CUET UG Accountancy Booster Test 1 Provisions of Partnership Act & Accounting Basics -

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CUET UG Accountancy Booster Test 1 Provisions of Partnership Act & Accounting Basics

⏱️ 30 Minutes

❓ 20 Questions

📌 Answers are locked once submitted — results and explanations appear at the end.

CUET UG Accountancy Booster Test 1 Provisions of Partnership Act & Accounting Basics

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QUESTION 1 OF 20

Based on the passage, if Partner A brings Rs. 50,000 and Partner B brings Rs. 20,000, and the deed is silent, how is a profit of Rs. 14,000 shared?

Answer Review

1 Based on the passage, if Partner A brings Rs. 50,000 and Partner B brings Rs. 20,000, and the deed is silent, how is a profit of Rs. 14,000 shared?

A A: Rs. 10,000, B: Rs. 4,000

B A: Rs. 14,000, B: Rs. 0

C A: Rs. 7,000, B: Rs. 7,000

D In the ratio of their active working hours

💡 Short Explanation

No deed means equal sharing. Capital contribution is ignored. Default provisions apply.

✅ Correct Answer Explanation

Since the partnership deed is silent about profit-sharing ratio, profits are shared equally among partners irrespective of capital contribution. 14000 ÷ 2 = 7000 Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Capital ratio not applicable.
Option B → Entire profit cannot go to one partner.
Option D → Working hours irrelevant.

🎯 Strategy

Used

Passage-Based Application

Application:

�� Apply equal sharing rule.

Final Logic:

�� Equal distribution gives Rs. 7,000 each.

🧠 Memory Trick

"Silent Deed = Equal Share"

📚 Read the following passage and answer Question 1: No partner is entitled to claim any interest on the amount of capital contributed by him in the firm as a matter of right. However, interest can be allowed when it is expressly agreed to by the partners. Thus, no interest on capital is payable if the partnership deed is silent on the issue. Furthermore, if the partnership deed is silent about the profit sharing ratio, the profits and losses of the firm are to be shared equally by partners.

2 According to the passage, what is the claim of a partner regarding interest on capital if there is no express agreement?

A The partner has no right to claim interest on capital

B The partner can claim 6% p.a. interest

C The partner can claim interest based on the bank rate

D The partner can claim interest only if profits are high

💡 Short Explanation

Interest requires agreement. No automatic entitlement exists. Deed silence means no interest.

✅ Correct Answer Explanation

The passage clearly states that no partner can claim interest on capital as a matter of right unless expressly agreed. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → 6% applies to partner's loan, not capital.
Option C → Bank rate irrelevant.
Option D → Profit level irrelevant.

🎯 Strategy

Used

Passage-Based Extraction

Application:

�� Use direct statement from passage.

Final Logic:

�� Agreement is compulsory for interest.

🧠 Memory Trick

"No Agreement = No Interest"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Interest on Capital – Page reference may vary by edition.

3 Assertion (A): In the absence of an agreement, profits are distributed in the capital ratio.
Reason (R): The Indian Partnership Act specifies that sharing of profits and losses must be equal if the deed is silent.

A Both A and R are true and R is the correct explanation of A

B Both A and R are true but R is not the correct explanation of A

C A is true but R is false

D A is false but R is true

💡 Short Explanation

Profits are not shared in capital ratio automatically. Equal sharing applies by law. Reason correctly states rule.

✅ Correct Answer Explanation

Assertion is false because capital ratio applies only if agreed. Reason is true because the Partnership Act mandates equal sharing when the deed is silent. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Assertion false.
Option B → Assertion incorrect.
Option C → Reason true.

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Verify truth of both statements separately.

Final Logic:

�� Equal sharing overrides capital ratio in absence of deed.

🧠 Memory Trick

"No Ratio = Equal Ratio"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Absence of Agreement – Page reference may vary by edition.

4 Mansoor and Reshma have capitals of Rs. 2,00,000 and Rs. 1,50,000 on April 1, 2019. Mansoor introduced Rs. 1,00,000 on August 1, 2019. Interest is 6% p.a. What is Mansoor's interest on capital for the year ending March 31?

A Rs. 12,000

B Rs. 16,000

C Rs. 18,000

D Rs. 20,000

💡 Short Explanation

Original capital gets full-year interest. Additional capital gets 8 months' interest. Add both interests.

✅ Correct Answer Explanation

Interest on original capital: 200000 × 6% = 12000 Interest on additional capital: 100000 × 6% × (8/12) = 4000 Total Interest: 12000 + 4000 = 16000 200000 × (6/100) + 100000 × (6/100) × (8/12) = 16000 Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Ignores additional capital interest.
Option C → Overcalculation.
Option D → Incorrect total.

🎯 Strategy

Used

Substitution

Application:

�� Calculate separately for different periods.

Final Logic:

�� Combined interest equals Rs. 16,000.

🧠 Memory Trick

"Separate Capital, Separate Time"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Agreement-Based Interest – Page reference may vary by edition.

5 Match the Following regarding interest on drawings:

List 1	List 2
1. Deed silent on interest on drawings	a. 7.5 months average
2. Drawings made middle of month evenly	b. 5.5 months average
3. Quarterly drawings at beginning	c. No interest charged
4. Drawings made end of each month evenly	d. 6 months average

A 1-b, 2-c, 3-d, 4-a

B 1-a, 2-b, 3-c, 4-d

C 1-c, 2-d, 3-a, 4-b

D 1-d, 2-a, 3-b, 4-c

💡 Short Explanation

No clause means no interest. Middle-month average = 6 months. End-month average = 5.5 months.

✅ Correct Answer Explanation

Correct matching: Silent deed → No interest Middle-month drawings → 6 months Quarterly beginning → 7.5 months End-month drawings → 5.5 months Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Incorrect average matching.
Option B → Silent deed mismatched.
Option D → Entire sequence incorrect.

🎯 Strategy

Used

Option Grouping

Application:

�� Match standard averages carefully.

Final Logic:

�� Standard drawing-period conventions determine answer.

🧠 Memory Trick

"Middle 6, End 5.5"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Interest on Drawings – Page reference may vary by edition.

6 If a fixed agreement-based amount is withdrawn at the beginning of each quarter, what is the formula to calculate the average period for interest on drawings?

A (12 + 1) / 2

B (12 + 3) / 2

C (9 + 0) / 2

D (11 + 0) / 2

💡 Short Explanation

Beginning-quarter withdrawals get longer average period. Formula gives average months. Standard accounting convention.

✅ Correct Answer Explanation

For quarterly drawings at the beginning of each quarter: (12 + 3) / 2 = 7.5 months (12 + 3) / 2 = 7.5 Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Monthly beginning formula.
Option C → Wrong calculation base.
Option D → Not standard formula.

🎯 Strategy

Used

Formula Recognition

Application:

�� Identify quarterly beginning formula.

Final Logic:

�� Standard average-period formula applies.

🧠 Memory Trick

"Quarter Beginning = 7.5 Months"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Average Period Formula – Page reference may vary by edition.

7 Consider the following multiple statements regarding interest on a partner's loan:
1. It is provided at 6% p.a. if the deed is silent.
2. It is considered an appropriation of profit.
3. It is a charge against profit and recorded in the Profit & Loss Account.
Which statements are correct?

A 1 and 3 only

B 1 and 2 only

C 2 and 3 only

D 1, 2, and 3

💡 Short Explanation

Loan interest allowed at 6%. It is charge against profit. Not appropriation of profit.

✅ Correct Answer Explanation

Statement 1 is correct because statutory interest is 6%. Statement 2 is incorrect because loan interest is a charge against profit, not appropriation. Statement 3 is correct. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Statement 2 false.
Option C → Statement 1 true.
Option D → Statement 2 incorrect.

🎯 Strategy

Used

Statement Verification

Application:

�� Distinguish charge against profit vs appropriation.

Final Logic:

�� Loan interest treated as expense.

🧠 Memory Trick

"Loan Interest = Expense"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Interest on Loan – Page reference may vary by edition.

8 Amitabh gave a loan of Rs. 50,000 on April 1, 2019 without any agreement. For the year ended March 31, 2020, what is the numerical interest amount payable to Amitabh?

A Rs. 5,000

B Rs. 6,000

C Rs. 0

D Rs. 3,000

💡 Short Explanation

Loan interest allowed at 6%. Full-year interest calculated. Simple interest formula used.

✅ Correct Answer Explanation

50000 × 6% = 3000 50000 × (6/100) = 3000 Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Incorrect percentage.
Option B → Overcalculation.
Option C → Interest payable by law.

🎯 Strategy

Used

Substitution

Application:

�� Apply statutory interest formula.

Final Logic:

�� 6% of 50,000 = 3,000.

🧠 Memory Trick

"Loan Gets 6%"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: 6% Statutory Rate – Page reference may vary by edition.

9 Raju and Jai are partners without a written agreement. Raju met with an accident and Jai managed the business alone for three months. Jai demands Rs. 1,000 p.a. as remuneration. Under the Partnership Act 1932, is Jai's case valid?

A Yes, because he worked extra when Raju was ill

B Yes, because Rs. 1,000 is a statutory minimum

C No, no partner is entitled to get salary unless there is a provision in the Deed

D No, he should claim Rs. 5,000 instead

💡 Short Explanation

Extra work gives no automatic salary. Salary requires deed provision. Default rule applies.

✅ Correct Answer Explanation

Under the Partnership Act, partners are not entitled to salary unless expressly agreed in the partnership deed. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Effort alone insufficient.
Option B → No statutory minimum salary exists.
Option D → Amount change irrelevant.

🎯 Strategy

Used

Direct NCERT Recall

Application:

�� Recall remuneration rule.

Final Logic:

�� Agreement necessary for salary.

🧠 Memory Trick

"No Deed = No Salary"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Partner Remuneration – Page reference may vary by edition.

10 When a partner is granted a salary as per conditions in the partnership deed, what is the correct conceptual journal entry to allow the salary to the partner's capital account?

A Debit Partner's Capital A/c, Credit Salary to Partner A/c

B Debit Profit and Loss A/c, Credit Partner's Capital A/c

C Debit Partner's Current A/c, Credit Profit and Loss Appropriation A/c

D Debit Salary to Partner A/c, Credit Partner's Capital/Current A/cs

💡 Short Explanation

Salary account transferred to partner. Partner account receives credit. Conceptual transfer entry used.

✅ Correct Answer Explanation

Salary allowed to partners is transferred to their Capital/Current Accounts through: Salary to Partner A/c Dr. To Partner's Capital/Current A/c Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Reverse entry.
Option B → Appropriation account normally used.
Option C → Incorrect debit-credit sequence.

🎯 Strategy

Used

Journal Entry Recognition

Application:

�� Identify conceptual transfer entry.

Final Logic:

�� Salary credited to partner.

🧠 Memory Trick

"Salary Goes to Partner Account"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Salary Entry – Page reference may vary by edition.

11 Arrange the sequence of steps to conceptually record when a partner makes a secret profit from a firm transaction and must account for it (assuming the deed is silent):
1. Distribute the final net profit equally among all partners.
2. Partner returns the secret profit to the firm.
3. Add the secret profit to the firm's net profit in the P&L Appropriation account.
4. Ascertain the base net profit before this adjustment.

A 1, 2, 3, 4

B 4, 2, 3, 1

C 2, 4, 1, 3

D 3, 1, 4, 2

💡 Short Explanation

Base profit identified first. Secret profit returned next. Added into firm profit before distribution.

✅ Correct Answer Explanation

Correct sequence: Ascertain base profit Return secret profit Add it to firm profit Distribute final profit Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Profit cannot distribute first.
Option C → Sequence incorrect.
Option D → Addition before ascertainment incorrect.

🎯 Strategy

Used

Sequential Logic

Application:

�� Arrange adjustment process properly.

Final Logic:

�� Secret profit must first return to firm.

🧠 Memory Trick

"Ascertain → Return → Add → Distribute"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Personal Profit Rule – Page reference may vary by edition.

12 If a partner uses the firm's name or property to derive personal profit, what principle of partnership dictates that they must pay it to the firm?

A Relationship of mutual agency and acting for all

B Limited liability of partners

C Separate legal entity

D Fluctuating capital concept

💡 Short Explanation

Partners act on behalf of firm. Personal gain from firm belongs to firm. Mutual agency principle applies.

✅ Correct Answer Explanation

Mutual agency means partners act for all partners collectively. Therefore, profit earned using firm property belongs to the firm. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Partnership liability is unlimited.
Option C → Partnership lacks separate legal entity.
Option D → Capital concept unrelated.

🎯 Strategy

Used

Conceptual Understanding

Application:

�� Connect fiduciary duty with mutual agency.

Final Logic:

�� Acting for all prevents secret personal profit.

🧠 Memory Trick

"Using Firm Means Sharing Profit"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Use of Firm Property – Page reference may vary by edition.

13 If a partner engages in a competing business, they must pay all profits made to the firm. What happens if the competing business suffers a loss?

A The firm must bear the loss

B The partner alone bears the loss and cannot ask the firm to compensate

C The loss is debited to the P&L Appropriation Account

D The loss is distributed equally among all partners

💡 Short Explanation

Competing business is personal risk. Firm bears no liability. Partner alone absorbs loss.

✅ Correct Answer Explanation

If a partner independently conducts competing business, any resulting loss remains personal and cannot be transferred to the firm. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Firm not responsible.
Option C → P&L Appropriation not involved.
Option D → Other partners need not share loss.

🎯 Strategy

Used

Conceptual Distinction

Application:

�� Separate firm business from personal business.

Final Logic:

�� Personal competition means personal loss.

🧠 Memory Trick

"Competing Loss is Personal Loss"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Competing Business Rule – Page reference may vary by edition.

14 The rule stating that a partner must account for and pay the firm any profit made in a competing business is specified in which document by default?

A The Companies Act 2013

B The Stamp Act

C The Indian Partnership Act, 1932

D The Registrar of Firms guidelines

💡 Short Explanation

Partnership rules governed by Partnership Act. Competing business rule included there. Default provisions apply.

✅ Correct Answer Explanation

The Indian Partnership Act, 1932 contains the legal rule requiring partners to surrender competing business profits to the firm. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Companies Act governs companies.
Option B → Stamp Act relates to legal documentation.
Option D → Registrar guidelines not governing law.

🎯 Strategy

Used

Direct Legal Recall

Application:

�� Identify governing legislation.

Final Logic:

�� Partnership Act controls partner duties.

🧠 Memory Trick

"Partnership Rules = Partnership Act"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Accountability to Firm – Page reference may vary by edition.

15 Under the Fixed Capital Method, which of the following items is recorded in the Partner's Current Account rather than the Capital Account?

A Interest on capital and drawings

B Permanent withdrawal of capital

C Fresh capital introduced

D The opening balance of fixed capital

💡 Short Explanation

Fixed capital remains unchanged. Adjustments go to Current Account. Interest items are temporary adjustments.

✅ Correct Answer Explanation

Under fixed capital method, interest on capital, drawings, salary, commission, and profit share are recorded in Partner's Current Account. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Permanent withdrawal affects Capital Account.
Option C → Additional capital affects Capital Account.
Option D → Opening balance belongs to Capital Account.

🎯 Strategy

Used

Direct NCERT Recall

Application:

�� Recall distinction between capital and current accounts.

Final Logic:

�� Temporary adjustments go to Current Account.

🧠 Memory Trick

"Adjustments Go to Current"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Fixed Capital Method – Page reference may vary by edition.

16 A firm's net profit is Rs. 35,660. Salaries to partners are Rs. 12,000, commission is Rs. 5,000. Interest on capitals is Rs. 7,200. Interest on drawings is Rs. 540. What is the final calculation of profit transferred to capital accounts?

A Rs. 36,200

B Rs. 11,460

C Rs. 35,660

D Rs. 12,000

💡 Short Explanation

Adjust appropriations carefully. Interest on drawings increases profit. Remaining profit transferred afterward.

✅ Correct Answer Explanation

Calculation: [35660 + 540 - 12000 - 5000 - 7200 = 12000] 35660 + 540 - 12000 - 5000 - 7200 = 12000 Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Incorrect adjustment.
Option B → Miscalculation.
Option C → Ignores appropriations.

🎯 Strategy

Used

Substitution

Application:

�� Apply appropriation account adjustments.

Final Logic:

�� Final distributable profit = Rs. 12,000.

🧠 Memory Trick

"Add Drawings Interest, Deduct Appropriations"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Profit Distribution – Page reference may vary by edition.

17 When rectifying a past error (e.g., omitted interest on capital), which multiple statements outline the correct methods?
1. Through a 'Profit and Loss Adjustment Account'.
2. Directly adjusting the capital accounts of the concerned partners.
3. Writing off the amount to a suspense account without partner approval.

A 1 and 3

B 1 and 2

C 2 and 3

D Only 1

💡 Short Explanation

Adjustment account rectifies errors. Capital accounts may be adjusted directly. Suspense account method inappropriate.

✅ Correct Answer Explanation

Past errors are corrected either through Profit & Loss Adjustment Account or by direct capital account adjustments. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Statement 3 incorrect.
Option C → Suspense account inappropriate.
Option D → Direct capital adjustment also valid.

🎯 Strategy

Used

Statement Verification

Application:

�� Identify accepted rectification methods.

Final Logic:

�� Only recognized adjustment procedures allowed.

🧠 Memory Trick

"Past Errors Need Adjustments"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Past Error Rectification – Page reference may vary by edition.

18 Which of the following events would necessitate a reconstitution of the partnership firm as a special accounting aspect?

A Purchasing a new fixed asset

B Opening a new bank account

C Changing the accounting period

D Admission or retirement of a partner

💡 Short Explanation

Change in partners alters structure. Rights and ratios change. Reconstitution occurs.

✅ Correct Answer Explanation

Admission or retirement changes partnership relationships and profit-sharing arrangements, requiring reconstitution. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Normal business activity.
Option B → Operational change only.
Option C → Accounting policy change only.

🎯 Strategy

Used

Conceptual Understanding

Application:

�� Identify structural partnership change.

Final Logic:

�� Partner changes trigger reconstitution.

🧠 Memory Trick

"Partner Change = Reconstitution"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Reconstitution Basics – Page reference may vary by edition.

19 Assertion (A): Dissolution of a partnership firm is a special aspect of partnership accounts.
Reason (R): Dissolution means the business continues but the profit sharing ratio changes.

A Both A and R are true and R is the correct explanation of A

B Both A and R are true but R is not the correct explanation

C A is true but R is false

D A is false but R is true

💡 Short Explanation

Dissolution ends business. Profit-sharing change means reconstitution. Reason incorrect.

✅ Correct Answer Explanation

Assertion is true because dissolution is an important partnership accounting aspect. Reason is false because dissolution means business closure, not continuation. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Reason false.
Option B → Reason incorrect.
Option D → Assertion true.

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Distinguish dissolution from reconstitution.

Final Logic:

�� Dissolution ends firm operations.

🧠 Memory Trick

"Dissolution = End"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Dissolution Concept – Page reference may vary by edition.

20 Why does the admission of a new partner (reconstitution) or dissolution require specific accounting treatments compared to a normal operating year?

A It involves redefining or closing the relationships and equity structures among partners

B It completely changes the provisions of the Partnership Act 1932

C It forces the firm to adopt the fixed capital method

D It allows partners to claim infinite interest on drawings

💡 Short Explanation

Partner relationships change significantly. Equity structure gets revised. Special accounting treatment required.

✅ Correct Answer Explanation

Admission, retirement, and dissolution affect ownership structure, partner rights, liabilities, and capital balances, requiring special accounting adjustments. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Partnership Act remains same.
Option C → Fixed capital not compulsory.
Option D → Infinite interest impossible.

🎯 Strategy

Used

Conceptual Understanding

Application:

�� Identify accounting impact of structural change.

Final Logic:

�� Relationship and equity changes require special treatment.

🧠 Memory Trick

"Partner Changes Need New Accounting"

📚 Class XII – Accountancy Part 1 – Chapter: Accounting for Partnership: Basic Concepts – Topic: Accounting Implications – Page reference may vary by edition.

CUET UG Accountancy Booster Test 1 Provisions of Partnership Act & Accounting Basics

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