Archives Answers

Ans – c) Explanation:- Under Fixed Capital Method. The Capital accounts are divided into two accounts. 1. Partner’s Current Account 2. Partner’s Capital Account As the name suggests, Fixed Capital Method. All recurring nature transactions of partners are recorded in…

And – d) Explanation:- The transaction between the partners and the firm is carried out through an adjusting entry. As no cash transaction is required.

Ans – b) Explanation:- When a guarantee is given by one or more partners to the other partners. Loss on the such guarantee is borne by those partners who gave the guarantee.

Ans – c) Explanation:- Rent paid to partners is a charge against profit. Thus it is transferred to Profit and Loss Account.

Ans – c) Explanation:- Profit for the year ₹ 1,50,000 Interest on Young’s Loan = 50,000 * 10% = ₹ 5,000 Profit after interest on Young’s Loan = 1,50,000 – 5000 = ₹ 1,45,000 Distributable Profit = 1,45,000 – old…

Ans – a) Explanation 20% after charging such commission = 20/120 = 1/6

Ans -c) Explanation:- Under the Fluctuating Capital Method, all transactions concerning to partners are recorded in the partners’ capital account. Following transactions are recorded. a) Interest on capital b) Partner’s Salary c) Partner’s Commission d) Interest on Partner’s Drawings e)…

Ans – a) Explanation:- Under the Fixed Capital Method, the current accounts is maintained to record all recurring nature of partners. Such as interest on capital, drawings, salary, commission and share of profits.

Section – 35 of the Indian Partnership Act, of 1932 states that a firm is dissolved on the death of a partner Unless otherwise agreed by the partners

Section – 69 of the Indian Partnership Act, 1932 mentioned that the Registration of the firm under the Indian Partnership Act, 1932 is optional and not compulsory.