In the absence of a partnership deed, the rate of interest on loan given by a partner to the firm is: MCQ with Answer and Explanation

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In the absence of a partnership deed, the rate of interest on loan given by a partner to the firm is:

A. Not allowed

B. 5% p.a.

C. 6% p.a.

D. 10% p.a.

Answer: Option C

Solution (By JKSSB Mock Tests)

Section 13(d) of Partnership Act provides 6% p.a. interest on partner's loan.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

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A credit balance in the Income and Expenditure Account of an NPO indicates:

A. Surplus (Excess of Income over Expenditure)

B. Capital Fund

C. Deficit (Excess of Expenditure over Income)

D. Cash in hand

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Correct Answer: Option A

Explanation:
An Income & Expenditure Account is a nominal account. A credit balance means incomes exceed expenses, resulting in a Surplus.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

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At the time of retirement of a partner, goodwill appearing in the balance sheet is:

A. Written off among all partners in old ratio

B. Credited to retiring partner only

C. Retained as is

D. Transferred to revaluation account

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Correct Answer: Option A

Explanation:
Existing goodwill in books is written off by debiting all partners' capital accounts in old ratio.

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Question #3

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A: Revenue is recognized when the significant risks and rewards of ownership are transferred. R: This is based on the Realization Concept. Choose the correct option.

A. Both A and R are true but R is NOT the correct explanation of A

B. A is false but R is true

C. A is true but R is false

D. Both A and R are true and R is the correct explanation of A

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Correct Answer: Option D

Explanation:
The Realization Concept dictates that revenue is recognized when the legal right to receive payment is established, typically upon transfer of risks and rewards. R correctly identifies the concept.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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