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Ans – d) When Capital is fixed, the drawing against capital is recorded at the debit side of the Capital account itself. The Journal entry is Partner’s Capital A/c Dr. To Bank A/c Thus Assertion (A) is incorrect. Drawings against…

Ans – d) Interest Charged on drawings is the income to the firm. Thus it is credited to Profit and Loss Appropriation Account. Thus Assertion (A) is incorrect. Interest on drawings is not charged If Partnership does not exist or…

Ans – c) The commission provided to the partner is an appropriation. It is debited to Profit and Loss Appropriation Account. Thus Assertion (A) is incorrect. The commission provided to the partner is not charged against profit. It is an…

Ans – c) As Partners agreed to provide Interest on Bharat’s Loan @ 8% p.a. It should be provided at the agreed rate. Thus Assertion (A) is correct. As there is consensus and agreement among the partners regarding the rate…

Ans – c) In the absence of the Partnership Deed, the Indian Partnership Act 1932 applies, Thus, Interest on Avinash’s loan to the firm would be allowed @ 6% p.a. Thus Assertion (A) is correct. Reason (R) talks about providing…

Ans – d) The interest on the loan to a partner by the firm is not charged in the absence of a partnership deed. Thus Assertion (A) is incorrect. In the absence of a Partnership Deed the interest on a…

Ans – b) The Rent to the partner is considered a charge against profit. Thus it is debited to the profit and loss Account. Assertion (A) is correct and Reason (R) is the correct explanation of it.

Ans – a) The written agreement among the partners is called a Partnership Deed. The Partnership Deed is also called Partnership Agreement.

The partnership is defined by Indian Partnership Act, 1932, Section 4, as follows: “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.”…

Ans – d) Interest on Partner’s drawing is charged from partners by the firm. Thus it is the revenue to the firm and is recorded at the credit side of the Profit and Loss Appropriation Account.