OBJECTIVE questions

 Interest on capital is debited in profit and loss a/c.

 Interest on capital is debited to capital a/c.

 Interest on drawings is credited in profit and loss a/c.

 Interest on drawings is credited to Goodwill capital a/c.

 Profit on sales of a fixed asset is debited to fixed asset a/c.

 The amount on depreciation charged on machinery will be

debited to depreciation a/c.

 Depreciation a/c will be closed by transferring to profit and

loss a/c.

 There will be a separate capital a/c and drawings a/c for

each partner.

 Under fluctuating capital current a/c is not maintained.

 Interest on capital will be allowed will generally be limited to

the available profits of the firm.

 Interest on partner’s drawings is not changed to their

drawings.

 Interest on partner’s drawings is charged to their respective

capitals.

 Money lend to a business by a partner is credited to his loan

a/c and not his capital a/c.

 Under fixed capital method, partner’s current a/c &

drawings a/c (or) capital a/c & current a/c are opened.

 Under fluctuating capital method partner’s drawing a/c is

opened.

 Undisturbed profit – Liabilities.

 Undisturbed loss – Assets.

 Under revaluation method, the new partner does not bring

in cash for his share of goodwill.

 If goodwill is not raised to Rs.xxxx, the amount is debited to

goodwill a/c.

 Companies have been defined in sec 3 (1) (i) of companies

act of 1956.

 A public issue cannot be kept open for more than 3 days.

 The part of authorized capital not offered for public

subscription to public is Issued capital.

 The public issue must be kept open for at least 3 days.

 Interest on calls-in-arrears – 5%.

 Interest on calls-in-advance – 6%.

 Capital reserve – capital profit – Liabilities.

CHALLENGING
-INSIDE BOOK

 Profit and loss appropriation a/c is an extension of profit and

loss a/c.

 If the date of additional capital is not given interest is

calculated for 6 months.

 Drawings a/c is closed and transferred to capital a/c or

current a/c.

 In the absence of any instructions, the capital accounts of

partners should be under fluctuating capital method.

 Admission of a partner sec 31 (1) of Indian partnership act of

1932.
 Where the consideration which new partners pay the old for
future profit – Goodwill.

 Goodwill does not appear as an asset in the balance

sheet in the existing firms, as it is a silent asset.

 Partnership retirement sec 32 (1) of Indian partnership act of

1932.

 A company can be financed through internal and external

sources.

 Share capital of the company part I schedule VI of

companies act of 1956.

 Defaulted amount is called as calls-in-arrears.