CHAPTER 2-ACCOUNTING FOR
PARTNERSHIP: FUNDAMENTALS
ASSERTION REASONING QUESTIONS
Ouestion
Assertion: Ram spends thrice the time that Yami devoted to
business. Ram claims that he
should get salary of Rs.5,000/- p.m. for extra time
spent.
Reason: As there is no partnership deed Partnership Act 1932
applies and as per the Act
partners will not be allowed any salary or
remuneration.
(A) BothA and Rtrue and R 0s the correct
explanation of A,
(B) BothA and R are true but R is not
the orrect eplanation of A
(C) A is true and R 0s false
(D) A is false and R is true
Assertlon: In case of losses interest on capital will not be provided.
Reason: As interest on capital is treated as the appropriation of the
profits and there are no
profits but interest on capital can be provided in case of
losses if it is to be treated as
charge.
(A) Both A and R true and R is the
correct explanation ofA.
(B) BothA and R are true but R is not
the Corect explanation of A
() A ls true andR 0s false
(D) A Is false and Ris true
Assertlon: Y wants that profits should be distributed in the ratio of apitals as he
has
invested more capital than X this dispute arises as the
partnership deed was not there.
Reason: As there is no partnership deed Indian
the Act, Profits are to be distributed
Partneship Act, 1932 applies and as per
equally.
(A) BothA and R 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 and R Is false
(D) Ais false and Ris true
|Assertlon: Average Normal Profit as Calculated is multiplied by number of years'
to determine the value of purchase
goodwill.
Reason: Number of years' purchase means the number of years for
which the fim is likely
to earn same amOunt of profit after change in
ownership becomes of the efforts put in the
past
(A) BothA and R true and R 0s the correct
explanation of A.
(B) Botth A and R are true but R is not the
Correct explanation of A
(C) A is true and R 0s false
Assertion: Average Normal Profit as Calaulated is multiplied by number of years purhase
to determine the value of goodwill.
Reason: Number of years' purchase means the number of years for which the fim is likely
to earn same mount of profit after change in ownership becomes of the efforts put in the
past.
(A) Both Aand R true and R is the correct explanation of A.
(B) BothA and Rare true but R is not the correct explanation of
(C) Ais true and Ris false
(D) Ais false and R is true
Assertion: Rent paid to the partner is not to be shown in Profit &Loss Appropriation AC.
Reason: Rent paid to the partrner is treated as the harge against profit and not the
appropriation of the profits.
(A) Both Aand Rtrue and Ris the correct explanation of A.
(B) Both Aand Rare true butRis not the correct explanation of A
(C) A is true and R is false
(D) A is false and Ris true
Assertion(A): Goodwillisthe good name or reputation of the Business which brings benefit
to the business.
Reason(R): It is an intangible asset as it has no physical existence.
(a) Both Aand Rare true and Ris the Comect explanation of A
(b) Both Aand Rare true and Ris not the corect explanation of A
(c) A ls true but R is false
(d) A is false but R is true
Assertion (A): In onder to compensate a partner for contributing capital to the firm in excess
of the profit sharing ratio, flirm pays such interest on Partners' Capital. Reason (R) :
Interest on Capital is treated as a charge against profits.
(a) Both Aand Rare true and Ris the Correct explanation of A
(b) Both A and R are true and R is not the correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
Assertion (A) : Fixed Capital AcDunts of a partner never shows a debit balance inspite of
regular and consistent losses year after year.
|Assertion (A) : In order to compensate a partner for contributing capital to the
firm in exoess
of the profit sharing ratio, frm pays such interest on
Partners' Capital. Reason (R):
Interest on Capital is treated as a charge against profits.
(a) Both A and R are true and R is the Correct
explanation ofA
(b) Both A and R are true and R is not the correct
explanation of A
(c) A ls true butRis false
(d) A is false but R0s true
Assertion (A): Fixed Capital Accounts of a partner never shows a debit balance inspite of
regular and consistent losses year after year.
Reason (R) : When Capital Accounts are fixed, losses are
recorded in Partners' Current
Account.
(a) BothA and R are true and R is the Correct
explanation of A
(b) Both A and R are true and R is not the Correct
explanation of A
(c) A is true but R is false
(d) A is false butR is true
Assertion(A): Both purchase and shelf generated goodwill are accounted in the books of
acoount
ReasonR): According to AS-26 only purchase qoodwill is accounted in the books of
account. Shelf generated goodwill is not accounted in the books of account(
(a) Both A and R are true and R s the Correct
explanation ofA
(b) Both A and R are true and R is not the orrect
explanation of A
(c) A is true but R is false
(d) A is false butRis true
Assertion (A): A Firm shoukd have a Partnership Deed.
Reason (R) : In case of dispute or any mis
acts as an evidence in the court of law.
nderstanding among partners, partnership deed
(a) Both A and R are true and R s the Correct
explanation of A
(b) Both A and R are true and R is not the orect
eplanation of A
(c) A 0s true but Ris false
Read thefollowing statements - Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the cormect explanation of
Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of
Assertion (A).
(c) Assertion (A) is true and Reason (R) is false
(d) Assertion (A) is false and Reason (R) ls true
Assertonn(A): In the absene of Parthership deed profits and losses are divided equally
among the partners.
Reason (B) : This rule is applicable according to Indian Partnership Act,1932
Assertion (A) :Personal properties of a partner may also be used to pay off the firms debts.
Reason (R) : All partner are limited liability in the firm.
Assertion (A) : Parthership firm is a form of Organization where two or more persons cary
on business activity on the basis of agreement among them.
Reason (R): The profit or loss arising from the partnership business is shared by the
partners in the agreed ratio.
Assertion(A): Maximum number of partners in a parthership firm is 50.
Reason (R ) : Maximum number of partner in a partnership firm is prescribed in Companies
Act,2013.
Assertion (4J: Average Normal Profit as Calaulated is multijplied by number of years'
purchase to determine the value of goodwill.
Reason (R): Number of years' purchase means the number of years for which the firm is
likely to eam same amount of profit after change in ownership becomes of the efforts put in
the past
(a) R is aorrect butA is not correct
(b) Both A and R are incorrTect
(c) A is correct R is not correct
(d) Both A and R are correct
Ans (d) Both A and R are orrect
Assertion (4J: Goodwill is the go0d name or reputation of the business which brings
benefit to the business.
Reason (R): It is an intangible asset as it has no physical existence.
(a) Both (A) and (R) are true and (R) is the corredt explanation of (A)
(b) Both (A) and (R) are true and (R) 0s not the correct explanation of (A).
(C) (A) is true, but (R) is false
(d) (A) is false, but (R) 0s true
Ans:- (b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
Assertion(AJ:
incduded anyto abnormal
by adding the nacte gain is excuded by deducting from and any abnormal loss is
pass
Reason(R): Normal business profits eamed by the business the specified number of
years are considered
(a) Both Aand Rare true and Ris not correct explanation
a) Both assertion(A) and reason(R) are true and reason (R) Is the correct explanation
of Assertion(A)
b) Both assertion(A) and reason(R) are true and reason (R) Is not the correct
explanation of Assertion(A)
c) Assertion(A) is true but Reasoning(R) is false
d) Both Assertion(A) is true but Reasons(R) is not correct
Assertion: In a partnership when profit sharing ratio is agreed, parters share the losses
also in the same ratio.
Reason: Although in the definition it is written that profit will be shared, it indude losses
also
Alternatives:
a) Both assertion(A) and reason(R) are true and reason (R) Is the correct explanation
of Assertion(A)
b) Both assertion(A) and reason(R) are true and reason (R) Is not the corect
explanation of Assertion(A)
c) Only Assertion(A) is correct
d) Only Reasoning(R) is correct
Assertion: Rent to a partner is transferred to debit of profit and loss account but not
transferred to profit and loS appropriation account
Reason: Rent to partner is a harge against profit, not an appropriation of profit. Hence it is
transferred to debit of profit and loss account
Alternatives:
a) Both assertion(A) and reason(R) are true and reason (R) Is the correct explanation
of Assertion(A)
b) Both assertion(A) and reason(R) are true and reason (R)
explanation of Assertion (A) Is not the correct
c) Assertion(A) is
correct but reason(R) is false
d) Assertion(A) is false but reason(R) is
Assertion: Only apital account is maintainedcorrect
for each partner under fluctuating capital
account method.
Reason: Interest on capital. Salary, commission and
partners capital account while interest on drawings andprofit
share
transferred to the redit of
of kosses are transferred to the
debit.
Altematives:
a) Both assertion(A) and reason(R) are true and
of Assertion(A) reason (R) Is the correct eplanation
b) Both assertion(A) and reason(R) are true and reason (R) Is not the
explanation of Assertion(A) orrect
c) sertion(A) is correct but reason(R) is false
d) Assertion(A) is false but reason(R) is
corredt
