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Minimum 2 and maximum 10 if it is a banking business or maximum 20 if it is any other business.

Partnership occurs when more than one person agrees to work together through verbal or written agreement. In this sense it is said that

1.Partnership for a particular venture or particular partnership.

2. This business will dissolve on the completion of the venture i.e. after completing the bridge.

Salary to the partner will be paid only if it is allowed by the Agreement.

Under fixed capital method, Capital Account and Current accounts are maintained. In current a/c all adjustments relating to partners are recorded on the credit side of current account viz. Interest on capital, share of profits, salary and commission etc., are recorded. On the debit side, drawings, interest on drawings, share of loss are recorded. Current account sometimes show credit balance or debit balance.

The correct answer is: (c) capital

The capital accounts of partners may be Fixed or fluctuating.

Interest Drawings for regular interval is calculated by the formula Total Drawing x Rate/100 x 16/12.

Interest on partners drawings is changed to their respective Capital A/c.

Revaluation Account is debited when unrecorded liability is brought into business.

Explanation: The Revaluation Account is debited when unrecorded liability is brought into business. An unrecorded liability is one which was earlier omitted from the records and is now being considered (i.e. recorded). This leads to increase in the amount of liabilities and so, the Revaluation Account is debited.

Reconstitution of a partnership

Explanation: Change in the relationship between the partners is regarded as reconstitution of a partnership firm. The reconstitution of partnership firm is said to occur when there exists a change in profit sharing ratio at the time of admission, retirement or death of a partner.

Profit and Loss Adjustment Account

Explanation: Profit and Loss Adjustment Account is opened to record the gains and losses on revaluation of assets and liabilities, so that the new partner is not put to any advantage or disadvantage. Any profit or loss on revaluation is shared or borne by the old partners in their old profit sharing ratio.

Legal heir or executor

Explanation: The person who represents the deceased partner is his legal heir or executor. This person is entitled to receive the amount due to the deceased partner.

Profit & Loss Account (Debit balance) or undistributed losses

Explanation: Profit and Loss Account appearing on the Assets side of a Balance Sheet represents debit balance in the Profit & Loss Account (i.e. undistributed losses). Such losses are to be borne by the old partners in their old profit sharing ratio.

Deceased partner

Explanation: The partner who died is a deceased partner, whose legal heirs are entitled to the amount due and the rights which the deceased partner had.

Deceased Partner’s Executors’ Loan Account

Explanation: The account to which deceased partner’s capital balance is transferred is known as Deceased Partner’s Executors’ Loan Account. The amount due is transferred to this account because actually, the payment is required to be made to the heirs of the deceased partner. The payment may be made in full, i.e. in one instalment or in more than one instalment.

Surplus Capital

Explanation: Excess of actual capital over proportionate capital is regarded as surplus capital. This implies that the actual capital of the partners is more than what the capital should be on a proportionate basis. It is to be transferred to the current account or it may be withdrawn by the partners as per the terms of the agreement.

Excess of proportionate capital over actual capital represents deficit capital.

Explanation: Excess of proportionate capital over actual capital represents deficit capital. This deficit capital must be brought in by the old partners or it is to be transferred to their current accounts.

True

Explanation: As per Accounting Standard 26 issued by The Institute of Chartered Accountants of India (ICAI), if any partner brings in a certain amount of goodwill in cash, then cash/bank account is debited and goodwill account is credited. Such premium is distributed among the sacrificing partners in their sacrificing ratio.

Deficit capital

Explanation: Excess of proportionate capital over actual capital represents deficit capital. This implies that the existing capital of the partners is less than what the capital should be on proportionate basis. The amount of deficit capital must be brought in by the old partners or it is to be transferred to their current accounts.

False

Explanation: If old (or existing) goodwill appears in the books of a firm, then at first, it is written off by debiting the Old Partners’ Capital Accounts in their old profit sharing ratio and crediting the Goodwill Account.

1.False, 

2.True,

When goodwill is raised at its full value and it is written off, goodwill account is to be credited.

Explanation: When goodwill is raised in the books of the firm at its full value and it is written off, then Goodwill Account is to be credited and all partners’ Capital Accounts are to be debited in their old profit sharing ratio.

On the death of a partner general reserve is distributed among all partners in their old profit and loss ratio.

Revaluation Account is an account that is opened at the time of admission, retirement and death of a partner. This account records the effect of every increase or decrease in the value of assets and liabilities. The balance of this account (which may be either profit or loss) is transferred to the Old Partners’ Capital Accounts, as the new partner has no right over such profits earned prior to his/her admission.

Goodwill Account is raised in the books of the firm at the time of admission of a new partner. The incoming partner brings his/her share of goodwill along to compensate the existing partners for the sacrifices made by them in the favour of the new partner.

The amount of general reserve is to be distributed amongst the old partners in their old profit sharing ratio. This reserve belongs to the old partners since it was created out of the profits of the previous years; therefore, the new partners do not receive any share of the general reserve.

General reserve is distributed on the death of a partner in their old profit sharing ratio.

This statement is False.

When the benefits of goodwill are given to the deceased partner, his capital account is credited and when such goodwill is written off, capital accounts of remaining partners are debited.

True

Explanation: There can be many reasons for admitting a new partner in a firm. For example, if the firm is short of capital, then a new partner can be admitted with the approval of all the partners. The new partner brings his or her share of capital, besides the skills possessed by him.

False

Explanation: If the goodwill account is raised, then goodwill or premium account is credited, whereas, cash/ bank account is debited if the amount is brought in cash.

Instalment method

Explanation: Under instalment method, the payment to a retiring partner is made in instalments. In this method, the payment is not made in one instalment (lump sum); rather, the amount due is paid off in instalments. Moreover, the executor is entitled to interest @ 6% p.a. (unless agreed otherwise) on outstanding amount till it remains unpaid.

Loss on revaluation

Explanation: Debit balance of Revaluation Account represents "Loss on revaluation." Such loss is transferred to All Partners’ Capital Accounts in their old profit-sharing ratio (including the retiring partner).

1. necessary × unnecessary 

2. forgot × remembered 

3. late × early 

4. tougher × easier

(d) Joint Venture

Registration of partnership is Optional.

Super profit is the excess of average profit over the normal profit of a business.

Super profit = Average profit – Normal profit. 

Average profit is calculated by dividing the total of adjusted actual profit of certain number of years by the total number of such years. Normal profit is the profit earned by the similar business firms under normal conditions. 

Normal profit = Capital employed x Normal rate of return Capital employed = Fixed assets + Current assets – Current liabilities

False

Explanation: The retiring partner is very much entitled to his respective share in all the accumulated profits and reserves (including general reserve). Such reserves include profits which were earned by them during the previous years when the retiring partner was a partner in the firm.

True

Explanation: The remaining/continuing partners need to compensate the outgoing (retiring/deceased) partner. This is because after the retirement/death of a partner, the fruits of the collective past performances and reputation will be shared only by the continuing partners. Hence, the remaining partners compensate the retiring or the deceased partner by entitling him/her to a share of the firm's goodwill.

(d) Much less fraction of energy flows through the GFC than through the DFC

Correct answer is (d) Kingfisher

Wholesalers deal in Large quantity of goods.

Correct option is: (a) The Sun

(b) Profit and loss appropriation account

(b) Product method