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The Companies Act, 2013 (Section 464) empowers the Central Government to prescribe a number of partners in a firm subject to a maximum of 100 Partners. The Central government has prescribed a maximum number of partners in a firm to…
No, the Partnership firm does not have a separate legal entity from its partners. Since the firm’s debts are payable from the personal assets of the partners if the firm is unable to repay its liabilities.
Ans – b) As per Business Entity Concept, the partnership firm is a separate entity from partners from the viewpoint of accounting. Thus all business transactions are recorded from the business point of view. For example when capital is introduced…
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.