MULTIPLE CHOICE QUESTIONS

(1) An ordinary partnership business can have:

(a) Not more than 50 partners. (b) Not more than 20 partners.
(c) Any number of partners. (d) Any number than 2 partners.

(2) A banking partnership business can have:

(a) Not more than 10 partners. (b) Not more than 20 partners.
(c) Not more than 50 partners. (d) Any number of partners.

(3) In the absence of an agreement profit and loss are divided by partners in
the ratio of:
(a) Capital (b) Equally
(c) Time devoted by each partners. (d) None of these.

(4) In the absence of an agreement, Interest on loan advanced by the partner

to the firm is allowed at the rate of:
(a) 6% (b) 5% (c) 12% (d) 9%

(5) Current accounts of the partners should be opened when the capitals are:
(a) Fluctuating (b) Fixed
(c) Either fixed or fluctuating (d) None of these

(6) Investment in partnership is made by introducing:

(a) Cash (b) None – cash assets
(c) Cash or non – cash assets (d) None of these.

(7) Partnership is formed by the partners by:

(a) Written agreement (b) Oral agreement
(c) Written or oral (d) None of these

(8) Any partner who investments in the business but does not take active part
in the business is:
(a) Secret partner (b) Sleeping partner
(c)Active partner (d) Nominal partner
(9) The written agreement of partnership is called:
(a) Partnership deed (b) Articles of association
(c) Memorandum of association (d) Certificate of incorporation

(10) Under fixed capital methods, profit will be credited to:

(a) Capital Account (b) Drawings
(c) Current Account (d) Profit & Loss

(11) Partnership business in Pakistan is government by partnership Act of:

(a) 1913 (b) 1932 (c)1984 (d) 1928

(12) The members of partnership firm are individually called as:

(a) Director (b) Investor (c) Partner (d) Manager

(13) The object of partnership is to:

(a) Earn profit (b) Not to earn profit
(c) Welfare of members (d) None of these

(14) Liability of partners in a partnership business is:

(a) Limited (b) Un-limited
(c) Limited & unlimited (d) None of these

(15) Capital of the partners are maintained by:

(a) Fixed capital method. (b) Fluctuating capital methods.
(c) By any two above methods. (d) None of them.

(16) Drawings of the partners are:

(a) Debited to profit & loss Account (b) Credited to profit & loss Account
(c) Credited to capital Account (d) Debited to capital Account

(17) A partners has to pay interest on drawings what is the entry in the
personal A/c of the partner?
(a) Credit partners capital account (b) Credit partners current account
(c) Debit the partners current account (d) Debit partners current account
(18) Salary paid to partner should be:
(a) Debited to his current account (b) Credited to his current a/c
(c) Credited to profit & loss appropriation account (d) None of above

(19) Interest on capital Account:

(a) Debited to profit & loss A/c
(b) Credit to profit & loss account
(c) Debit to profit & loss and credited to partners capital A/c.
(d) Only credited to partners capital A/c.

ADMISSION OF PARTNER
(20) At the time of admission of a new partner the firm is:
(a) Dissolved (b) Continued
(c) Not effected (d) RE-organized

(21) At the time of admission an incoming partner contributes as goodwill:

(a) In cash (b) Does not pay cash
(c) May or may not pay cash for good will (d) None of these.

(22) An incoming partner pays his share of good will in cash, and profit
sharing ration of old partner is changed, Good – will be distributed
among old partners:
(a) As their old profit ratio
(b) According to new ratio
(c) According to sacrifice ratio
(d) None of these

(23) At the time of admission of a new partner, general reserve is:

(a) Debited to capital of old partners (b) Credited to capital of old partners.
(c) Allowed to remain is balance sheet (d) Debited to current account
RETIREMENT OF PARTNERS
(24) The partnership may come to an end due to the:
(a) Death of a partner (b) Insolvency of partner
(c) By giving notice (d) All of the above

(25) In case of retirement of a partner full good will is credited to the accounts of:
(a) All partners (b) Only retiring partner
(c) Only remaining partner (d) None of the above

(26) Revaluation account is operated to find out gain or loss at the time of:
(a) Admission of a partner (b) Retirement of a partner
(c) Death of a partner (d) All of above

(27) Partners equity is effected due to:

(a) Retirement of a partner (b) Admission of a partner
(c) Death of a partner (d) All of above

(28) The accounting procedure at the retirement of partner is valued:

(a) Revaluation of assets and liabilities
(b) Ascertaining his share of good will
(c) Finding the amount due to him
(d) All of above

(29) If the remaining partner want to continue the business, after the retirement of a
partner, a new partnership agreement:
(a) Necessary (b) Not necessary
(c) Optioned (d) None of above

(30) An account operated to ascertain the loss or gain at the death of a partner
is called:
(a) Realization account (b) Revaluation account
(c) Execution account (d) Deceased partner A/c