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When interest on capital is allowed to partners, Interest on Capital Account is debited and Partner’s Capital Account is credited, it is called

Ans – c) The interest on capital is an expense of the firm towards the partners. It is not paid in cash to the partners. But in order to provide benefits to the partners. The capital of the partners is…

Anurag Pathak
April 4, 2023

If the fixed amount is withdrawn on the last day of every month of a calendar year, interest on total amount of drawings will be calculated for

Ans – b) Average Month = 11 + 0/2 = 5.5 Month

Anurag Pathak
April 4, 2023

Which of the following is transferred to the Profit and Loss Appropriation Account?

Ans – d) The following are transferred to the Profit and Loss Appropriation Account At debit side 1. Interest on partner’s capital 2. Partner’s Salary 3. Partner’s Commission At Credit side 1. Interest on Drawing 2. net Profit. Note:- Salary…

Anurag Pathak
April 4, 2023

Choose the correct sequence of the following transactions in the context of the Division of Profits:

Ans – c) 1. The first profit is transferred to P & L Appropriation Account. 2. It is raised by the guarantee given by the partner to the firm. 3. Then guarantee given by the firm to the partner is…

Anurag Pathak
April 4, 2023

Adil, Bhavya, and Chris are partners sharing profits in the ratio of 5:4:1. Chris is given a guarantee that his share of profit in any year will not be less than ₹ 5,000. The deficiency in the profit share of Chris will be borne by Bhavya.

Ans – c) The actual share of Profit received by Chris is ₹ 5000 – ₹ 1000 = ₹ 4000 Thus Profit earned by the firm is 4000 * reciprocal of Chris share 4000 * 10/1 = ₹ 40,000

Anurag Pathak
April 4, 2023

Girdhar, a partner withdrew ₹ 5,000 at the beginning of each quarter and interest on drawings was calculated as ₹ 1,500 at the end of the accounting year 31st March 2022. What is the rate of interest on drawings charged?

Ans – d)

Anurag Pathak
April 4, 2023

Green and Organe are partners. Green draws a fixed amount at the beginning of every month. Interest on drawings is charged @ 8% p.a. At the end of the year interest on Green’s drawings amounts to ₹ 2,600. Monthly drawings of Green were

Ans – d) Detailed Solution

Anurag Pathak
April 4, 2023

Shiv and Mohan are two partners sharing profits and losses in the ratio of 3:2. On 31st March 2023, their capital Accounts stood at ₹ 55,000 and ₹ 45,000 after distribution of net profit of ₹ 15,000 and due consideration of drawings of the partners for ₹ 6,000 and ₹ 4,000 respectively.

Ans – 1 – c) Ans – 2 – b) Ans – 3) – b)

Anurag Pathak
April 4, 2023

The partners of a firm distributed the profits for the year ended 31st March 2023, ₹ 4,50,000 in the ratio of 3:2:1 without providing for the following adjustments:

Here is the solution

Anurag Pathak
April 4, 2023

Hari and Kunal were partners in a firm sharing profits in the ratio of 5:3. Their fixed capitals on 31st March 2022 were: Hari ₹ 60,000 and Kunal ₹ 80,000. They agreed to allow interest on capital @ 12% p.a.