Commerce MCQs
Topic Notes: Commerce
MCQs and preparation resources for competitive exams, covering important concepts, past papers, and detailed explanations.
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
71
How should a partner's salary, as stipulated in the Partnership Deed, be recorded in the books of account?
Answer:
Credited to the Current Account of Partner X
In partnership accounting, salaries payable to partners are appropriations of profit rather than business expenses. Therefore, they are recorded by debiting the Profit and Loss Appropriation Account and crediting the partner's Current Account (or Capital Account if fixed). This reflects the distribution of profits to the partner for their services rendered to the firm.
72
Which of the following best describes a dormant or sleeping partner in a partnership firm?
Answer:
Invests but doesn’t take part in the business
A dormant or sleeping partner is an individual who contributes capital to the partnership and shares in the profits or losses but does not participate in the day-to-day management or active operations of the business. Despite their lack of active involvement, they remain liable to third parties for the debts and obligations incurred by the firm, just like an active partner.
73
Which of the following methods is not available to a partnership firm for raising capital?
Answer:
debentures
A partnership firm is not a corporate entity and therefore cannot issue debentures, which are debt instruments used by companies to borrow from the public. Partnerships typically raise funds through partner contributions, bank loans, or private loans from partners, as they lack the legal structure to access public capital markets.
74
Partners X, Y, and Z share profits equally with capitals of Rs. 5,00,000, Rs. 3,00,000, and Rs. 1,00,000. Interest on capital was erroneously charged at 6% instead of 5%. What is the correct adjusting entry?
Answer:
X was debited with Rs. 2,000 and Z was credited with Rs. 2,000
The excess interest charged (1%) on capitals is: X: 5,000, Y: 3,000, Z: 1,000. Total excess = 9,000. This must be debited back to partners in profit-sharing ratio (3,000 each). Net adjustment: X (5,000 - 3,000) = 2,000 Dr; Y (3,000 - 3,000) = 0; Z (1,000 - 3,000) = 2,000 Cr. Thus, X is debited and Z is credited by 2,000.
75
In the absence of a partnership deed, what interest is a partner entitled to receive on additional capital introduced during the year?
Answer:
Zero
According to the Partnership Act 1932, in the absence of an express agreement or partnership deed, partners are not entitled to receive interest on their capital contributions. Therefore, regardless of the amount or the timing of the capital introduction, the interest payable is zero.
76
Match the following accounting terms with their correct formulas:
Answer:
a-4, b-3, c-2, d-1
The correct matches are: (a) New share (Admission) = Old share - Sacrifice share; (b) Gaining ratio = New ratio - Old ratio; (c) Sacrificing ratio = Old ratio - New ratio; (d) New share (Retirement) = Old share + Gaining share. These formulas are fundamental to adjusting capital and profit-sharing arrangements during changes in the partnership structure.
77
In the absence of a specific partnership agreement, what is the entitlement of a partner regarding interest on their capital contribution?
Answer:
Is not entitle to receive interest on capital
According to the Partnership Act, if the partnership deed is silent or absent, partners are not entitled to receive interest on their capital contributions. Interest on capital is only payable if there is an express agreement between the partners to provide for such payment.
78
Four individuals (A, B, C, D) rented a pasture. A grazed 24 cows for 3 months, B grazed 10 cows for 5 months, C grazed 35 cows for 4 months, and D grazed 21 cows for 3 months. If A's rent share is Rs. 720, what is the total rent?
Answer:
Rs. 3,250
Calculate cow-months: A=72, B=50, C=140, D=63. Total cow-months = 325. A's share is 72/325 of total rent. If 72/325 * Total = 720, then Total = 720 * 325 / 72 = 3,250. The calculation confirms the total rent is Rs. 3,250.
79
In which of the following areas does a dormant (or sleeping) partner participate?
Answer:
Profit
A dormant or sleeping partner is one who contributes capital to the firm and shares in the profits and losses but does not take an active role in the day-to-day management or operations of the business. Despite their lack of involvement in management, they remain liable for the firm's debts to third parties.
80
Partners A, Y, and Z share profits in a 5:4:1 ratio. Z is guaranteed a minimum profit of Rs. 80,000, with any deficiency covered by A and Y in a 3:2 ratio. If the total profit is Rs. 5,60,000, what is Y's share of the deficiency?
Answer:
Rs. 9,600
Z's share is 1/10 of 560,000, which is 56,000. The deficiency is 80,000 - 56,000 = 24,000. This deficiency is shared by A and Y in a 3:2 ratio. Y's portion is 2/5 of 24,000, which equals 9,600.