Prepare for JKSSB FAA 2026 with these important Partnership Accounts MCQs, specially prepared by Exam Waves. Practice simple and important questions on partnership, capital accounts, interest, profit sharing, goodwill, admission, death, and dissolution of a firm.
Q1. Consider the following statements regarding the Indian Partnership Act, 1932:
- It covers all aspects of partnership.
- The minimum number of partners is two.
- The maximum number of partners is generally 100 as per Section 464 of the Companies Act, 2013.
- The Central Government has prescribed the maximum number of partners as 50.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 1, 2 and 4 only
D) 1, 2, 3 and 4
Answer: C
Q2. Which of the following statements correctly describe a Partnership Agreement and Partnership Deed?
- Partnership is the result of an agreement between two or more persons.
- An oral agreement is also valid.
- A Partnership Deed contains the partnership agreement among partners.
- A written partnership agreement is called a Deed.
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q3. Assertion (A): Partners must agree to share the profits and losses of the business.
Reason (R): Sharing of profit is an important feature of partnership as mentioned in the given material.
Choose the correct answer:
A) Both A and R are true, and R is the correct explanation of A
B) Both A and R are true, but R is not the correct explanation of A
C) A is true, but R is false
D) A is false, but R is true
Answer: A
Q4. Consider the following statements regarding the liability of partners:
- Each partner is jointly liable with all other partners.
- A partner’s private assets can also be used to pay the firm’s debts.
- The liability of every partner is restricted only to the amount of capital contributed.
- Private assets of partners can never be used for business debts.
Which of the statements given above are correct?
A) 1 only
B) 1 and 2 only
C) 2 and 3 only
D) 1, 2, 3 and 4
Answer: B
Q5. In the absence of a Partnership Deed, which of the following rules apply?
- Profits and losses are shared equally.
- No interest is allowed on partners’ capital.
- No interest is charged on partners’ drawings.
- Interest on partners’ loan is allowed at 6% per annum.
- No bonus, commission or salary is allowed to partners.
A) 1, 2 and 3 only
B) 1, 2, 3 and 4 only
C) 2, 3, 4 and 5 only
D) 1, 2, 3, 4 and 5
Answer: D
Q6. Match List I with List II and select the correct answer:
| List I | List II |
|---|---|
| A. Interest on Capital | 1. Charged to partners |
| B. Interest on Drawings | 2. Payable to partners |
| C. Salary/Commission | 3. Payable to partners |
| D. Drawings | 4. Made by partners during the current accounting year |
A) A-2, B-1, C-3, D-4
B) A-1, B-2, C-4, D-3
C) A-2, B-4, C-1, D-3
D) A-3, B-2, C-4, D-1
Answer: A
Q7. Which of the following statements correctly distinguish the Fixed Capital Method from the Fluctuating Capital Method?
- Under the Fixed Capital Method, partners’ capital remains the same at the end of the financial year.
- Under the Fixed Capital Method, two accounts are maintained.
- Under the Fluctuating Capital Method, the capital balance changes every year.
- Under the Fluctuating Capital Method, only one Capital Account is maintained for each partner.
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q8. Under the Fixed Capital Method, which of the following items are recorded in the Partners’ Current Account?
- Interest on Capital
- Interest on Drawings
- Drawings made during the current accounting year
- Salary or Commission payable to partners
- Distribution of profit and loss of the firm
A) 1, 2 and 3 only
B) 1, 2, 3 and 4 only
C) 2, 3, 4 and 5 only
D) 1, 2, 3, 4 and 5
Answer: D
Q9. Assertion (A): Under the Fluctuating Capital Method, only one Capital Account is maintained for each partner.
Reason (R): Adjustments such as opening capital, share of profit or loss, additional capital, interest on capital, salary or commission and drawings are recorded in the Capital Account itself.
Choose the correct answer:
A) Both A and R are true, and R is the correct explanation of A
B) Both A and R are true, but R is not the correct explanation of A
C) A is true, but R is false
D) A is false, but R is true
Answer: A
Q10. Consider the following statements regarding the Profit and Loss Appropriation Account:
- It is prepared according to the Partnership Deed.
- It is an extension of the Profit and Loss Account of the firm.
- It shows the distribution of net profit or loss as per the Profit and Loss Appropriation Account.
- It is used only when a partnership firm is dissolved.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: B
Q11. Which of the following statements correctly describe Interest on Capital?
- It is allowed at the agreed rate as per the Partnership Deed.
- If the deed is silent, no interest on capital is allowed.
- Interest on capital is allowed only if the firm earns profit.
- If profit is less than the interest amount, payment is restricted to the amount of profit available.
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q12. Which of the following correctly represents the formula for Interest on Capital?
A) Interest = Principal × Rate × Time
B) Interest = Principal + Rate × Time
C) Interest = Principal × Time ÷ Rate
D) Interest = Principal − Rate × Time
Answer: A
Q13. Consider the following statements regarding Interest on Drawings:
- It is charged if mentioned in the Partnership Deed.
- It is calculated at the agreed rate for the period during which drawings are made.
- Interest on Drawings is credited to the Profit and Loss Appropriation Account.
- It is always allowed to the partner as an expense of the firm.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: B
Q14. Match the following situations relating to Reconstitution of a Firm with their correct treatment:
| List I | List II |
|---|---|
| A. Admission of a new partner | 1. Gain Ratio |
| B. Existing partners sacrifice profit share | 2. Goodwill is valued |
| C. Existing partners change profit-sharing ratio | 3. Sacrificing Ratio |
| D. New ratio compared with old ratio | 4. New profit-sharing ratio results |
A) A-2, B-3, C-4, D-1
B) A-3, B-2, C-1, D-4
C) A-2, B-4, C-3, D-1
D) A-1, B-3, C-4, D-2
Answer: A
Q15. Which of the following correctly represents the formulas relating to Sacrificing Ratio and Gain Ratio?
- Sacrificing Ratio = Old Ratio − New Ratio
- Sacrificing Ratio = New Ratio − Old Ratio
- Gain Ratio = New Ratio − Old Ratio
- Gain Ratio = Old Ratio − New Ratio
A) 1 and 3 only
B) 1 and 4 only
C) 2 and 3 only
D) 2 and 4 only
Answer: A
Q16. On the death of a partner, the amount due to the deceased partner is calculated by considering which of the following?
- Balance of Capital
- Interest on Capital
- Commission or Salary, if applicable
- Share of Profit or Loss up to the date of death
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: D
Q17. Which of the following statements correctly describe the Dissolution of a Partnership Firm under Section 39 of the 1932 Act?
- Creditors are paid first out of the assets.
- All accounts are settled.
- Final payments are made to partners for the amount due to them.
- Creditors are paid only after the partners receive their final payments.
A) 1 and 2 only
B) 1, 2 and 3 only
C) 2, 3 and 4 only
D) 1, 2, 3 and 4
Answer: B
Q18. Assertion (A): Realisation Account is a temporary account prepared at the time of dissolution of a firm.
Reason (R): It is a Nominal Account used to record the sale of assets and settlement of liabilities.
Choose the correct answer:
A) Both A and R are true, and R is the correct explanation of A
B) Both A and R are true, but R is not the correct explanation of A
C) A is true, but R is false
D) A is false, but R is true
Answer: A
Q19. Consider the following items relating to the amount debited to the account of a deceased partner:
- Goodwill Account
- Drawings
- Interest on Drawings
- Accumulated Losses
- Any asset taken over by the partner
- Profit and Loss Account in case of share of loss
- Revaluation Loss
Which of the above are included?
A) 1, 2, 3 and 4 only
B) 1, 2, 3, 4 and 5 only
C) 2, 3, 4, 5, 6 and 7 only
D) 1, 2, 3, 4, 5, 6 and 7
Answer: D
Q20. Consider the following statements regarding Goodwill and other Partnership Account concepts:
- Under the Average Profit Method, goodwill is based on average profit.
- Average Profit = Total Profit ÷ Number of Years.
- Under the Super Profit Method, Super Profit = Average Profit − Normal Profit.
- Interest on loan and advance to partners is not recorded in the Profit and Loss Appropriation Account.
- When P&L is fluctuating, Accrued Interest Account is prepared separately.
- Salary or Commission to partners is transferred to the Debit side of the Profit and Loss Appropriation Account.
Which of the statements given above are correct?
A) 1, 2 and 3 only
B) 1, 2, 3 and 4 only
C) 2, 3, 4, 5 and 6 only
D) 1, 2, 3, 4, 5 and 6
Answer: D
