Accountancy · Class 12 Commerce
Ch 3Accounts of Partnership Firms – Fundamentals — Class 12 Accountancy, concept-first.
A sole trader runs a business alone and takes all the profit, but also carries all the risk and all the work alone. The moment two or more people decide to run a business together and share what it earns, the law needs a clear definition of what that relationship actually is — that definition is what Section 4 of the I…
Key concepts
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Meaning and Features of Partnership
Partnership, as defined by Section 4 of the Indian Partnership Act, 1932, 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.
Most relevant Q&A
Chapter contents
The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.
Meaning, Features of Partnership and the Partnership Deed
A sole trader runs a business alone and takes all the profit, but also carries all the risk and all the work alone.
Provisions of the Indian Partnership Act, 1932 in the Absence of a Partnership Deed
A partnership does not need a written deed to exist — but what happens when there is genuinely no deed at all, or the partners have a deed that is simply silent on a particular point (say, it fixes th…
Profit and Loss Appropriation Account
Once the firm's Trading and Profit and Loss Account has been prepared in the ordinary way and the net profit for the year has been arrived at, a sole trader would simply add that net profit to his cap…
Interest on Drawings — Methods of Calculation
A partner is entitled to withdraw money from the firm for personal use during the year — these withdrawals are drawings.
Partners' Capital Accounts, Guarantee of Minimum Profit and Past Adjustments
Every partner's stake in the firm — capital contributed, share of profit, interest earned, salary due, drawings taken, interest charged on those drawings — has to be recorded somewhere.
Exercises
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- Q1Explain the meaning of Partnership as defined under the Indian Partnership Act, 1932, and state its essential features.Free
- Q2State the provisions of the Indian Partnership Act, 1932 that apply in the absence of a partnership deed.Free
- Q3Distinguish between the Fixed Capital Method and the Fluctuating Capital Method of maintaining partners' capital accounts.Preview
- Q4What is a Profit and Loss Appropriation Account? State its purpose and explain why it is prepared separately from the Profit and Loss Accoun…Preview
Sample & Board Papers
Sample papers and previous-year board questions for this subject.
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- Q1In the absence of an agreement among the partners, interest on capital is : (a) Allowed @ 6% per annum (b) Not allowed (c) Allowed at bank r…Preview
- Q2Under fixed capital method, partners' salary, commission and interest on capital will be credited in : (a) Drawings Account (b) Capital Acco…Preview
- Q3Mani is a partner, who withdrew ₹ 30,000 on 1st September, 2018. Interest on drawings is charged at 6% per annum. Calculate interest on draw…Preview
- Q4State the differences between fixed capital method and fluctuating capital method.Preview
- Q5(a) Dinesh and Sugumar entered into partnership agreement on 1st January 2018, Dinesh contributing ₹ 5,00,000 and Sugumar ₹ 4,00,000 as capi…Preview
- Q6When a partner withdraws regularly a fixed sum of money at the end of every month, period for which interest is to be calculated on the draw…Preview
- Q7In the absence of a partnership deed, profits of the firm will be shared by the partners in : (a) Equal ratio (b) Capital ratio (c) Both (a)…Preview
- Q8Kavitha is a partner in a firm. She withdraws ₹ 2,500 p.m. regularly. Interest on drawings is charged @ 4% p.a., calculate the interest on d…Preview
- Q9Akash, Bala, Chandru and Daniel are partners in a firm. There is no partnership deed. How will you deal with the following ? (i) Akash has c…Preview
- Q10As per the Indian Partnership Act, 1932, the rate of interest allowed on loans advanced by partners is : (a) 5% per annum (b) 8% per annum (…Preview
- Q11Which of the following is shown in Profit and Loss Appropriation account ? (a) Partner's salary (b) Office expenses (c) Interest on bank loa…Preview
- Q12Ram and Shyam are partners. Ram withdraws ₹ 12,000 at the beginning of each half year. Interest on drawings is chargeable @10% p.a. Calculat…Preview
- Q13Antony and Akbar were partners who shared profits and losses in the ratio of 3 : 2. Balance in their Capital account on 1st January 2018 was…Preview
- Q14(a) State the differences between Fixed Capital method and Fluctuating Capital method. OR (b) From the following information relating to Aru…Preview
- Q15When fixed capital method is adopted by a partnership firm, which of the following items will appear in capital account ? (a) Interest on dr…Preview
- Q16Name the Final Accounts which are to be prepared by the partnership firms.Preview
- Q17Kumar is a partner in a partnership firm. As per the Partnership deed, interest on drawings is charged at 6% per annum. During the year ende…Preview
- Q18(a) From the following information, prepare Capital accounts of partners Mannan and Sevagan, when their capitals are fluctuating. | Particul…Preview
- Q19(a) Durai and Velan entered into a partnership agreement on 1st April 2018. Durai contributing ₹ 25,000 and Velan ₹ 30,000 as capital. The a…Preview
- Q20As per the Indian Partnership Act, 1932, the rate of interest allowed on loans advanced by Partners is : (a) 6% per annum (b) 12% per annum…Preview
- Q21Choose the incorrect pair. | Item | Section | | --- | --- | | (a) Interest on Capital | Sec 13(c) | | (b) Remuneration to Partners | Sec 13(…Preview
- Q22What is a Partnership Deed ?Preview
- Q23John is a partner in a Partnership firm. As per the Partnership Deed, interest on drawings is charged @ 12% p.a. During the year ended 31st…Preview
- Q24(a) From the following information, prepare Capital accounts of partners Valarmathi and Aathirai when their capitals are fixed. | Particular…Preview
- Q25Which of the following is shown in Profit and Loss appropriation account ? (a) Partner's salary (b) Office expenses (c) Interest on bank loa…Preview
- Q26In the absence of an agreement, partners are entitled to : (a) Interest on loan (b) Salary (c) Interest on capital (d) CommissionPreview
- Q27What is meant by fixed capital method ?Preview
- Q28Sumathi is a partner in a firm. She withdraws ₹ 5,000 p.m. regularly. Interest on Drawings is charged @ 4% p.a. Calculate the interest on Dr…Preview
- Q29(a) From the following information, prepare capital accounts of partners Amutha and Amuthini, when their capitals are fluctuating. | Particu…Preview
More questions
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- Q5A and B are partners sharing profits and losses equally. Their capitals as on 1st April 2023 were A ₹2,00,000 and B ₹1,50,000. The partnersh…Free
- Q6X, Y and Z are partners sharing profits and losses in the ratio 3:2:1. Their capitals as on 1st April 2023 were X ₹3,00,000, Y ₹2,00,000 and…Free
- Q7P, Q and R are partners sharing profits and losses equally, with capitals of ₹1,00,000 each as on 1st April 2023. The partnership deed provi…Free
- Q8A partner, Arjun, withdrew ₹60,000 from the firm on 1st October 2023 for his personal use. The firm closes its books every year on 31st Marc…Preview
- Q9A partner withdrew ₹5,000 at the beginning of every month throughout the year ended 31st March 2024. Calculate interest on drawings @6% p.a.…Preview
- Q10A partner withdrew ₹20,000 at the end of every quarter during the year ended 31st March 2024. Calculate interest on drawings @5% p.a. using…Preview
- Q11P and Q are partners with fixed capitals of ₹4,00,000 and ₹3,00,000 respectively as on 1st April 2023. The partnership deed provides: (i) In…Preview
- Q12Using the same data as the previous illustration (P and Q, capitals ₹4,00,000 and ₹3,00,000, interest on capital @5% p.a., salary to Q ₹3,00…Preview
- Q13A, B and C are partners sharing profits in the ratio 5:3:2. The partnership deed provides that C's share of profit shall not be less than ₹4…Preview
- Q14A, B and C are partners sharing profits and losses in the ratio 2:2:1. After the final accounts for the year ended 31st March 2024 had been…Preview