Profit and loss appropriation account questions and answers pdf
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- TS Grewal Accountancy Class 12 Solutions Chapter 1 Accounting for Partnership Firms – Fundamentals
- Accounting for partnerships
- Important Questions for CBSE Class 12 Accountancy Profit and Loss Appropriation Account
- ACCOUNTING FOR PARTNERSHIP BASIC CONCEPTS
These solutions for DK Goel Accountancy Class 12 help commerce students understand the concepts of accountancy and build strong base in accounts. Short Answer Questions. Question 1. Mention any four provisions of the partnership Act, in the absence of Partnership Deed.
TS Grewal Accountancy Class 12 Solutions Chapter 1 Accounting for Partnership Firms – Fundamentals
Question 1. Question 2. Question 3. Find odd one and state the reason a Interest on capital b Interest on drawings c Salary d Commission Answer: b Interest on drawings.
Question 5. Find the odd one and state reason. Question 6. Rugma, Neha and Lekshmi are partners in a firm sharing profits and loses in the ratio of Their fixed capitals were Rs. You are required to rectify the mistake by passing an adjustment entry.
Define Partnership. What is Partnership Deed? Answer: Partnership agreement may be oral or written. When the agreement is written, it is called Partnership Deed. What is meant by Profit and Loss Appropriation Account?
It is prepared to show the appropriation distribution of profit among partners. Question 4. What are the circumstances in which goodwill is need to be valued? What is divisible profit? Answer: Divisible profit is the balance net profit that remains after making all adjustments to net profit regarding interest on capital, salary to partners, interest on partners loan, interest on drawings, etc.
Edwin and Abel are partners sharing profits and losses in the ratio of Edwin drew Rs. Question 7. Christy and Fiyona are partners in a firm with equal profit sharing ratio. Christy drew regularly Rs.
Question 8. After closing the books of accounts, it was discovered that an item, interest on capital was omitted to be recorded in the books of accounts. Even then, there was no difference in the closing balance of capital account, before and after the treatment of the item. What do you infer from this? Question 9. Paul, Kumar, and Lakshman are partners in a firm, sharing profits and losses in the ratio of After the preparation of final accounts, it was discovered that interest on drawing had not been taken into consideration.
The interest on drawings of partners amounted to Rs. Give necessary adjustment journal entry. Question Give your suggestions to the following arguments. Sanu and Manu are in partnership, who have not made any written agreement.
Sanu has given a loan of Rs. During the year the firm made a net loss of Rs. Regarding the interest on loan, Manu is of the opinion that no interest be paid being the loan was not external one.
Is Mr. Manu right in his stand? State your views. Answer: Normally partnership deed contains rules and regulations regarding the conduct of partnership business. In such cases partnership may not have a written agreement. In some other firms, partnership deed may be silent on some matter.
Then relevant discussion in the IPA becomes applicable. A business has been purchased by a firm for Rs. But its net tangible assets were worth Rs. Goodwill refers to the value of reputation of a business. It is an intangible asset. Ameer and Sudheer are partners sharing profits equally.
They are entitled to salaries as follows, Ameer Rs. The partnership has made a profit of Rs. How much is the increase in capital of Mr. So increase in capital is Rs. Gomez and Arun Gomez are partners sharing profits and losses in the ratio of The partnership has made a net profit of Rs. How much is the total increase in the net worth of A. So total increase in the net worth of A.
Gomez is Rs. Lalu and Beena are in partnership. He is also entitled to a salary of Rs. Profits and losses are shared equally. Give reasons in favour of having partnership deed in writing. Answer: Partnership is the result of agreement between two or more persons. The agreement may be oral or written. The written agreement is called Partnership Deed.
It is always advisable to put the partnership agreement in writing because of the reasons given below:. X, Y, and Z are partners in a firm sharing profits and losses in the ratio of During , their fixed capital and drawings were as follows: Partners are entitled to a salary of Rs.
You are required to prepare the Current Accounts of partners. Answer: Current Account:. Define Partnership Deed. Mention some of its contents. Answer: Partnership deed is a written document which contains the rules and regulations regarding the conduct of business. Contents of Partnership deed:.
What are the rules applicable as per the Partnership Act in the absence of an agreement? The following are the rules applicable as per the Partnership Act in the absence of an agreement. Distinguish between Fluctuating and Fixed Capital methods. Answer: 1. Number of members: The minimum member of persons required for a partnership is two 2.
Maximum number is ten 10 in case of banking business and twenty 20 in other partnerships. Business Purpose: The purpose of forming a partnership should be to carry out some business.
The business must not be illegal. Agreement: For the formation of a partnership an agreement is must. Only competent persons can enter into a partnership agreement. Profit sharing: The profits and losses of a partnership business must be shared among the partners.
Profits must be shared in an agreed ratio or equally. Mutual agency: Mutual agency is there in partnership. Every partner is an agent and a principal at a time. He is an agent when he acts for others and a principal when the others act for him. Unlimited liability: The liability of the partners. Every partner is individually and jointly liable for all the debts of the firm.
No legal existence: A partnership has no legal existence. It has no existence different from its members. No transfer of share: A partner cannot transfer his share in the firm to outsiders without the consent of the other partners. Sabu and Sekhar commenced business in partnership on 1 st January, No written agreement was in force between them.
Accounting for partnerships
Org to score more marks in CBSE board examination. Capital contributed by them is Rs. Radha was given salary of Rs. Radha advanced loan of Rs. Profits for the year are Rs. Solution: Profit and Loss Appropriation account For the year ending on
Important Questions for CBSE Class 12 Accountancy Profit and Loss Appropriation Account
Next Lesson: Depreciation Problems and Solutions. Haris and Usama started business in partnership on 1 st January, without any agreement. Haris introduced capital Rs. Usama Rs. On March 1 st , Mr.
It is an extension of profit and loss account and shows appropriation or distribution of profits. After the profit and loss account has been prepared, the profit for the year is transferred to the profit and loss appropriation account. This account will show how the net profit or net loss of the firm is being appropriated among the partners. It is a nominal account in nature.
The purpose of this article is to assist candidates to develop their understanding of the topic of accounting for partnerships. There are a number of ways in which a partnership may be defined, but there are four key elements. Two or more individuals A partnership includes at least two individuals partners.
ACCOUNTING FOR PARTNERSHIP BASIC CONCEPTS
Question 1. In the absence of Partnership Deed, what are the rules relation to a Salaries of partners, b Interest on partners capitals c Interest on partners loan d Division of profit, and e Interest on partners drawings Solution:. Question 2. Following differences have arisen among P, Q and R.