Profit Distribution

Correct answer: A. Rs 60,000

Total parts = 1+4+5 = 10. B has 4 parts. So B's share = (4/10) × Rs 1,50,000 = Rs 60,000. Option C (Rs 75,000) is incorrect because that corresponds to 5/10 (C's share), not B's. Option D (Rs 90,000) is not a result of any correct fraction of the total. Exam tip: always sum the ratio parts first, then multiply the fraction for the required partner by the total amount.

Correct answer: A. Rs 98000

Add interest on drawings to net profit and deduct interest on capital and salary. Rs 140000 plus Rs 4000 minus Rs 46000 equals Rs 98000.

Correct answer: A. Rs 48000

Interest on capital and commission are both debit appropriation items. Total is Rs 36000 plus Rs 12000 equal to Rs 48000.

Correct answer: A. Rs 4,000

Interest on drawings is treated as income of the firm and is credited to the Profit and Loss Appropriation Account. Total credit here = interest of A + interest of B = Rs 2,300 + Rs 1,700 = Rs 4,000. Options B and C represent only one partner’s interest and option D shows the difference, so they are incorrect. Exam tip: Remember interest on drawings is credited (income) — always add amounts for all partners when asked for total credit.

Correct answer: A. Partners' salary

The deed's appropriation order is binding and must be followed exactly. Since the deed specifies partners' salary first, that item is deducted from profit before interest on capital or distribution. Interest on capital is the next appropriation and distribution of remaining profit is the final step. Interest on drawings is typically a charge on the partner’s account and does not replace the deed's stated appropriation order. Exam tip: always apply appropriations in the exact sequence shown in the deed; identify whether an item is an appropriation or a charge on partner's account.

Correct answer: A. Rs 50000

After salary remaining profit is Rs 80000 and two fifths of it is Rs 32000. Adding salary gives total Rs 50000.

Correct answer: A. Rs 45,000

The governing concept is sequential profit appropriation: a commission paid first must be deducted before the residual profit is distributed between the partners. Total profit is Rs 89,000 and A’s prior commission is Rs 14,000, so the profit available for ratio-based distribution is Rs 89,000 − Rs 14,000 = Rs 75,000. The sharing ratio A:B is 2:3, which contains five total parts. B is entitled to three parts; therefore B’s share is 3/5 × Rs 75,000 = Rs 45,000. A receives 2/5, or Rs 30,000. A useful check is Rs 14,000 + Rs 30,000 + Rs 45,000 = Rs 89,000. Option C incorrectly applies the ratio to the total profit, and option D is only the residual amount, not B’s share. Hence option A is correct.

Correct answer: A. Rs 11000

Five percent is applied directly on profit before commission. Five percent of Rs 220000 is Rs 11000.

Correct answer: A. Rs 10,000

The governing concept is commission calculated on profit after charging the commission itself. Therefore the commission is not found by simply taking 5% of Rs 210,000, because that would calculate commission on profit before commission. Use the formula: commission = profit before commission × rate ÷ (100 + rate). Thus, commission = 210,000 × 5 ÷ 105 = Rs 10,000. The profit remaining after commission is Rs 200,000, and 5% of Rs 200,000 is also Rs 10,000. Hence option A is correct. Option B is the ordinary 5% calculation on the unadjusted profit, while C and D do not satisfy the stated after-charging condition.

Correct answer: A. Rs 32,000

The general reserve is 20% of profit. Calculation:
Rs 160,000 × 20/100 = Rs 32,000. Hence Rs 32,000 will be set aside before distribution. Option C (Rs 1,28,000) is a common distractor — it equals the remaining distributable profit after creating the reserve (160,000 − 32,000), not the reserve itself. Options B and D result from applying incorrect percentages. Exam tip: compute percentage by multiplying profit by (%/100) to avoid shortcuts leading to errors.

Correct answer: A. Rs 64,000

After creating the reserve, remaining profit = Rs 1,20,000 − Rs 24,000 = Rs 96,000. With ratio 1:2, total parts = 3, so B gets (2/3) × Rs 96,000 = Rs 64,000. Option C would reflect forgetting to deduct the reserve; options D and B show common ratio mistakes (half or one-third of the remainder). Exam tip: always subtract reserves or appropriations first, then divide the remaining profit according to the given ratio.

Correct answer: A. Rs 15,000

The governing rule is that interest on partners' capital is an appropriation of profit, subject to the partnership agreement and the availability of profit. Here the total interest claim is Rs 40,000, but only Rs 30,000 of profit is available. Because A and B have equal interest claims, the available amount must be shared equally when it is insufficient to satisfy the full claims. Therefore A receives Rs 30,000 ÷ 2 = Rs 15,000, and B also receives Rs 15,000. Rs 20,000 would incorrectly divide the total claim rather than the available profit, while Rs 30,000 would give all available profit to A. Zero is also incorrect because some profit is available and both claims are equal.

Correct answer: A. Rs 20000

First compute total claims: Rs 10000 + Rs 15000 + Rs 25000 = Rs 50000. Since available profit Rs 40000 is less than total claims, distribute the profit in the ratio of claims. C's share = \(\dfrac{25000}{50000}\times 40000 = \dfrac{1}{2}\times 40000 = 20000\) rupees. The distractor Rs 25000 is incorrect because that is C's full claim but the profit is insufficient to pay full claims. Exam tip: If profit < total interest claims, allocate profit proportionally to each partner's claim.

Correct answer: A. Rs 30000

Total ratio = 2 + 3 = 5 parts. B's share = 3/5 of the loss. So B's debit = (3/5) × 50,000 = Rs 30,000. Option B (Rs 20,000) is incorrect because that equals A's share (2/5). Option C (Rs 25,000) is wrong — likely an arithmetic or halving mistake. Exam tip: always add the ratio parts first, then multiply the total loss/profit by the partner's fraction.

Correct answer: A. In two to two to one

If no separate loss ratio is given losses are generally shared in profit ratio. In exams use profit ratio as base.

Correct answer: A. Rs 8000

Deficiency is the difference between minimum guarantee and normal share. Rs 50000 minus Rs 42000 equals Rs 8000.

Correct answer: A. Rs 5000

Bs normal share is two fifths which is Rs 30000. Guarantee is Rs 35000 so deficiency is Rs 5000.

Correct answer: A. As profit will decrease by Rs 9000

A minimum-profit guarantee promises that B will receive at least the guaranteed amount. If B’s actual share is lower by Rs 9,000, the difference is called a deficiency. The partner who gave the guarantee, A, must bear this deficiency unless the agreement specifies another arrangement. This means A’s share of profit is reduced by Rs 9,000 so that B can receive the promised minimum amount.

Consequently, option A is correct: A’s profit decreases by Rs 9,000. The amount is not a reduction in B’s drawings, because drawings are withdrawals and are separate from the guaranteed profit. It also does not increase sales or change the firm’s operating activity. The adjustment is made only in the final distribution of profit, transferring the deficiency from the guaranteed partner’s share to the guarantor’s share.

Correct answer: A. Rs 5000

Cs normal share is two tenths which is Rs 20000. Guarantee is Rs 25000 so deficiency is Rs 5000.

Correct answer: A. Rs 6000

Concept: A and B share profits in ratio 2:3 so total parts = 2+3 = 5. B's share = 3/5 × 10,000 = Rs 6,000, so B bears Rs 6,000. Closest distractor C (Rs 5,000) is wrong because it assumes an equal split (1/2), and option B (Rs 4,000) equals 2/5 which corresponds to A's share, not B's. Exam tip: always add the ratio parts first, then multiply the required party's part by the total amount.

Correct answer: A. Rs 80,000

The governing concept is that interest on a partner’s loan is a charge against profit, not an appropriation of profit. It must therefore be recorded before the Profit and Loss Appropriation Account is prepared. The given net profit of Rs 85,000 is before recording the omitted interest expense. Subtracting the outstanding interest gives: corrected profit before appropriation = Rs 85,000 − Rs 5,000 = Rs 80,000. Thus option A is correct. Option C ignores the omitted expense, option B adds the expense instead of deducting it, and option D gives only the interest amount rather than the corrected profit. The adjustment affects profit first and is not distributed among partners as an appropriation.

Correct answer: A. It should be debited as an expense in the Profit and Loss Account

Interest on a partner's loan is a revenue expense of the firm and must be debited to the Profit and Loss Account (i.e., before appropriation). The Profit and Loss Appropriation Account is used only for appropriation of net profit among partners, so charging a firm expense there is an error of principle. Option C is a tempting distractor but incorrect because interest on drawings relates to partners' withdrawals, not interest payable on funds lent to the firm. Exam tip: classify items as either "profit determination (P&L)" or "profit appropriation (P&L Appropriation)" before posting.

Correct answer: A. Net profit will be lower and appropriation will be wrong

Interest on capital is normally a distribution or appropriation of profit in partnership accounts, provided the partnership agreement allows it. It is not treated as an operating expense while preparing the ordinary Profit and Loss Account. It is recorded later in the Profit and Loss Appropriation Account and charged against the profit available for distribution.

If it is wrongly debited as an expense in the Profit and Loss Account, the reported net profit becomes lower before the appropriation stage. If it is then also dealt with in the appropriation account, the error may cause double reduction; even without that, the classification and distribution are wrong. The profit-sharing ratio itself does not change, and interest on drawings does not disappear. Therefore, option A best states the problem.

Correct answer: A. The second effect is incomplete

Interest on drawings is debited to partner account and credited to appropriation account. Leaving one side makes double effect incomplete.

Correct answer: A. Rs 85000

Total credit is Rs 137000 and debit items are Rs 52000. Remaining distributable profit is Rs 85000.