MCQ Charge vs appropriation - Partnership accounts
This quiz on the charge against profits vs appropriation of profits with 15 practice questions. Test your knowledge about the meaning of charge vs appropriation with this MCQ practice test. This quiz contains questions 1-15 covering what is charge in partnership accounts, how it is different from the appropriation of profits. Charge against profits are payable even in case of loss whereas appropriation of profits are not. Answer all questions and get instant feedback with detailed explanations. The quiz suits well for conceptual clarity for your board exams
CBSE MCQ class 12 accounts
The below MCQ test is designed as per the latest syllabus prescribed by CBSE board. With the rise in weightage of MVQ questions, the practice of MCQ questions becomes very important. The quiz is equally useful for students of CUET exams.
How to attempt the quiz
One by one go through the below questions and select the right option. Do all the questions and in the end press submit. Instantly you will get your score and the explanation against each question. Go through your mistakes and reattempt the quiz any number of times as needed.
MCQ Quiz - Practice Questions
MCQ Quiz
Question 1
When is interest on capital not allowed as appropriation?
B
Correct Answer: When firm incurs loss or has no distributable profit
Interest on capital as appropriation is not allowed when firm incurs loss or has no distributable profit, as it requires profit for distribution.
Question 2
If interest on capital is specified as 'charge' in Partnership Deed, it is:
C
Correct Answer: Transferred to P&L Account and paid even if loss occurs
When interest on capital is specified as charge, it is transferred to debit of P&L Account and allowed whether firm earns profit or incurs loss.
Question 3
Which is an example of charge against profit?
B
Correct Answer: Interest on loan by partner
Interest on loan by partner and rent payable to partner are examples of charge against profit.
Question 4
Which is an example of appropriation of profit?
C
Correct Answer: Interest on capital
Salary to partners, interest on capital, commission to partners, and transfer to reserve are examples of appropriation of profit.
Question 5
In the absence of Partnership Deed, salary to partners is:
B
Correct Answer: Not allowed
Salary to partners is not allowed in absence of Partnership Deed as Partnership Act doesn't provide for it.
Question 6
In absence of Partnership Deed, interest on loan by partner at 6% p.a. is:
C
Correct Answer: A charge against profit
Interest on loan by partner is a charge against profit and is allowed at 6% p.a. as per Partnership Act when rate is not agreed.
Question 7
The nature of charge against profit is:
B
Correct Answer: An expense for the firm
Charge against profit is in nature of expense, hence transferred to debit of P&L Account to determine net profit or loss.
Question 8
The nature of appropriation of profit is:
C
Correct Answer: Distribution of net profit among partners
Appropriation of profit means distribution of net profit for the year among partners as per Partnership Deed.
Question 9
If firm incurs loss, which item will still be paid?
C
Correct Answer: Both (a) an (b)
Manager commission and Interest on loan by partner is a charge against profit, so it is paid whether firm earns profit or incurs loss.
Question 10
Appropriation items are recorded in:
A
Correct Answer: Profit & Loss Appropriation Account
Appropriation items are transferred to the debit of Profit & Loss Appropriation Account to show distribution of profit.
Question 11
Charge items are recorded in:
B
Correct Answer: Profit & Loss Account
Charge against profit items are transferred to the debit of Profit & Loss Account as expenses.
Question 12
Which follows Matching Principle?
B
Correct Answer: Profit & Loss Account
Profit & Loss Account follows Matching Principle (expense matched against revenue). P&L Appropriation Account does not follow this principle.
Question 13
Interest on loan by partner is credited to:
B
Correct Answer: Partner's Loan Account
Interest on loan by partner is credited to Partner's Loan Account
Question 14
When net profit before a charge is given in question then , the charge is:
B
Correct Answer: Deducted from net profit before writing it in P&L Appropriation Account
If net profit is given before charge items like rent to partner or interest on loan, such items are deducted before writing net profit in P&L Appropriation Account.
Question 15
Preparation of Profit & Loss Appropriation Account is guided by:
C
Correct Answer: Partnership Deed or Partnership Act
Preparation of Profit & Loss Appropriation Account is guided by the Partnership Deed or Partnership Act provisions.
