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Subjects

Accountancy

Adjustments

In this Class 12 Accountancy topic, students learn how adjustments are made in partnership accounts when the terms of the partnership deed affect the distribution of profit. The topic covers items such as interest on capital, interest on drawings, partners’ salary or commission, and other corrections required before preparing the Profit and Loss Appropriation Account and partners’ capital or current accounts. Students also practise identifying the correct treatment and recording these adjustments accurately.

Hard · Level 2 · 25 questions

Practice questions

01The firm paid ₹12,000 for partner A’s personal expense in cash but recorded it as a business expense. What effect will the rectifying entry have on A’s account?

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02A and B are equal partners. Interest on A's drawings of ₹5000 was wrongly debited as an expense. What is the correct treatment?

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03Which item is shown in the Profit and Loss Account and not in the Profit and Loss Appropriation Account?

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04A B and C share profits in the ratio 2:2:1. C is guaranteed ₹18000 by all partners in profit ratio. Profit is ₹60000. What is A's final share?

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05A and B share profits in the ratio 3:2. A withdrew ₹6000 with interest ₹600. B withdrew ₹9000 with interest ₹900. What total credit will appear in the appropriation account?

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06A and B shared profit of ₹40000 equally. Later it was found that interest on B's drawings of ₹20000 at 10% for six months was not charged. What is the correction?

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07A has guaranteed B that B’s share of profit will not be less than ₹50,000. A and B share profits in the ratio 4:1. The total profit for the year is ₹1,60,000. What adjustment will be made due to the guarantee?

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08A B and C share profits in the ratio 3:2:1. A's salary of ₹24000 was omitted. Profit was already distributed in ratio. Which partner will have the highest debit effect?

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09Profit is ₹90000. A gets salary ₹15000 and B gets commission at 10% on remaining profit. A and B share the balance equally. What is B's total share?

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10A withdrew ₹10000 on 1 July and ₹20000 on 1 January. The year ends on 31 March. Rate of interest is 12%. What is interest by product method?

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11The deed states that A will get managerial commission at 10% of profit and it is to be given before profit distribution. In which account will it appear?

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12A and B share profits in the ratio 2:1. A's salary of ₹18000 was wrongly debited to expense and also debited in appropriation. Accounts are closed. What is the correction?

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13A and B maintain fixed capitals. At year end A's current account shows a debit balance. What does it generally mean?

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14The partnership deed provides interest on drawings but dates of drawings are not given. Drawings are assumed evenly throughout the year. What time period is used?

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15A B and C share profits in the ratio 3:2:1. Total profit is ₹96000. A gets salary ₹12000 and C gets interest on capital ₹6000. What is B's share of remaining profit?

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16A and B share profits in the ratio 3:2. A has a minimum income guarantee of ₹50000 including salary and profit share. A's salary is ₹20000 and total profit is ₹100000. Is any extra guarantee payable?

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17A has taken a loan of ₹80000 from the firm and the deed has no provision for interest. What is the treatment of interest for the firm?

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18Partner A has interest on capital ₹10000 and interest on drawings ₹1500. Under fluctuating capital method what is the net effect on A's capital account?

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19A and B shared profit equally. Later it was found that A's salary of ₹12000 was due and interest on B's drawings of ₹4000 was to be charged. What is the net correction?

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20A and B share profits in the ratio 4:3. A's opening capital was ₹180000 and he introduced ₹60000 additional capital on 1 October. Interest on capital is 10% per annum. What is A's interest on capital?

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21B invested ₹240000 capital at the beginning of the year and withdrew ₹80000 on 1 January. Interest on capital is 9% per annum. What total interest on capital will B receive?

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22A withdrew ₹5000 in the middle of every month. Interest on drawings is 12% per annum. What is the interest for one year?

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23B withdrew ₹12,000 at the end of each quarter. Interest on drawings is 10% per annum. What is the interest on drawings for the year?

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24A withdrew ₹15000 on 1 June and ₹25000 on 1 November. The year ends on 31 March and the interest rate is 8%. What is the interest on drawings?

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25A and B shared profit equally. Later it was found that A's salary of ₹18000 and B's interest on drawings of ₹6000 were omitted. What is the net correction?

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