Q. How is depreciation calculated for a partnership firm?
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A.
Straight-line method only
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B.
Declining balance method only
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C.
Any method agreed upon by partners
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D.
No depreciation is allowed
Solution
Depreciation can be calculated using any method agreed upon by the partners as per their partnership agreement.
Correct Answer:
C
— Any method agreed upon by partners
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Q. How is goodwill calculated in a partnership when a new partner is admitted?
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A.
Total Assets - Total Liabilities
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B.
Total Capital - Total Drawings
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C.
Purchase Price - Net Assets
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D.
Net Income / Number of Partners
Solution
Goodwill is calculated as the Purchase Price minus the Net Assets of the partnership.
Correct Answer:
C
— Purchase Price - Net Assets
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Q. In a partnership, how is the profit-sharing ratio determined?
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A.
Equally among all partners
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B.
Based on capital contribution
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C.
As per partnership agreement
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D.
By mutual consent only
Solution
The profit-sharing ratio is determined as per the partnership agreement made by the partners.
Correct Answer:
C
— As per partnership agreement
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Q. What is the effect of revaluation of assets in a partnership?
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A.
Increase in capital accounts
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B.
Decrease in capital accounts
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C.
No effect on capital accounts
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D.
Increase in liabilities
Solution
Revaluation of assets leads to an increase in the capital accounts of the partners reflecting the increased value.
Correct Answer:
A
— Increase in capital accounts
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Q. What is the journal entry for a partner withdrawing cash from the partnership?
-
A.
Debit Cash, Credit Capital Account
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B.
Debit Drawings Account, Credit Cash
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C.
Debit Capital Account, Credit Drawings Account
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D.
Debit Cash, Credit Drawings Account
Solution
The correct entry is to debit the Drawings Account and credit Cash to record the withdrawal.
Correct Answer:
B
— Debit Drawings Account, Credit Cash
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Q. What is the journal entry for recording depreciation on a partnership's fixed asset?
-
A.
Debit Depreciation Expense, Credit Accumulated Depreciation
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B.
Debit Accumulated Depreciation, Credit Depreciation Expense
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C.
Debit Fixed Asset, Credit Depreciation Expense
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D.
Debit Depreciation Expense, Credit Fixed Asset
Solution
The correct entry is to debit Depreciation Expense and credit Accumulated Depreciation.
Correct Answer:
A
— Debit Depreciation Expense, Credit Accumulated Depreciation
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Q. What is the journal entry to record the distribution of profits to partners?
-
A.
Debit Profit and Loss Account, Credit Partner's Capital Accounts
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B.
Debit Partner's Capital Accounts, Credit Profit and Loss Account
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C.
Debit Retained Earnings, Credit Partner's Drawings
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D.
Debit Partner's Drawings, Credit Profit and Loss Account
Solution
The correct entry is to debit the Profit and Loss Account and credit the Partner's Capital Accounts.
Correct Answer:
A
— Debit Profit and Loss Account, Credit Partner's Capital Accounts
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Q. What is the journal entry to record the initial capital contribution of a partner?
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A.
Debit Cash, Credit Capital Account
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B.
Debit Capital Account, Credit Cash
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C.
Debit Cash, Credit Drawings Account
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D.
Debit Drawings Account, Credit Cash
Solution
The correct entry is to debit Cash and credit the Capital Account to reflect the partner's contribution.
Correct Answer:
A
— Debit Cash, Credit Capital Account
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Q. What is the purpose of preparing a final account for a partnership?
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A.
To determine the net income or loss
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B.
To calculate the partners' capital balances
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C.
To distribute profits among partners
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D.
All of the above
Solution
The final account serves multiple purposes including determining net income, calculating capital balances, and profit distribution.
Correct Answer:
D
— All of the above
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Q. Which accounting standard governs the accounting for partnerships?
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A.
IFRS 1
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B.
IAS 2
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C.
IFRS 10
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D.
There is no specific standard for partnerships
Solution
There is no specific accounting standard that governs partnerships; they follow general accounting principles.
Correct Answer:
D
— There is no specific standard for partnerships
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Q. Which of the following accounts is NOT included in a trial balance?
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A.
Assets
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B.
Liabilities
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C.
Expenses
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D.
Dividends
Solution
Dividends are not included in the trial balance as they are distributions of profit, not an expense.
Correct Answer:
D
— Dividends
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