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The MCQs below are drawn from the Accountancy & Auditing subject category.
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761
Partners A and B share profits and losses in a 3:2 ratio, each holding a capital balance of $100,000. If the firm's assets decrease in value from $60,000 to $40,000, what is the adjusted balance of A's capital account?
The total revaluation loss is $20,000 ($60,000 - $40,000). Partner A's share of this loss is 3/5 of $20,000, which equals $12,000. Subtracting this loss from A's initial capital of $100,000 results in an adjusted capital balance of $88,000.
762
Partners Bill and Ben share profits and losses in a 3:2 ratio. Bill receives a $12,000 annual salary. Given a net profit of $52,000, what amounts are credited to their Current Accounts?
Partners X and Y share profits in a 1:2 ratio. Given a net income of $10, X's salary of $2, Y's interest on drawings of $3, and X's interest on capital of $2, what is X's final share of profit?
Starting with net income of $10, add interest on drawings ($3) to get $13. Subtract X's salary ($2) and X's interest on capital ($2), leaving $9 as divisible profit. X's share is 1/3 of $9, which equals $3. This calculation follows standard partnership appropriation procedures.
764
Partners X and Y share profits and losses in a 1:2 ratio. Given a net income of $10, X's salary of $2, Y's interest on drawings of $3, and X's interest on capital of $2, calculate X's share of the final profit.
The divisible profit is calculated as: Net Income ($10) - Salary ($2) - Interest on Capital ($2) + Interest on Drawings ($3) = $9. X's share is 1/3 of $9, which equals $3. This calculation follows the standard appropriation of profit process where interest on drawings increases the distributable profit while salaries and interest on capital decrease it.
765
Which form of business organization does not require the preparation of a Profit and Loss Appropriation Account?
A Profit and Loss Appropriation Account is used to distribute net profits among partners or shareholders. In a sole proprietorship, the entire profit belongs to the single owner, so there is no need to appropriate or divide the profit among multiple parties, making this account unnecessary.
766
In which financial statement is the interim dividend typically recorded?
An interim dividend is a dividend payment declared and paid before the company's annual general meeting and the final financial statements are released. Because it represents a distribution of profits to shareholders, it is recorded in the Profit and Loss Appropriation Account, which shows how the net profit is allocated.
767
Calculate the partner's commission if the net profit before charging such commission is 65,000 and the commission rate is 11% after charging.
When commission is calculated after charging such commission, the formula is (Net Profit * Rate) / (100 + Rate). Here, (65,000 * 11) / 111 equals approximately 6,441.44. Rounding to the nearest whole number gives 6,441. This adjustment ensures the commission is correctly calculated as a percentage of the profit remaining after the commission expense has been deducted.
768
Calculate the partner's commission if the net profit before charging such commission is 65,000 and the commission rate is 11% before charging.
When the commission is calculated on net profit before charging such commission, the formula is (Net Profit * Rate) / 100. Here, 65,000 * 11 / 100 equals 7,150. This represents the commission amount to be paid to the partner based on the specified percentage of the profit before the deduction of the commission itself.
769
Is a partner permitted to transfer their interest in the partnership to a third party without obtaining the consent of the other partners?
Under standard partnership law, the principle of 'delectus personae' applies, meaning that a partner cannot transfer their share or introduce a new partner into the firm without the unanimous consent of all existing partners. This ensures that partners have control over who they enter into a business relationship with, as partnership involves mutual agency and personal trust.
770
What is the maximum number of partners permitted in a partnership firm under the laws of Pakistan?
Under the Companies Act, 2017 in Pakistan, the maximum number of persons who may form a partnership for carrying on business is generally limited to 50, unless the partnership is formed for a profession governed by special laws. This limit is a statutory requirement for partnership firms.
