MCQ of Accounts Class 12th Fundamental of Partnership 2021-22
We are providing you some of the basic concepts of Chapter 2 Fundamental of Partnership that are based on your Term-I exam i.e. 2021-22 pattern and will also provide you for other chapters as well.
Table Contents:-
- Partnership and its features
- Limited Liability Partnership (LLP)
- Partnership Deed and its Absence
- Some Important Journal Entries
- Profit and Loss Appropriation Account
Click here for the video of this concept – https://youtu.be/TmW4tw7gOd0
Partnership
Q. What is Partnership or What do you mean by Partenrship?
Ans. As Per Section 4 of the Indian Partnership Act, 1932:
“Partnership is the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all”.
Main features of Partnership:
- Maximum Person – 50 & Minimum Person – 2
- Agreement – Can be Oral or Written i.e. (Partnership Deed)
- Existence of Business and Profit Motive –
- Joint ownership of property is not a partnership
- No Separate Existence – All agreement with the firm enforceable for all
Limited Liability Partnership (LLP)
- Its applicable law is under “The Limited Liability Partnership Act, 2008”
- Its registration is compulsory with ROC
- It is created by law.
- Separate Legal Entity
- Minimum 2 partners and no maximum limit.
- Liability is limited to extent of their contribution towards LLP.
Partnership Deed and its Absence
Article of Partnership–
- Not Compulsory
- Can be written or oral
- Regulates the rights duties and liabilities of each partner.
- Avoids any misunderstanding
Absence of Deed-
When there is no partnership deed among partners then we will do the following:-
- Profit Sharing Ratio – Equally
- Interest on Capital – Not Allowed
- Interest on Drawings – Not Charged
- Salary to Partner – Not entitled
- Interest on Loan – 6% p.a.
- Admission of partner – Consent of all partners
Some Important Journal Entries
- Transfer of Net Profit to P/L Appropriation Account:
- Profit and Loss A/c Dr………
To Profit and Loss Appropriation A/c…………
- Profit and Loss A/c Dr………
- Entry for Interest on Capital:
- Interest on Capital A/c Dr…….
To partners Capital A/c………………….. - Profit & Loss Appropriation A/c Dr……….
To Interest on Capital A/c…………………………………………..
- Interest on Capital A/c Dr…….
- Interest on Drawings
- Partner’s Capital A/c Dr……….
To Interest on Drawings A/c………….. - Interest on Drawings A/c Dr…….
To Profit & Loss Appropriation A/c………….
- Partner’s Capital A/c Dr……….
Profit and Loss Appropriation Account
- It is an extension of Profit and Loss Account.
- Prepared by partnership firm only.
- Shows distribution of Net Profit among partners.
- Provided as per partnership deed or Indian Partnership Act.
- This account may have opening/closing balances.
- Matching Principle is not followed while preparing this account.
- Not prepared in case of loss to the firm.