Profit Distribution

Correct answer: A. Rs 9000

Total ratio = 6 + 3 + 1 = 10 parts. C's share = 1 part. One part = 90000 ÷ 10 = Rs 9000, so option A is correct. Option B (Rs 54000) and option C (Rs 27000) are actually A's and B's shares respectively (6/10 and 3/10), hence incorrect for C. Option D (Rs 10000) is a common calculation error. Exam tip: add all ratio parts first, then divide the total profit by the number of parts to find the value of one part.

Correct answer: A. Rs 12000

Total parts = 7 + 5 = 12. One part = Rs 72,000 ÷ 12 = Rs 6,000. Difference = (7 − 5) parts = 2 parts = 2 × 6,000 = Rs 12,000, so option A is correct. A common error (leading to option C = 30,000) is dividing the total by a wrong number of parts or miscomputing the difference of ratio parts. Exam tip: always find the value of one part first, then multiply by the difference in parts.

Correct answer: A. 36000

Let shares be 2x and 1x for ratio 2 : 1. Total = 3x = 54,000 ⇒ x = 54,000 ÷ 3 = 18,000. Therefore A = 2x = 2×18,000 = 36,000. The closest distractor 27,000 arises if one mistakenly takes A as half the total (54,000÷2), which ignores the given ratio. Exam tip: represent shares as multiples (kx) and solve for x using the total profit.

Correct answer: A. Rs 10000

Correctly A should get Rs 40000 but under equal sharing he received Rs 30000. So he should receive Rs 10000 extra.

Correct answer: A. Rs 20000

Correct share of third partner is five ninths which is Rs 50000. Under equal sharing he received Rs 30000 so deficiency is Rs 20000.

Correct answer: A. It will appear higher

A reserve is an amount retained from profit for future needs, strengthening the financial position of the firm rather than being immediately distributed to partners. Therefore, when a reserve is created, it is deducted from the profit available for distribution. Only the balance after this deduction should be credited among the partners.

Suppose the profit is ₹40,000 and a reserve of ₹5,000 is required. The amount available for distribution is ₹40,000 − ₹5,000 = ₹35,000. If the reserve entry is omitted, the entire ₹40,000 may appear available for partners, which is ₹5,000 too much. Thus the distributed profit appears higher than it should. It does not become zero or lower merely because the reserve was omitted, so option A is correct.

Correct answer: A. Remaining profit will appear higher

Partner commission is an appropriation of profit and should be debited to the Profit and Loss Appropriation Account before the remaining profit is distributed. If the commission is omitted, no deduction is made from the available profit, so the remaining profit is overstated by the amount of commission. Therefore, option A is correct; omission does not automatically create a loss.

Correct answer: A. Profit will appear lower by twice the interest amount

The governing concept is the opposite treatment of interest on drawings and interest on capital in the appropriation account. Interest on drawings is income for the firm and should be credited to the Profit and Loss Appropriation Account. Interest on capital is an appropriation or charge on that account and should be debited. If drawings interest of Rs X is wrongly treated as capital interest, Rs X is debited instead of being credited. Compared with the correct treatment, the account changes from a credit of X to a debit of X, a total adverse difference of 2X. Consequently, profit available for distribution appears lower by twice the interest amount. Therefore option A is correct; the other options ignore either the wrong side or the double effect.

Correct answer: B. \(\text{Rs }80,000\)

Total ratio \(=4+4+2=10\). A has ratio \(4\), so A's share corresponds to \(\frac{4}{10}\) of total profit.
Given \(\frac{4}{10}\times \text{Total} = 32,000\).
So \(\text{Total} = 32,000\times \frac{10}{4} = 32,000\times 2.5 = 80,000\).
Therefore total profit is \(\text{Rs }80,000\).

Correct answer: A. Rs 49000

Total parts = 4 + 3 = 7. B’s share = 3/7 of total. So total profit = 21000 ÷ (3/7) = 21000 × (7/3) = Rs 49,000. Option B (Rs 28,000) is a common error — it equals A’s share if someone computes 21000×(4/3), not the total. Option C and D are incorrect: C would arise from an incorrect parts-sum (e.g. using 10 parts), and D is just B’s received amount, not the total. Exam tip: Convert a partner’s share to a fraction of the sum of ratio numbers before computing total profit.

Correct answer: A. Rs 90000

Ten percent reserve is Rs 20000. Remaining Rs 180000 shared equally gives Rs 90000 to each partner.

Correct answer: A. Rs 60000

Time-proportionate salary means monthly salary multiplied by the number of months served. A's monthly pay is Rs 7500 and he served 8 months, so total = Rs 7500 × 8 = Rs 60000. Closest distractor Rs 90000 represents 12 months (full year) and is therefore incorrect. Exam tip: first write down monthly amount and months served, then multiply — this avoids proportionality mistakes.

Correct answer: A. Time proportion

On mid year admission profit share may be adjusted on time basis. Always check the date in the question.

Correct answer: A. Rs 20000

One-third of the annual profit = Rs 120000 × 1/3 = Rs 40000. Since A was partner for only six months, his time-based share = (6/12) × Rs 40000 = Rs 20000. Option B (Rs 40000) is incorrect because it gives the full-year share; A must be adjusted for the period he was active. Exam tip: compute the partner’s full-year share first, then multiply by (actual months/12).

Correct answer: A. A will not be charged loss

The governing concept is that the partnership deed controls the agreed rights and obligations of partners. Here the deed expressly states that A will participate in profits but will not bear losses. That specific agreement must be followed for loss distribution, unless it is legally invalid under the applicable partnership law. Therefore A is excluded from the loss, and the loss is distributed among the remaining partners according to their agreed loss-sharing ratio or, where relevant, the applicable default rule. Option A is correct. Options B, C, and D incorrectly impose a loss on A by assuming that profit sharing automatically requires identical loss sharing, which is not true when the deed clearly provides otherwise.

Correct answer: A. Rs 20,000

A is exempt from loss, so the entire loss is borne by B and C only. With equal sharing between B and C, each bears = Rs 40,000 ÷ 2 = Rs 20,000. Option C (≈Rs 13,333) would be correct only if all three shared equally, which is not the case here. Exam tip: when a partner is stated as 'exempt' or 'not sharing losses', exclude them first and divide the loss among the remaining partners according to their agreed ratios.

Correct answer: A. Equally

If profit ratio is absent the general rule is equal sharing. Ratio of capital interest is not the basis for remaining profit.

Correct answer: A. Both will not be considered

The direct answer is option A: neither interest on capital nor interest on drawings will be considered. In partnership accounting, these interest items are applied only when the partnership deed or a valid agreement provides for them, subject to the applicable legal rules. Here the deed is silent about both items. Therefore no interest on capital is credited to partners, and no interest on drawings is charged to partners. Option A is correct. Option B, six percent for both, is wrong because silence does not automatically create a six-percent rate for both items. Option C, only interest on capital, is wrong because the deed is equally silent about capital interest. Option D, only interest on drawings, is wrong for the same reason: there is no stated authority to charge it. Do not confuse statutory rules for an agreement expressly saying that interest is payable with a deed that says nothing. In a standard basic-concepts question, no provision means no appropriation for either interest item. Memory cue: “No clause, no interest entry,” unless a specifically applicable legal rule in the question changes the result.

Correct answer: A. Rs 45,000

Under the intended accounting exercise, both the reserve transfer and the partner’s salary are to be appropriated from the stated net profit before the balance is distributed. First calculate the total amount set aside: reserve Rs 10,000 + salary Rs 15,000 = Rs 25,000. Then subtract this total from net profit: Rs 70,000 − Rs 25,000 = Rs 45,000. Therefore option A is correct. Option B deducts only the reserve, option C adds the two appropriations to profit, and option D gives only the total deductions rather than the remaining profit. In a complete set of accounts, the exact treatment of a reserve depends on whether it is a current appropriation or an existing balance; this question clearly intends it as an amount appropriated from the given profit.

Correct answer: A. A Rs 30000 and B Rs 15000

The direct answer is Option A: A receives Rs 30,000 and B receives Rs 15,000. The ratio 2:1 contains 3 total parts. One part = Rs 45,000 ÷ 3 = Rs 15,000. A has two parts, so A’s share = 2 × Rs 15,000 = Rs 30,000. B has one part, so B’s share = Rs 15,000. Option A is correct. Option B reverses the shares. Option C divides the profit equally, which would be a 1:1 ratio, not 2:1. Option D gives all profit to A and none to B, which is not the stated ratio. Memory cue: divide by the sum of ratio terms, then multiply each person’s term.

Correct answer: A. It will still be debited in appropriation account

Partner salary is appropriation of profit. Cash payment is a separate effect but salary remains debit in appropriation account.

Correct answer: A. Double effect is incomplete

The other side of interest on capital is debit in appropriation account. Leaving one side makes accounts incomplete.

Correct answer: A. Calculate normal share of guaranteed partner

Deficiency is found by comparing normal share with guarantee. Therefore normal profit share must be calculated first.

Correct answer: A. Only remaining profit after all appropriations should be shared in ratio

The direct answer is option A: only the remaining profit after all proper appropriations should be shared in the agreed ratio. Profit distribution is done in an order. First identify the total profit. Then record valid appropriations, such as a partner’s salary, commission, or other items allowed by the deed. After these amounts are dealt with, the balance is the residual profit. That balance is distributed among partners in their profit-sharing ratio. Option A is correct because it describes this final checking rule. Option B, distributing the full total profit first, is wrong because it would ignore salaries, commissions, reserves, or other required adjustments and could distribute more than is available. Option C, treating interest on drawings as a debit, confuses the nature of the item: interest on drawings is generally income for the firm and is credited in the relevant profit-and-loss appropriation process, not treated as a deduction from distributable profit in this way. Option D, treating loan interest as an appropriation, is wrong because interest on a partner’s loan is a charge against profit before appropriation. The final ratio applies only after the correct accounting treatment. Exam cue: “adjust first, divide last.”

Correct answer: B. Equally

The governing default rule is that, when the partnership deed is silent, partners share profits and losses equally. The amount of capital contributed does not by itself determine the profit ratio, and the time or effort spent in managing the business also does not alter the ratio unless the deed provides a special arrangement. Therefore A’s capital being three times B’s capital is irrelevant to profit sharing, and B’s full-time work does not entitle B to the entire profit. The profit will be divided equally between A and B, so option B is correct. Options A and C apply unsupported bases, while D ignores A’s status as a partner.