11std CBSE Accountancy lesson 1..25 short questions with answers based on "Accounting for Partnership Firms – Fundamentals

Here are 25 short questions with answers based on "Accounting for Partnership Firms – Fundamentals":

1.What is a partnership?

Answer: A partnership is an agreement between two or more persons to share profits and losses of a business carried on by all or any of them acting for all.

2.What governs partnership firms in India?

Answer: The Indian Partnership Act, 1932.

3.What is a partnership deed?

Answer: A written agreement between partners outlining the terms and conditions of the partnership.

4.What is the minimum number of partners required to form a partnership?

Answer: At least two partners.

5.What is the maximum number of partners in a general business partnership?

Answer: 20 partners.

6.What is mutual agency in a partnership?

Answer: It means every partner is an agent and principal of the firm.

7.What is the profit-sharing ratio in the absence of an agreement?

Answer: Profits are shared equally among partners.

8.What is interest on capital?

Answer: It is the interest allowed to partners on their capital contributions to the firm.

9.Is interest on capital an expense for the firm?

Answer: No, it is an appropriation of profit.

10.What is interest on drawings?

Answer: It is the interest charged on the amount withdrawn by partners for personal use.

11.What is the difference between fixed and fluctuating capital methods?

Answer: In the fixed capital method, capital remains constant, while in the fluctuating method, it changes due to adjustments like drawings or interest.

12.Which account is used to distribute profits among partners?

Answer: Profit and Loss Appropriation Account.

13.How is goodwill treated in partnership accounts?

Answer: Goodwill is recorded as an intangible asset and is adjusted during admission, retirement, or dissolution of a partnership.

14.What happens if the partnership deed is silent on interest on loans?

Answer: Interest is allowed at 6% per annum.

15.What is revaluation account?

Answer: An account prepared to record changes in the value of assets and liabilities when a partner is admitted or retires.

16.What are drawings?

Answer: Amounts withdrawn by partners for personal use.

17.What is the liability of partners in a partnership firm?

Answer: Partners have unlimited liability.

18.What is a partner’s capital account?

Answer: It is the account used to record transactions related to a partner’s capital contributions, profits, and drawings.

19.What is guaranteed profit to a partner?

Answer: A minimum profit assured to a partner regardless of the firm’s actual profits.

20.What happens to profits in the absence of an agreement?

Answer: Profits are shared equally among partners.

21.What is the purpose of the partnership deed?

Answer: To avoid disputes by clearly defining the terms of the partnership.

22.What is the accounting treatment for salary to partners?

Answer: It is debited to the Profit and Loss Appropriation Account.

23.What is meant by unlimited liability?

Answer: Partners are liable for the firm’s debts with their personal assets.

24.How is interest on drawings treated in accounts?

Answer: It is credited to the firm’s Profit and Loss Account.

25.What is the purpose of the Profit and Loss Appropriation Account?

Answer: To appropriate net profit among partners as per the agreement.