INDUS UNIVERSAL SCHOOL, SAINIKPURI, SECUNDERABAD

(Sri Lakshmi Saraswathi Educational Society, Affiliated to Central Board of Secondary Education, New Delhi)
Grade: XII Subject: Accountancy
Worksheet 1
Topic: Fundamental of partnership
1. Write any two features of partnership. 1
2. In case the partners’ capitals are fixed, in which account will withdrawal of capital be recorded ? 1

3. Why does the Fixed Capital Account of partners show credit balance even when the firm suffers losses
year after year ? 1
4. Lazy and Dazy had no partnership agreement. After earning profit Lazy wants profits to be distributed
according to their capital ratio but Dazy wants the distribution to be in equal ratio. Suggest them with
proper explanation. 1
5. Mohit, Shobhit and Rohit are partners sharing profits and losses in the ratio 2 : 1 : 1. Rohit is
guaranteed a profit of Rs14,000. The firm incurred a profit of Rs20,000 during the year. Calculate the
amount of deficiency borne by Mohit and Shobhit. 1

6. Which of the following items is not dealt through Profit and Loss Appropriation Account? 1
a. Interest on Partner’s Loan
b. Partner’s Salary
c. Interest on Partner’s Capital
d. Partner's Commission
7. E, F and G are partners sharing profits in the ratio of 3:3:2. As per the partnership agreement, G is to
get a minimum amount of Rs80,000 as his share of profits every year and any deficiency on this
account is to be personally borne by E. The net profit for the year ended 31st March, 2020 amounted
to Rs3,12 ,000. Calculate the amount of deficiency to be borne by E? 1
a. Rs1,000
b. Rs4,000
c. Rs8,000
d. Rs2,000
8. Calculate the amount of interest on drawings at the rate of 10%p.a for the following: 2
i) Raghav withdrew 2,000 per month at the beginning of every month, where as Bhuvan with
drew Rs5,000 at the end of every quarter.
ii) Arun Madhu and Vinay were equal partners. Their capitals were of Rs1,00,000; 80,000; and 60,000
respectively on 1st April 2019. Arun introduced fresh capital of Rs 20,000 on 1st july 2019, and Madhu
introduced Rs30,000 as further capital on 1st October 2019.Calculate the interest on capital if it is allowed
@ 10%p.a
9. Yadav, Vinod and Radha were partners in a firm sharing profits in the ratio of 4 : 3 : 3. Their fixed
capitals on 1st April, 2018 were Rs9,00,000, Rs 5,00,000 and Rs4,00,000 respectively. On 1st
November, 2018, Yadav gave a loan of Rs80,000 to the firm. As per the partnership agreement :
(i) The partners were entitled to an interest on capital @ 6% p.a.
(ii) Interest on partners’ drawings was to be charged @ 8% p.a.
The firm earned profits of Rs2,53,000 (after interest on Yadav’s loan) during the year 2018-19. Partners’
drawings for the year amounted to Yadav : Rs80,000, Vinod : Rs70,000 and Radha : Rs50,000.
Prepare Profit and Loss Appropriation Account for the year ending 31st March, 2019. 4
10. Arun, Shobha and Yuvraj were partners in a firm. On 1st April, 2018 their Fixed Capitals Stood at Rs
1,00,000, Rs50,000 and Rs 50,000 respectively. 4
As per the provisions of partnership deed,
(i) Partners were entitled to an annual salary of Rs20,000 each.
(ii) Interest on Capital @ 10% p.a. was to be provided.
(iii) Profits were to be shared in the ratio 3 : 1 : 1. Net profit for the year ended 31st March, 2019
was Rs90,000.
Prepare Profit and Loss Appropriation Account and Pass Journal Entries for the above in the books of the
firm.
 11. Josh and Krish are partners sharing profits and losses in the ratio of 3:1. Their capitals at the end of the
financial year 2015-2016 were Rs 1,50,000 and 75,000. During the year 2015-16, the drawings of Josh and
Krish were Rs 20,000 and Rs5,000 respectively.
Profit before charging interest on capital for the year was Rs16,000. The same had also been credited to their
capitals. Krish introduced fresh capital of Rs16,000 on 1 st October 2015. Calculate interest on capital @12% p.a
for the year 2015-16 4
12. Abdul , Bhuvan and Dev are partners in a firm. Their Capitals Accounts stood at
Rs8,00,000,Rs6,00,000 and Rs4,00,000 respectively on 1st April, 2013. They shared profits and Losses
in the ratio of 3:2:1 respectively. Partners are entitled to interest on capital@6% per annum and salary
to Bhuvan and Dev@ 4,000 per month and Rs6,000 per quarter respectively as per the provisions of
Partnership Deed.
Bhuvan’s share of profit including interest on capital but excluding salary is guaranteed at a minimum
of Rs82,000 p.a. Any deficiency arising on that account shall be met by Dev.
Profit for the year ended 31st March, 2014 amounted to Rs3,12,000. Prepare Profit & Loss
Appropriation Account for the year ended 31st March,2014 and Capital account. 6

Worksheet 2
1.Ravi and Giri are partners sharing profits and losses equally. Ravi withdrew ₹ 1000 p.m regularly on the
first day of every month during the year 2018-19 for personal expenses. If interest on drawings is charged @
5% p.a, calculate interest on Ravi’s drawings.
*Fill in the Blanks: -*
3. Partners may or may not have written ____________________.
*True / False*
4. Partnership is the relation between persons who have agreed to share profits of a business carried
on by all or any of them acting for all.
*Multiple Choice Question*
5. In case partners have guaranteed profit to a partner and deficiency of profit. The deficiency happens
it is borne by
(a) All the partners in new profit sharing ratio
(b) Remaining partners in the ratio in which they have given guarantee
(c) All the partners in sacrificing ratio.
(d) All the partners in old profit sharing ratio.
*True/False*

6. If interest on capital is to be allowed as per the agreement, then interest on capital is calculated with
reference to time and is calculated on Capital in the beginning.

*Fill in the Blank*

7. Interest on Drawings is charged if the Partnership Deed provides for it and whether the firm earns
______________ or not. .
*Multiple Choice Question*

8. In the absence of provision in the partnership deed, interest on loans given by the partners is allowed @
(a) 8% p.a.
(b) 6% p.a.
(c) 10% p.a.
(d) 9% p.a.
*True/False*
9. Current Accounts of the partners are opened when capital is withdrawn.
*Fill in the Blank
10. In the absence of Partnership Deed, interest on Loan by partners to the firm is allowed @ _____________
.
*Multiple Choice Question*
11. Interest on drawings of the partners is a
(a) Loss to the business
(b) Gain to the business
(c) Profit to partners
(d) Loss to partners
12. Lakshman, Sarath and Pari were partners in a firm sharing profits and losses in the ratio 7:2:1. Their
fixed capitals were Lakshman ₹ 300,000, Sarath ₹ 200,000 and Pari ₹ 100,000. The partnership deed
provides the following for division of profit:
(a). 10% of the trading profit will be transferred to the Reserve Account.
(b). Pari was guaranteed a profit of ₹ 50,000. Any deficit of Pari will be shared by Lakshman and Sarath
equally.
The net profit of the firm for the year ended 31st March 2019 was ₹ 2,00,000.
Prepare profit and loss appropriation account

13.Ajay, Sunil and Pavan were partners in a firm sharing profits and losses in the ratio 7:2:1. Their fixed
capitals were ₹ 300,000, ₹ 200,000 and ₹ 100,000 respectively. The partnership deed provides the
following for division of profit:

(a). partners are allowed an interest on capitals @ 10%p.a

(b). Ajay and Sunil will be allowed a monthly salary of Rs 5,000 and 6,000 respectively.
(c) 10% of the divisible profit will be transferred to the Reserve Account.
(d). Pavan was guaranteed a profit of ₹ 40,000. Any deficit of Pavan will be shared by Ajay and
Sunil equally.
The net profit of the firm for the year ended 31st March 2019 was ₹ 5,00,000.
Prepare profit and loss appropriation account

14.Under the Capitalisation Method of Valuation of Goodwill the formula for calculating goodwill is :

a. Super profits multiplied by the rate of return

b. Average profits multiplied by the rate of return
c. Super profits divided by the rate of return
d. Average profits divided by the rate of return

15.Which of the following statement is Correct?

(a) Goodwill is a fictitious asset.
(b) Goodwill is a current asset.
(c) Goodwill is a wasting asset.
(d) Goodwill is an intangible asset.

16. Rahul, Bablu and Sekhar are partners in a diem sharing profits and losses in the ratio of 3:2:1.Bablu’s
share of profits is guaranteed as minimum of Rs 20,000. In case of any deficiency it will be borne by
 remaining partners equally. The net profit for the year ending 31st March 2015 was Rs 45,000. Prepare Profit
and Loss Appropriation A/c.

17. A firm’s average profits are Rs70,000. Capital invested in the business is Rs 5,50,000 and the normal rate
of return is 10%. Calculate goodwill at four times of super profit. Pass the journal entries to show the
distribution of goodwill.

18. Define Goodwill.

19. Give any two features of Goodwill.
20. Explain the need for valuation of Goodwill.
21. Explain all the factors affecting the value of Goodwill.(Q17 to 20 refer to ncert text book)

22. Describe the classification of Goodwill.(Refer to page 3.3 chapter Goodwill T.S.Grewal)

. 23.Kumar and Raja are partners in a firm sharing profits in the ratio of 7:3. Their capitals
were Kumar Rs. 900,000, Raja Rs. 400,000. Profit was distributed without the treatment of the following
provided in the partnership deed:
i)Interest on the Capitals at the rate 9% per annum
ii)Salary to Kumar Rs. 50,000 per year and to Raja Rs. 3000 per month
Profits for the year ended 31.3.2007 was Rs. 278,000. Pass adjustment entries by showing the
workings clearly.
23. Define partnership.

24. Explain the features of partnership.

25.Decsribe the important provisions of partnership of IPA, 1932

Worksheet 3

Choose the correct option to complete the statement:

1. The Current Account of a partner

a) will always have a credit balance.
b) will always have a debit balance.
c) may have a debit or a credit balance.
d) can never have a debit balance.
2. The interest on partner’s drawing is debited to
a) Partners’ Capital Account b) Profit and Loss Account
c) Drawings Account d) None of these
3. When a new partner gives cash for goodwill, the amount is credited to the

a) Goodwill Account b) Capital Account of new partner

c) Cash Account d) None of these
4. At the time of admission of new partner the goodwill existing in the books will be written
off among the old partners in
a) the new profit sharing ratio b) the old profit sharing ratio
c) sacrificing ratio d) gaining ratio
5. A, B and C are partners sharing profits in the ratio of 2:2:1. C retired. The new profit
sharing ratio between A and B will be
a) 2:1 b) 1:1
c) 3:1 d) None of these
 6. Calculate the value of goodwill on the basis of average profit of last six years.
Profits/losses are as follows:
Year: 1st 2nd 3rd 4th 5th 6th
Rs 60,000 40,000(loss) 30,000(loss) 1,00,000(profit) 1,70,000(profit) Rs 2,20,000(P)

7. P & Q started business on 1st April 2011 with capitals of Rs.150000 & Rs. 90000 respectively.
On 1st October 2011 they decided that the capital should be Rs. 120000 each.
Necessary adjustments in capitals were made by introducing or withdrawing by cheque.
Interest on capital was allowed at 8%. Compute interest on Capital on 31st March 2012.

9.J and K are partners in a firm, their capitals are J Rs. 300000 and K Rs. 200000. During the
year ended 31st March, 2010 the firm earned a profit of Rs 1,50,000. Assuming that the
normal rate of return is 20%, calculate the value of goodwill of the firm:
i. By Capitalisation Method
ii. By Super Profit Method if the goodwill is valued at 2 years’ purchase of super profits.
10. A, B , C were partners in a firm. On 1st April 2008, their capitals stood at 50000, 25000 and
25000 respectively. As per partnership provisions
i. B was entitled for a salary Rs.5000 per annum
ii. All partners were entitled to an interest on capital at 5% per annum
iii. Profits were to be shared in the ratio of capitals
Net profit for the year ended 31st March 2009 was Rs 33000 which was divided equally without providing
the above terms.
Pass an adjustment journal entry to rectify the above error.
11. D, E & F were partners in a firm sharing profits in the ratio 5:7:8. Their capitals were
Rs.500000. Rs.700000 & Rs.800000. Their partnership deed provided for the following:
i. Interest on Capital @10% p.a
ii. Salary of Rs 10000 per month of F
iii. Interest on drawings @ 12% p.a.

Drawings of D, E & F were Rs. 40000, Rs. 50000 & Rs. 30000 respectively. The profit
earned by the firm during the year was Rs. 350,000. Prepare P&L appropriation account for
year ended 31st Dec. 2009.
Worksheet 4

1. What is the maximum number of partners a partnership firm may have?

2. How is gaining ratio calculated?
3. A,B and C are in partnership but there is no partnership deed. C advanced a loan of Rs 20,000 and is
demanding interest on loan at the prevailing market rate,@8%. Is his demand correct? Justify

4. Apart from Admission, retirement/death of a partner and change in profit sharing ratio when is
goodwill of the firm valued.
5. To which account are the profits transferred when capital accounts are Fixed?
6. P and Q are partners sharing profits in the ratio of 3:2 in a firm which provides technical services to
industrial enterprises. They admitted R in the firm for 1/5th share in the profits. R an MBA would help
them to expand their business. R is given a guarantee that his share of profit in any year will not be
less than Rs5,00,000. Deficiency if any will be borne by P and Q equally. Loss for the year ended
on31st March 2017 was 25,00,000. Pass necessary journal entries in the books of the firm.
7. Calculate the value of goodwill on the basis of three years’ purchase of average profit of the preceding
five years which were as follows:

Year 2016-17 2015-16 2014-15 2013-14 2012-13

Profits 8,00,000 15,00,000 18,00,000 4,00,000(loss) 13,00,000

8. Pankhu and Nimmy are partners in M/s Mega Enterprises. They admit. Ashish as partners as a new
partners. They agreed to value goodwill at 3years purchase by Super Profit Method for which they
decided to take average of last 5 years profits.
The profits for the last five years were: 4
Year ended Rs
2018 2,00,000
2019 1,70,000
2020 2,10,000
2021 2,30,000
2022 2,50,000
Capital Employed in the firm is Rs15,00,000 and normal rate of return in similar business is 10%.
Calculate value of goodwill.

9. Calculate interest on drawings of Mr. Ashok @10% p.a for the year ended 31st March,2017 if he
withdrew Rs7,500 (a) at the beginning of each quarter (b) during the middle of each quarter (c) at the
end of each quarter .

10. On 1st April,2016, Ashu and Bose commenced business with capitals of Rs4,00,000 and Rs6,00,000
respectively. The terms of the partnership agreement are:
i. Profits to be shared in the ratio of 2:3.
ii. Partners are entitled to interest on capital @6%p.a.
iii. Interest on drawings shall be charged @8%p.a.
During the year ended 31st march,2017, the firm earned a profit of Rs3,85,600 before interest on
capital and drawings. The partners withdrew Rs60,000 each at the end of every quarter commencing
from 30th June,2016. Prepare Profit and Loss Appropriation Account.

11. Ashok, Bhim and Chetan are partners in a firm. On 1st April,2018, their capitals stood at Rs4,00,000,
Rs3,00,000 and Rs2,00,000 respectively. As per the provisions of the partnership deed:
i. Ashok was entitled to a salary of Rs5,000 per month. 3
ii. Partners were entitled to interest on Capital @10% p.a.
The net profit for the year ended 31st March, 2019, Rs3,00,000 was divided among the partners
without providing for the above items. Showing your working clearly, pass an adjustment entry to
rectify the above error

12. Rajesh purchased Athreya’s business with effect from 1st April, 2022. It was agreed that the firm’s
goodwill will be valued at two years’ purchase of average normal profit of the last three years. Profits
of Athreys’s business for last years ended 31st March, were:
2020: Rs1,00,000 (including a abnormal gain of Rs 10,000);
2021: Rs 1,10,000(after charging an abnormal loss of Rs20,000);
2022: Rs 85,000 ( including non-business income of Rs5,000).
Calculate value of the firm’s goodwill.
ii. Shiva and Karan were partners in an interiors designer firm. Their fixed Capitals were
Rs 6,00,000 and Rs4,00,000 respectively. There were credit balances in their current accounts of
Rs4,00,000 and Rs5,00,000 respectively. The firm had a balance of Rs1,00,000 in General Reserve.
The firm did not have any liability. They admitted Radhika into Partnership for 1/4th share in the
profits of the firm. The average profit of the firm for the last five years were Rs5,00,000. Calculate
the value of goodwill of the firm by capitalization of average profits method. The normal rate of
return in the business is 10%.