Chapter accounting-for-partnership-basic-concepts: Accounting for Partnership: Basic Concepts Assertion-Reason Questions | accountancy Class 12 CBSE

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 1

Logic Check

Assertion (A): In the absence of a partnership deed, profits and losses are shared equally among all partners. Reason (R): Section 4 of the Indian Partnership Act, 1932 provides that equal sharing is the default rule when no agreement exists regarding profit sharing ratio.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 2

Logic Check

Assertion (A): Interest on capital is always allowed to partners in a partnership firm. Reason (R): The Indian Partnership Act, 1932 mandates that interest on capital must be paid to all partners at 6% per annum.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 3

Logic Check

Assertion (A): Under the fixed capital method, the capital account balance of a partner remains unchanged unless there is an addition or withdrawal of capital. Reason (R): Under the fixed capital method, all adjustments like interest on capital, drawings, salary etc. are recorded in the Partner's Current Account.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 4

Logic Check

Assertion (A): A partnership firm has a separate legal entity distinct from its partners. Reason (R): Partners have unlimited liability for the debts of the firm.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 5

Logic Check

Assertion (A): Profit and Loss Appropriation Account is prepared to show how profits are distributed among the partners. Reason (R): Profit and Loss Appropriation Account is an extension of the Profit and Loss Account and starts with net profit or net loss.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 6

Logic Check

Assertion (A): When a fixed amount is withdrawn at the beginning of each month, interest on drawings is calculated for an average period of 6.5 months. Reason (R): The average period is calculated as (month of first withdrawal + month of last withdrawal) / 2 = (12+1)/2 = 6.5 months.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 7

Logic Check

Assertion (A): Under the fluctuating capital method, only one capital account is maintained for each partner. Reason (R): Under the fluctuating capital method, the capital account balance remains fixed throughout the year.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 8

Logic Check

Assertion (A): Interest on drawings is charged to discourage excessive drawings by partners. Reason (R): No interest on drawings is charged if the partnership deed is silent on this matter.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 9

Logic Check

Assertion (A): The partnership deed can be altered by a majority decision of the partners. Reason (R): The partnership deed contains terms agreed upon by all partners and can only be changed with the consent of all partners.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 10

Logic Check

Assertion (A): Interest on a partner's loan to the firm is payable at 6% per annum even if the deed is silent. Reason (R): The Indian Partnership Act, 1932 specifically provides for 6% per annum interest on a partner's loan when the deed does not specify a rate.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 11

Logic Check

Assertion (A): Interest on capital is allowed to partners even when the firm incurs a net loss for the year. Reason (R): Interest on capital is a charge against profits and must be paid regardless of whether the firm makes profit or loss.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 12

Logic Check

Assertion (A): When the firm's profit is less than the total interest on capital due, the available profit is distributed in the ratio of interest on capital of each partner. Reason (R): This ensures that the partner with higher capital contribution gets proportionately higher interest even when full interest cannot be paid.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 13

Logic Check

Assertion (A): The product method for calculating interest on drawings is used when varying amounts are withdrawn at different time intervals. Reason (R): In the product method, each withdrawal is multiplied by the remaining period of the accounting year and interest is calculated on the total of products.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 14

Logic Check

Assertion (A): A partnership can be formed for the purpose of charitable activities. Reason (R): Partnership requires sharing of profits and losses, which implies there must be a business carried on for profit.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 15

Logic Check

Assertion (A): Under the fixed capital method, the Partner's Current Account may sometimes show a debit balance. Reason (R): If a partner's withdrawals and share of losses exceed the credits in the current account, it will show a debit balance.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 16

Logic Check

Assertion (A): Interest on drawings appears on the debit side of the Profit and Loss Appropriation Account. Reason (R): Interest on drawings is income for the firm and hence increases the profit available for distribution.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 17

Logic Check

Assertion (A): Mutual agency is an essential element of partnership. Reason (R): In mutual agency, each partner is both the principal and agent for all other partners with respect to the business of the firm.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 18

Logic Check

Assertion (A): Past adjustments can be made through the Profit and Loss Adjustment Account without reopening old books. Reason (R): The Profit and Loss Adjustment Account is used to record items that were omitted in the previous accounting period and are now being corrected.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 19

Logic Check

Assertion (A): A written partnership agreement is mandatory for the existence of a valid partnership. Reason (R): An oral agreement between partners is equally valid in law for forming a partnership.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 20

Logic Check

Assertion (A): When a new partner is given a guarantee of minimum profit and actual share falls short, the deficiency is borne by guaranteeing partners in their mutual profit sharing ratio. Reason (R): The guaranteeing partners are collectively responsible for making up the shortfall to the guaranteed partner.

Reasoning Options

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Chapter sections

Chapter accounting-for-partnership-basic-concepts: Accounting for Partnership: Basic Concepts | Assertion-Reason

Assertion (A): In the absence of a partnership deed, profits and losses are shared equally among all partners. Reason (R): Section 4 of the Indian Partnership Act, 1932 provides that equal sharing is the default rule when no agreement exists regarding profit sharing ratio.

Assertion (A): Interest on capital is always allowed to partners in a partnership firm. Reason (R): The Indian Partnership Act, 1932 mandates that interest on capital must be paid to all partners at 6% per annum.

Assertion (A): A partnership firm has a separate legal entity distinct from its partners. Reason (R): Partners have unlimited liability for the debts of the firm.

Assertion (A): Profit and Loss Appropriation Account is prepared to show how profits are distributed among the partners. Reason (R): Profit and Loss Appropriation Account is an extension of the Profit and Loss Account and starts with net profit or net loss.

Assertion (A): When a fixed amount is withdrawn at the beginning of each month, interest on drawings is calculated for an average period of 6.5 months. Reason (R): The average period is calculated as (month of first withdrawal + month of last withdrawal) / 2 = (12+1)/2 = 6.5 months.

Assertion (A): Under the fluctuating capital method, only one capital account is maintained for each partner. Reason (R): Under the fluctuating capital method, the capital account balance remains fixed throughout the year.

Assertion (A): Interest on drawings is charged to discourage excessive drawings by partners. Reason (R): No interest on drawings is charged if the partnership deed is silent on this matter.

Assertion (A): The partnership deed can be altered by a majority decision of the partners. Reason (R): The partnership deed contains terms agreed upon by all partners and can only be changed with the consent of all partners.

Assertion (A): Interest on a partner's loan to the firm is payable at 6% per annum even if the deed is silent. Reason (R): The Indian Partnership Act, 1932 specifically provides for 6% per annum interest on a partner's loan when the deed does not specify a rate.

Assertion (A): Interest on capital is allowed to partners even when the firm incurs a net loss for the year. Reason (R): Interest on capital is a charge against profits and must be paid regardless of whether the firm makes profit or loss.

Assertion (A): A partnership can be formed for the purpose of charitable activities. Reason (R): Partnership requires sharing of profits and losses, which implies there must be a business carried on for profit.

Assertion (A): Under the fixed capital method, the Partner's Current Account may sometimes show a debit balance. Reason (R): If a partner's withdrawals and share of losses exceed the credits in the current account, it will show a debit balance.

Assertion (A): Interest on drawings appears on the debit side of the Profit and Loss Appropriation Account. Reason (R): Interest on drawings is income for the firm and hence increases the profit available for distribution.

Assertion (A): Mutual agency is an essential element of partnership. Reason (R): In mutual agency, each partner is both the principal and agent for all other partners with respect to the business of the firm.

Assertion (A): Past adjustments can be made through the Profit and Loss Adjustment Account without reopening old books. Reason (R): The Profit and Loss Adjustment Account is used to record items that were omitted in the previous accounting period and are now being corrected.

Assertion (A): A written partnership agreement is mandatory for the existence of a valid partnership. Reason (R): An oral agreement between partners is equally valid in law for forming a partnership.

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