1. Sivam and Param are partners in a partnership.

Their profit sharing ratio is 4:3 and

following information are given.

Detail Sivam (Rs) Param (Rs)

Capital balance at 2022.04.01 500 000 300 000
Current A/C balance at 2022.04.01 100 000 (50 000)
Interest on Capital for the year 2023.03.31 50 000 30 000
Partners’ salary for the year 2023.03.31 60 000 30 000
Net profit was Rs. 240 000 for the year ended at 31.03.2023.
Find out total ownership of each partner for the year ended at 31.03.2023

Sivam Param
1) Rs. 710 000 Rs. 310 000
2) Rs. 250 000 Rs. 40 000
3) Rs. 750 000 Rs. 340 000
4) Rs. 900 000 Rs. 500 000
5) Rs. 812 857 Rs. 378 571

2. Which one of the following matters is equitable in accordance with the provision of the
section 24 of partnership act?
1) When partners’ capital participation is not equal
2) When partners’ drawings are not equal
3) When annual loan interest rate of the economy is greater than 5%
4) When partners are not acting equally in partnership business
5) When partners distribute profits and losses among partners on equal base

3. Which of the following statements is correct in relation to the provisions contained in

section 42 of partnership ordinance?
1) The additional capital introduced by a partner is entitled to an annual interest of 5%
2) The maximum number of members in a partnership determines as 20 members
3) In writing partnership agreement is essential in conducting a partnership business
4) When the “estate” of the retired or decreased partner is transferred to a loan account,
it should be paid 5% annual interest for that balance
5) The partnership is carried out by some other name, it has to be registered within 14
days of the commencement.
1|Accounting 2024 Revision-Nimesh Dayananda
4. Nimali and Samali were partners in a firm and they admitted Amali as a new partner. From
that date the partners agreed to share profits and losses among Nimali, Samali and Amali
in the ratio of 4:3:2 respectively. On the admission of Amali, she bought Rs. 400 000 as her
share of goodwill and it was acquired equally by Nimali and Samali.

The profit sharing ratio between Nimali and Samali before the admission of Amali
respectively was.

1) 4:3 2) 5:4 3) 4:2 4) 5:3 5) 2:1

5. What are the following ways that the partnership business is able to receive the contribution
of its partners?
a. Contribution for the management
b. Contribution for the long- term loans of the partnership
c. Bearing the risk
d. Contribution for the partnership capital

1) All of the above 2) a and d only 3) a. b and d only

4) a, b and c only 5) a, c and d only

6. Which one of the following cannot be a reason for not maintaining a goodwill account in
books by a partnership business?
1) As it is an intangible asset
2) As it is unable to increase future economic benefit than invested capital
3) As it makes only the increase of total capital and total assets of the partnership
4) As goodwill cannot be valued precisely
5) As the value of goodwill can be changed from time to time

7. Which of the following statements are correct in relation to partnerships?

A- The partnerships should not follow accounting standards when preparing the
financial statements
B- The salaries paid to partners when they contribute to the management of the
business as partners are treated as expenses of the partnership
C- In a written agreement, the partners can agree to share profits and losses based on
their capital contribution ratio
D- When there is a change in the ownership of a partnership, its goodwill is estimated

1) A and C only
2) C and D only
3) A, B and D only
4) A, C and D only
5) B, C and D only

2|Accounting 2024 Revision-Nimesh Dayananda

Use the following information to answer the questions 8, 9 and 10
Anudhi and Manudhi carried out a partnership sharing profits and losses in the ratio 3:2 and
Sanuki was admitted as a partner on 01/04/2022. She invested Rs. 1,200,000 as capital. The
goodwill of Rs. 600,000 and should be adjusted through capital accounts. The terms of the
partnership agreement of Anudhi, Manudhi and Sanuki are as follows.
Manudhi is entitled to an annual salary of Rs. 300,000

Capital accounts (Rs.000) Current accounts (Rs.000)

as at as at as at as at
31.03.2023 31.03.2022 31.03.2023 31.03.2022
Anudhi 2 360 2 200 600 600
Manudhi 1 040 1 000 700 400
Sanuki 1 000 - 100 -

The drawings of partners for the year ending 31.03.2023 Anudhi Rs. 200,000, Manudhi Rs.
200,000, Sanuki Rs. 100,000 and they have been adjusted through current accounts.

8. Calculate the sacrificing ratio

1) 3:2 2) 2:1 3) 3:1 4) 4:1 5) equally

9. The equity of the partnership as at 31.03.2023 (Rs.000)

1) 4 400 2) 5 800 3) 1 400 4) 3 000 5) 2 000

10. The profit of the partnership and the total profit distributed to Sanuki for the year ending
31.03.2023 (Rs.000)
Profit for the year Profit distributed to Sanuki
1) 900 240
2) 720 240
3) 900 200
4) 1 080 240
5) 1 080 200

11. Which of the following statements are correct in relation to a partnership?

A- The goodwill of a partnership is estimated when its profit-sharing ratio is changed.
B- The goodwill of a partnership is estimated as per section 42 of the partnership
ordinance of 1890.
C- The partners are not entitled to a salary as per section 24 of the partnership
ordinance of 1890.
D- ‘Drawings’ can be used as a means of withdrawing profits of a partnership by the
partners.
E- An interest of 5% should be payable on the partners’ capital balances as per section
24 of the partnership ordinance of 1890.
1) A, B and C only 2) A, C and D only 3) B, D and E only
4) C, D and E only 5) A, C, D and E only
3|Accounting 2024 Revision-Nimesh Dayananda
12. Nisal, Visal and Chamal were partners in a business sharing profits and losses in the ratio
of 7:5:3 respectively. On 1.4.2022 Chamal retired from the partnership and Nisal and Visal
agreed to carry on the business.
On the retirement of Chamal the goodwill adjustment was made as follows.

Nisal Visal Chamal Nisal Visal Chamal

Goodwill 50 250 - Goodwill - - 300

According to the goodwill adjustment the new profit sharing ratio of Nisal and Visal
respectively is,
1) 1:1 2) 3:2 3) 1:5 4) 7:5 5) 5:1

13. Which of the following statements are correct as to the benefits entitled by the partners of
a partnership?
A- The partners are entitled for an interest on capital if stated in the partnership
agreement.
B-An interest could be given to a loan provided by a partner only if it is stated in the
partnership agreement
C-The partners are not entitled for a salary as per the section 24 of the Partnership
Ordinance when it is not stated in the partnership agreement.
D- When a partner is retiring, he/she will get the benefit arising from the unrecorded
assets of the partnership in proportion to the profit share.

1) A and B only 2) C and D only 3) A, B, and C only

4) A, C and D only 5) all A, B, C and D

14. A partnership business was commenced by Asitha and Samitha on 1.4.2022 by investing
Rs. 600,000 and Rs. 300,000 respectively. Profit and losses sharing ratio is 3:2. Each
partner is entitled to an annual interest of 10% for capital account balances and a monthly
salary of Rs. 8000. Net profit earned during the year ending 31.03.2023 is Rs. 362,000. The
current account balances as at 31.03.2023;
ASITHA SAMITHA
1) 198 000 164 000
2) 204 000 158 000
3) 217 200 144 800
4) 220 000 142 000
5) 804 000 458 000

4|Accounting 2024 Revision-Nimesh Dayananda

15. The following current account information of Aba and Praba partnership for year ended
31.03.2023 had been extracted from books of accounts.
Aba Praba
Opening current account balance 5 000 3 000
Closing current account balance 140 000 118 000
Interest on capital 30 000 20 000
Partner’s salary 40 000 30 000

Net profit of the partnership for the year ended 31.03.2023 would be;
1) 250 000
2) 220 000
3) 200 200
4) 218 200
5) 221 000

16. What is the correct statement in relation to a loan given by a partner to the partnership
business?
A- Partner is entitled to have an interest of 5% unless if it is not agreed by the partners.
B- Given loan is treated as a part of the equity.
C- Loan interest is adjusted when appropriating profit/loss for the partners.

1) A only
2) 2) A and B only
3) A and C only
4) B and C only
5) B and C only

17. The following information was extracted from books of Sanuki and Thihansa partnership
as at 01.04.2022. profit sharing ratio among Sanuki and Thihansa 2:3 respectively.
Partnership salaries Rs.6 000 per month for each partner and interest on capital is 10%.

What would be the income of each partner if the net profit of the partnership was Rs.
300 000 for the year ended 31.03.2023?
Sanuki Thihansa
1) 134 400 165 600
2) 1120 000 132 000
3) 73 600 82 400
4) 105 700 94 400
5) 145 600 154 400

5|Accounting 2024 Revision-Nimesh Dayananda

18. Which of the following statements are correct in relation to the financial statements of a
partnership?
A- The profit of a partnership can be appropriated as interest on capital, salaries and
profit share of partners.
B- A statement of cash flows cannot be prepared for the partnership.
C- The interest on the loans given by the partners to the business is recognized as an
expense of the partnership.
D- The goods drawings of the partners should be adjusted when appropriating the profit
of the partnership.

1) A and B only 2) A and C only 3) B and C only

4) A, B and D only 5) A, C and D only

19. Anu, Minu and Vinu were partners in a partnership. On 01.04.2022 Anu retired from the
partnership and Minu and Vinu decided to continue the partnership sharing profits and
losses in the ratio of 3:2 respectively.
If Anu’s share of profit was acquired by Minu and Vinu as 12/45 and 9/45 respectively.
What was the old profit-sharing ratio of Anu, Minu and Vinu before the retirement of Anu?

1) 7:4:3 2) 3:2:1 3) 5:3:2 4) 1:1:1 5) 7:5:3

20. Nimal, Kamal and Sunimal were in partnership sharing profits and losses in the ratio of
2:2:1. Sunimal retired from the partnership on 31.03.2023 and Nimal and Kamal agreed to
continue the partnership sharing profits and losses in the ratio of 3:2. On this date the
goodwill of the partnership was estimated as 400 000 and it was adjusted through capital
account. What is the net impact of the goodwill adjustment on capital account balances of
Nimal and Kamal as at 31.03.2023?
Nimal Kamal
1) No impact No impact
2) A decrease of 80 000 No impact
3) No impact Decrease of 80 000
4) An increase of 160 000 An increase of 160 000
5) A decrease of 240 000 A decrease of 160 000

21. Which of the following statements are incorrect as to section 24 of partnership ordinance
of 1890?
A- Partners are entitled for a reimbursement when they pay an expense of the
partnership from their personal funds.
B- Partners are entitled to salaries when they contribute for the management.
C- Partners are entitled to an annual interest of 5% when the amount payable on
retirement is outstanding.

6|Accounting 2024 Revision-Nimesh Dayananda

 D- Partners are entitled to an annual interest of 5% on the loans provided by them to
the partnership.

1) A and C 2) A and D 3) B and C 4) A, B, and D 5) B, C and D

22. Kusum and Nelum were partners sharing profits and losses in the ratio 3:2. When Pathum
joined the partnership the new profit sharing ratio was agreed among Kusum , Nelum and
Pathum as 5:3:2 respectively and on that date the goodwill of the partnership was estimated
as Rs. 1,200,000.

According to the above, Pathum’s share of goodwill acquired by Kusum and Nelum
respectively as,
1) Rs. 144 000 and 96 000
2) Rs. 150 000 and 90 000
3) Rs. 160 000 each
4) Rs. 180 000 and 60 000
5) Rs. 120 000 each

Use the following information to answer the question 23 and 24.

Sarath and Amara are partners sharing profit and losses in the ratio of 5:3 respectively. They
admitted Hesara to the partnership with the agreement of 1/5 of the profit.

23. What is the new profit sharing ratio?

1) 4:3:2 2) 2:2:1 3) 5:3:2 4) 1:1:1 5) 2:3:5

24. What is the sacrificing ratio of Sarath and Amara?

1) 5:3 2) 5:2 3) 2:5 4) 1:1 5) 3:5

25. Interest earned on loan provided by a partner in a partnership in financial statement is

shown,
1) Profit or loss statement Dr , Partners capital a/c Cr
2) Profit or loss statement Dr , Partners current a/c Cr
3) Profit or loss appropriation a/c Dr , Partners current a/c Cr
4) Profit or loss appropriation a/c Dr , Partners loan a/c Cr
5) Profit or loss statement Dr , Accrual loan a/c Cr

7|Accounting 2024 Revision-Nimesh Dayananda

8|Accounting 2024 Revision-Nimesh Dayananda