Q. In a partnership, how is profit typically shared among partners?
-
A.
Equally
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B.
In proportion to capital contribution
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C.
As per partnership agreement
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D.
All of the above
Solution
Profit sharing can be done equally, in proportion to capital contributions, or as specified in the partnership agreement.
Correct Answer:
D
— All of the above
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Q. What is the effect of a partner's withdrawal on the partnership's capital accounts?
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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
A partner's withdrawal results in a decrease in the capital accounts of the partnership.
Correct Answer:
B
— Decrease in capital accounts
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Q. What is the effect of revaluation of assets on the partnership's capital accounts?
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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.
Depends on the asset type
Solution
Revaluation of assets typically results in an increase in the capital accounts of the partners, reflecting the increased value of the assets.
Correct Answer:
A
— Increase in capital accounts
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Q. What is the journal entry for depreciation on a partnership asset?
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A.
Debit Depreciation Expense, Credit Accumulated Depreciation
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B.
Debit Accumulated Depreciation, Credit Depreciation Expense
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C.
Debit Asset, Credit Depreciation Expense
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D.
Debit Depreciation Expense, Credit Asset
Solution
The correct entry is to debit depreciation expense and credit accumulated depreciation to reflect the reduction in asset value.
Correct Answer:
A
— Debit Depreciation Expense, Credit Accumulated Depreciation
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Q. What is the journal entry to record the capital contribution of a partner in a partnership firm?
-
A.
Debit Cash, Credit Partner's Capital Account
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B.
Debit Partner's 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 Partner's Capital Account to reflect the capital contribution.
Correct Answer:
A
— Debit Cash, Credit Partner's Capital Account
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Q. What is the primary accounting standard governing partnerships?
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A.
IFRS 10
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B.
IAS 1
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C.
AS 26
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D.
AS 7
Solution
AS 26 (Accounting for Intangible Assets) is relevant for partnerships, especially regarding goodwill.
Correct Answer:
C
— AS 26
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Q. What is the purpose of preparing a trial balance?
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A.
To determine the net income
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B.
To ensure that debits equal credits
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C.
To prepare the cash flow statement
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D.
To calculate the tax liability
Solution
The primary purpose of preparing a trial balance is to ensure that total debits equal total credits.
Correct Answer:
B
— To ensure that debits equal credits
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Q. Which method of depreciation is commonly used for partnership firms?
-
A.
Straight Line Method
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B.
Declining Balance Method
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C.
Units of Production Method
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D.
Sum of the Years' Digits Method
Solution
The Straight Line Method is commonly used for its simplicity and consistency in partnership firms.
Correct Answer:
A
— Straight Line Method
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