12th Accountancy - Book Back Answers - Unit 3 - English Medium Guides

  

 

12th - Accountancy - Book Back Answers -  Unit 3 - English Medium

Tamil Nadu Board 12th Standard Accountancy - Unit 3: Book Back Answers and Solutions

    This post covers the book back answers and solutions for Unit 3 –  from the Tamil Nadu State Board 12th Standard Accountancy textbook. These detailed answers have been carefully prepared by our expert teachers at KalviTips.com.

    We have explained each answer in a simple, easy-to-understand format, highlighting important points step by step under the relevant subtopics. Students are advised to read and memorize these subtopics thoroughly. Once you understand the main concepts, you’ll be able to connect other related points with real-life examples and confidently present them in your tests and exams.

    By going through this material, you’ll gain a strong understanding of Unit 3 along with the corresponding book back questions and answers (PDF format).

Question Types Covered:

• 1 Mark Questions: Choose the correct answer, 
• 2 Mark Questions: Very Short Answer Questions
• 3, 4, and 5 Mark Questions: Short Answer Questions, Excercises
  

All answers are presented in a clear and student-friendly manner, focusing on key points to help you score full marks.

All the best, Class 12th students! Prepare well and aim for top scores. Thank you!

Topic: Unit 3 :Accounts Of Partnership Firms Fundamentals

I. Choose the correct answers 

1. In the absence of a partnership deed, profits of the firm will be shared by the partners in …………….

(a) Equal ratio

(b) Capital ratio

(c) Both (a) and (b)

(d) None of these

Answer Key:

(a) Equal ratio

 

2. In the absence of an agreement among the partners, interest on capital is …………….

(a) Not allowed

(b) Allowed at bank rate

(c) Allowed @ 5% per annum

(d) Allowed @ 6% per annum

Answer Key:

(a) Not allowed

 

3.As per the Indian Partnership Act, 1932, the rate of interest allowed on loans advanced by partners is …………….

(a) 8% per annum

(b) 12% per annum

(c) 5% per annum

(d) 6% per annum

Answer Key:

(d) 6% per annum

 

4. Which of the following is shown in Profit and loss appropriation account?

(a) Office expenses

(b) Salary of staff

(c) Partners’ salary

(d) Interest on bank loan

Answer Key:

(c) Partners’ salary

 

5. When fixed capital method is adopted by a partnership firm, which of the following items will appear in capital account?

(a) Additional capital introduced

(b) Interest on capital

(c) Interest on drawings

(d) Share of profit

Answer Key:

(a) Additional capital introduced

 

6. When a partner withdraws regularly a fixed sum of money at the middle of every month, period for which interest is to be calculated on the drawings on an average is …………….

(a) 5.5 months

(b) 6 months

(c) 12 months

(d) 6.5 months

Answer Key:

(b) 6 months

 

7. Which of the following is the incorrect pair?

(a) Interest on drawings – Debited to capital account

(b) Interest on capital – Credited to capital account

(c) Interest on loan – Debited to capital account

(d) Share of profit – Credited to capital account

Answer Key:

(c) Interest on loan – Debited to capital account

 

8. In the absence of an agreement, partners are entitled to …………….

(a) Salary

(b) Commission

(c) Interest on loan

(d) Interest on capital

Answer Key:

(c) Interest on loan

 

9. Pick the odd one out …………….

(a) Partners share profits and losses equally

(b) Interest on partners’ capital is allowed at 7% per annum

(c) No salary or remuneration is allowed

(d) Interest on loan from partners is allowed at 6% per annum.

Answer Key:

(b) Interest on partners’ capital is allowed at 7% per annum

 

10. Profit after interest on drawings, interest on capital and remuneration is Rs 10,500. Geetha, a partner, is entitled to receive commission @ 5% on profits after charging such commission. Find out commission. …………….

(a) Rs 50

(b) Rs 150

(c) Rs 550

(d) Rs 500

Answer Key:

(d) Rs 500

II.Very short answer questions

1.  Define partnership.

•  According to Section 4 of the Indian Partnership Act, 1932, partnership is defined as, “the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”

 

2.  What is a partnership deed?

•  Partnership deed is a document in writing that contains the terms of the agreement among the partners. It is not compulsory for a partnership.

 

3.  What is meant by fixed capital method?

•  Under fixed capital method, the capital of the partners is not altered and it remains generally fixed. Two accounts are maintained for each partner namely (a) Capital account and (b) Current account.

 

4.  What is the journal entry to be passed for providing interest on capital to a partner?

Date	Particulars	L.F.	Debit	Credit
	Interest on capital A/c                Dr. To Partners Capital / current A/c		xxx	xxx

 

 

5.  Why is Profit and loss appropriation account prepared?

•  The profit and loss appropriation account is an extension of profit and loss account prepared for the purpose of adjusting the transactions relating to amounts due to and amounts due from partners. It is nominal account in nature. It is credited with net profit, interest on drawings and it is debited with interest on capital, salary and other remuneration to the partners.

 

III. Short answer questions 

1.  State the features of partnership.

• Partnership is an association of two or more persons. The maximum number of partners is limited to 50.
• The agreement must be to carry on a business and to share the profits of the business.
• The business may be carried on by all the partners or any of them acting for all.

 

2.  State any six contents of a partnership deed.

• Name of the firm and nature and place of business
• Date of commencement and duration of business
• Names and addresses of all partners
• Capital contributed by each partner
• Profit sharing ratio 
• Amount of drawings allowed to each partner

 

3.  State the differences between fixed capital method and fluctuating capital method.

Basis	Fixed capital	Fluctuating capital
1. Number of accounts	Two accounts are maintained for each  partner, that  is, capital account and current account.	Only one account, that is, capital account is maintained for each partner.
2.Change in capital	The amount of capital normally remains unchanged except when additional capital is introduced or capital is withdrawn permanently.	The amount of capital changes from period to period.
3.Closing balance	Capital account always shows a credit balance. But current account may show either debit or credit balance.	Capital account generally shows credit balance. It may also show a debit balance.

 

4.  Write a brief note on the applications of the provisions of the Indian Partnership Act, 1932 in the absence of partnership deed.

(i) Remuneration to partners - No salary or remuneration is allowed to any partner.

(ii) Profit sharing ratio- Profits and losses are to be shared by the partners equally.

(iii) Interest on capital- No interest is allowed on the capital.

(iv) Interest on loans- advanced by partners to the firm Interest on loan is to be allowed at the rate of 6 per cent per annum.

(v) Interest on drawings - No interest is charged on the drawings of the partners.

 

IV. Excercises

Question 1.
Akash, Bala, Chandru, and Daniel are partners in a firm. There is no partnership deed. How will you deal with the following?
1.Akash has contributed maximum capital. He demands interest on capital at 10% per annum.
2.Bala has withdrawn Rs 3,000 per month. Other partners ask Bala to pay interest on drawings @ 8% per annum to the firm. But, Bala did not agree to it.
3.Akash demands the profit to be shared in the capital ratio. But, others do not agree.
4.Daniel demands a salary at the rate of Rs 10,000 per month as he spends full time for the business.
5.The loan advanced by Chandru to the firm is Rs 50,000. He demands interest on loan @ 12% per annum.

Answer Key:
1.No interest on capital is payable to any partner.
2.No interest is charged on the drawing made by the partner.
3.Profit should be distributed equally.
4.No remuneration is payable to any partner.
5.Interest on the loan is payable at 6% per annum 

Question 2.
From the following information, prepare capital accounts of partners Rooban and Deri, when their capitals are fixed.

Answer Key:
Capital Account

Current Account

Question 3.
Arun and Selvam are partners who maintain their capital accounts under fixed capital method. From the following particulars, prepare capital accounts of partners.

Answer Key:
Capital Account

Current Account

Question 4.
From the following information, prepare capital accounts of partners Padmini and Padma, when their capitals are fluctuating. 

Answer Key:

Question 5.
Mannan and Ramesh share profits and losses in the ratio of 3:2 and their capital on 1st April, 2018 was Mannan Rs 1,50,000 and Ramesh Rs 1,00,000 respectively and their current accounts show a credit balance of’ Rs 25,000 and Rs 20,000 respectively. Calculate interest on capital at 6% p.a. for the year ending 31st March, 2019 and show the journal entries.

Answer Key:

Question 6.
Prakash and Supria were partners who share profits and losses in the ratio of 5:3. Balance in their capital account on 1st April, 2018 was Prakash Rs 3,00,000 and Supria Rs 2,00,000. On 1st July, 2018 Prakash introduced additional capital of Rs 60,000. Supria introduced additional capital of Rs 30,000 during the year. Calculate interest on capital at 6% p.a. for the year ending 31st March, 2019 and show the journal entries.

Answer Key:

Journal Entries

Question 7.
The capital account of Begum and Fatima on 1st January, 2018 showed a balance of RS 50,000 and Rs 40,000 respectively. On 1st October, 2018, Begum introduced an additional capital of? 10,000 and on 1st May, 2018 Fatima introduced an additional capital of Rs 9,000.
Answer Key:

Calculate interest on capital at 4% p.a. for the year ending 31st December 2018.

 

Question 8.
From the following balance sheets of Subha and Sudha who share profits and losses in 2:3, calculate interest on capital at 5% p.a. for the year ending 31st December 2018.
Balance sheet as on 31st December, 2018

Drawings of Subha and Sudha during the year were Rs 8,000 and Rs 10,000, respectively. Profit earned during the year was Rs 30,000.

Answer Key:

Question 9.
From the following balance sheets of Rajan and Devan who share profits and losses 2:1, calculate interest on capital at 6% p.a. for the year ending 31st December 2018.
Balance sheet as on 31st December 2018

On 1st April, 2018, Rajan introduced an additional capital of  Rs 40,000 and on 1st September, 2018, Devan introduced Rs 30,000. Drawings of Rajan and Devan during the year were Rs 20,000 and Rs 10,000 respectively. Profit earned during the year was Rs 70,000.
Answer Key:

 

Question 10.

Ahamad and Basheer contribute Rs 60,000 and Rs 40,000 respectively as capital. Their respective share of profit is 2 : 1 and the profit before interest on capital for the year is Rs 5,000. Compute the amount of interest on capital in each of the following situations:
1.if the partnership deed is silent as to the interest on capital
2.if the interest on capital @ 4% is allowed as per the partnership deed
3.if the partnership deed allows interest on capital @ 6% per annum.
Answer Key:

1. No Interest on capital is allowed.
2. Since the profit is sufficient, Interest on capital will be provided.

Ahamad:
$\mathrm{60,000}\times \frac{4}{100}=\mathrm{Rs}.\mathrm{2,400}$
Basheer:
$\mathrm{40,000}\times \frac{4}{100}=\mathrm{Rs}.\mathrm{1,600}$
3. Since the profit is insufficient, Interest on capital will be provided.
Ahamad:
$\mathrm{60,000}\times \frac{6}{100}=\mathrm{Rs}.3,600$
Basheer:
$4\mathrm{0,000}\times \frac{4}{100}=\mathrm{Rs}.\mathrm{2,400}$
Profit of 5,000 will be distributed to the partners in their capital ratio of 3:2.

 

Question 11.
Mani is a partner, who withdrew RS 30,000 on 1st September, 2018. Interest on drawings is charged at 6% per annum. Calculate interest on drawings on 31st December, 2018 and show the journal entries by assuming that the fluctuating capital method is followed.
Answer Key:
Mani:
$\mathrm{30,000}\times \frac{6}{100}=\mathrm{Rs}.600$
Interest on drawings of Mani = Rs. 600.

 

Question 12.
Santhosh is a partner in a partnership firm. As per the partnership deed, interest on drawings is charged at 6% per annum. During the year ended 31st December, 2018 he withdrew as follows:

Date	RS
February 1	2,000
May 1	10,000
July  1	4,000
October 1	6,000

Calculate the amount of interest on drawings.

Answer Key:

Interest on Drawings = Amount x Rate of Interest x Period
Feb 1 ⇒ 2,000 x 6100 = Rs 600
May 1 ⇒ 10, 000 x 6100 x 812 = Rs. 400
July 1 ⇒ 4,000 x 6100 x 612 = Rs. 120

$Oct 1\Rightarrow \mathrm{6,000}\times \frac{6}{100}\times \frac{3}{12}$ =\mathrm{Rs}.90$$

$\mathrm{Total\; interest \; 720}$

Question 13.
Kumar is a partner in a partnership firm. As per the partnership deed, interest on drawings is charged at 6% per annum. During the year ended 31st December, 2018 he withdrew as follows:

Date	Rs
March 1	4,000
June 1	4,000
September  1	4,000
December 1	4,000

Interest on Drawings = Amount x Rate of Interest x Period
March 1 ⇒ 4, 000 x 6100 = Rs. 200
June 1 ⇒ 4, 000 x 6100 x 712 = Rs. 140
Sep 1 ⇒ 4,000 x 6100 x 412 = Rs. 80

$\mathrm{Dec}1\Rightarrow \mathrm{4,000}\times \frac{6}{100}\times \frac{1}{12}=\mathrm{Rs}.20$

$\mathrm{Total\; interest \; 440}$

 

Question 14.
Mathew is a partner who withdrew Rs 20,000 during the year 2018. Interest on drawings is charged at 10% per annum. Calculate interest on drawings on 31st December 2018.
Answer Key:
$\mathrm{20,000}\times \frac{10}{100}\times \frac{6}{12}=\mathrm{Rs}.1000$

$\mathrm{ }$

Question 15.
Santhosh is a partner in a partnership firm. As per the partnership deed, interest on drawings is charged at 6% per annum. During the year ended 31st December, 2018 he withdrew as follows:

Date	Rs
February 1	2,000
May 1	10,000
July  1	4,000
October 1	6,000

Calculate the amount of interest on drawings by using product method.

Answer Key:

Date of Drawings	Amount	Period	Product
February 1 May 1 July  1 October 1	2,000 10,000 4,000 6,000	11 8 6 3	22,000 80,000 24,000 18,000
			1,44,000

Interest on drawings = Product x Rate of interest x$\frac{1}{12}$

$=1,\mathrm{44,000}\times \frac{6}{100}\times \frac{1}{12}=\mathrm{Rs}.720$$\frac{\mathrm{}}{\mathrm{}}$

Question 16.
Kavitha is a partner in a firm. She withdraws Rs 2,500 p.m. regularly. Interest on drawings is charged @ 4% p.a. Calculate the interest on drawings using average period, if she draws
1.At the beginning of every month
2.In the middle of every month
3.At the end of every month

Answer Key:
1. At the beginning of every month $=\mathrm{2,500}\times 12\times \frac{4}{100}\times \frac{13}{24}=Rs.650$

2. In the middle of every month $=\mathrm{2,500}\times 12\times \frac{4}{100}\times \frac{12}{24}=Rs.600$

3. At the end of every month $=\mathrm{2,500}\times 12\times \frac{4}{100}\times \frac{11}{24}=Rs.550$

 

Question 17.
Kevin and Francis are partners. Kevin draws Rs 5,000 at the end of each quarter. Interest on drawings is chargeable at 6% p.a. Calculate interest on drawings for the year ending 31st March 2019 using the average period. 

Answer Key:
Calculation of interest on drawings of Kevin.
Total amount of drawings = 5000 x 4 = 20,000

$\frac{\mathbf{A}\mathbf{v}\mathbf{e}\mathbf{r}\mathbf{a}\mathbf{g}\mathbf{e}\mathbf{ }\mathbf{P}\mathbf{e}\mathbf{r}\mathbf{i}\mathbf{o}\mathbf{d}}{\mathbf{12}}$

$\mathbf{20,000}\mathbf{\times }\frac{\mathbf{6}}{\mathbf{100}}\mathbf{\times }\frac{\mathbf{4.5}}{\mathbf{12}}\mathbf{=}\mathbf{R}\mathbf{s}\mathbf{.}\mathbf{450}$

 

Question 18.
Ram and Shyam were partners. Ram withdrew Rs 18,000 at the beginning of each half year. Interest on drawings is chargeable @ 10% p.a. Calculate interest on the drawings for the year ending 31st December 2018 using the average period.
Answer Key:
Total amount of drawing: 18, 000 x 2 = 36,000

$Interest of drawings=Amount\times Rate of interest\times \frac{Avwerage Period }{12}$

$\mathbf{36,000}\times \frac{\mathbf{10}}{\mathbf{100}}\times \frac{\mathbf{9}}{\mathbf{12}}\mathbf{=}\mathit{R}\mathit{s}\mathbf{.}\mathbf{2700}$

 

Question 19.
Janani, Kamali and Lakshmi are partners in firm sharing profits and losses equally. As per the terms of the partnership deed, Kamali is allowed a monthly salary of Rs 10,000 and Lakshmi is allowed a commission of Rs 40,000 per annum for their contribution to the business of the firm. You are required to pass the necessary journal entry. Assume that their capitals are fluctuating.
Answer Key:

Question 20.
Sibi and Manoj are partners in a firm. Sibi is to get a commission of 20% of net profit before charging any commission. Manoj is to get a commission of 20% on net profit after charging all commission. Net profit for the year ended 31st December 2018 before charging any commission was Rs 60,000. Find the commission of Sibi and Manoj. Also, show the distribution of profit.
Answer Key: 

$Calculation of commision:$

$commission to Sibi:$ 

$Net profit before comission\times \frac{\%ofcommission}{(100+\%of commission)}$ 

$=\mathrm{60,000}\times \frac{20}{100}=Rs\mathrm{12,000}$ 

$Commission to Manoj:$ 

$Net profit after Sibi\text{'}s commission\times \frac{\%ofcommission}{(100+\%ofcommission)}$ 

$=\mathrm{48,000}\times \frac{20}{100}=Rs\mathrm{8,000}$

 

Question 21.
Anand and Narayanan are partners in firm sharing profits and losses in the ratio of 5 : 3. On 1st January 2018, their capitals were Rs 50,000 and Rs 30,000, respectively. The partnership deed specifies the following:
1.Interest on capital is to be allowed at 6% per annum.
2.Interest on drawings charged to Anand and Narayanan are Rs 1,000 and Rs 800, respectively.
3.The net profit of the firm before considering interest on capital and interest on drawings amounted to Rs 35,000.

Give necessary journal entries and prepare profit and loss appropriation account as of 31st December 2018. Assume that the capitals are fluctuating.
Answer Key: 

Profit and Loss Appropriation Account

 Journal Entries

 

Question 22.
Dinesh and Sugumar entered into a partnership agreement on 1st January 2018, Dinesh contributing RS 1,50,000 and Sugumar Rs 1,20,000 as capital. The agreement provided that:
1.Profits and losses to be shared in the ratio 2 : 1 as between Dinesh and Sugumar.
2.Partners to be entitled to interest on capital @ 4% p.a.
3.Interest on drawings to be charged Dinesh: RS 3,600 and Sugumar: Rs 2,200
4.Dinesh to receive a salary of Rs 60,000 for the year, and
5.Sugumar to receive a commission of Rs 80,000
During the year ended on 31st December 2018, the firm made a profit of Rs 2,20,000 before adjustment of interest, salary, and commission.
Prepare the Profit and loss appropriation account.
Profit and Loss Appropriation Account

Question 23.
Antony and Ranjith started a business on 1st April 2018 with capitals of Rs 4,00,000 and Rs 3,00,000 respectively. According to the Partnership Deed, Antony is to get the salary of Rs 90,000 per annum, Ranjith is to get 25% commission on profit after allowing salary to Antony and interest on capital @ 5% p.a. but before charging such commission. Profit-sharing ratio between the two partners is 1:1. During the year, the firm earned a profit of Rs 3,65,000.
Answer Key:
Prepare profit and loss appropriation account. The firm closes its accounts on 31st March every year.