawings is calculated for an average period of:

1. 12 months
2. 6 months
3. 3 months
4. 6.5 months

What is the primary difference between "Drawings against Capital" and "Drawings against Profit"?

1. Drawings against capital are considered while calculating interest on drawings; drawings against profit are not.
2. Drawings against capital reduce the fixed capital balance and affect interest on capital; drawings against profit do not reduce capital balance directly.
3. Drawings against profit are debited to Profit and Loss Account; drawings against capital are debited to P&L Appropriation.
4. Both have identical accounting treatments in all partner accounts.

After preparing the final accounts, it was discovered that interest on capital at 10% per annum was completely omitted. Partners A and B have fixed capitals of Rs. 1,00,000 and Rs. 80,000 respectively, and share profits equally. In the adjustment entry, which account will be credited and by what net amount?

1. A's Current Account by Rs. 1,000
2. B's Current Account by Rs. 1,000
3. A's Capital Account by Rs. 1,000
4. B's Capital Account by Rs. 1,000

According to the Companies (Miscellaneous) Rules, 2014 issued under the Companies Act, 2013, what is the maximum number of partners allowed in a partnership firm?

1. 20
2. 50
3. 100
4. Unlimited

If a partner withdraws Rs. 15,000 at the end of each quarter throughout the financial year, for how many months will interest on total drawings be calculated?

1. 6 months
2. 7.5 months
3. 4.5 months
4. 5.5 months

Where should rent paid or payable to a partner for using his personal premises for business operations be recorded in the accounting records?

1. Debited to Profit and Loss Appropriation Account
2. Debited to Profit and Loss Account
3. Credited to Partner's Capital Account directly
4. Debited to Partner's Current Account

Under the Fixed Capital Method, which of the following transactions is directly recorded on the credit side of a Partner's Capital Account?

1. Share of net profit for the year
2. Interest on capital allowed to the partner
3. Addition of permanent fresh capital introduced by the partner
4. Partner's drawings out of profits

P and Q are partners sharing profits in the ratio of 3:2. They admit R into partnership for a 1/5th share of profit, with a guaranteed minimum profit of Rs. 50,000 per annum. Any deficiency is to be borne by P and Q in the ratio of 3:1. The total profit of the firm for the year is Rs. 2,00,000. What is P's final share of profit?

1. Rs. 96,000
2. Rs. 90,000
3. Rs. 88,500
4. Rs. 1,02,000

Net profit of a firm for the financial year is Rs. 3,30,000 before charging manager's commission. The manager is entitled to a commission of 10% on net profit after charging such commission. What is the amount of manager's commission?

1. Rs. 33,000
2. Rs. 30,000
3. Rs. 36,300
4. Rs. 27,000

Partner X withdraws Rs. 10,000 at the beginning of every month throughout the year. The firm charges interest on drawings at 12% per annum. What is the total interest on drawings for X at the end of the year?

1. Rs. 6,600
2. Rs. 7,200
3. Rs. 7,800
4. Rs. 6,000

A and B are partners sharing profits in the ratio of 3:2. Their capital balances are Rs. 20,00,000 and Rs. 10,00,000 respectively. The Partnership Deed provides for interest on capital at 10% per annum. The net profit for the year ended 31st March 2026 before considering interest on capital is Rs. 1,50,000. How much interest on capital will A and B receive?

1. A: Rs. 1,50,000; B: Rs. 1,00,000
2. A: Rs. 90,000; B: Rs. 60,000
3. A: Rs. 1,00,000; B: Rs. 50,000
4. A: Rs. 2,00,000; B: Rs. 1,00,000

In the absence of a written Partnership Deed, which of the following provisions is applicable regarding the interest on a partner's loan to the firm?

1. Interest is allowed at 6% per annum as an appropriation out of profits.
2. Interest is allowed at 6% per annum as a charge against profits.
3. Interest is allowed at 12% per annum only if there are sufficient profits.
4. No interest on a partner's loan is allowed.