This quiz on the interest on partners capital with 15 practice questions. Test your knowledge about the concepts of interest on partners capital, how it is calculated, what are its journal entries, etc. 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 MCQ 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
Interest on capital is:
A
Correct Answer: Return allowed to partners on capital invested in the firm
Interest on capital is return/compensation allowed to partners on capital invested by them in the firm.
Question 2
Interest on capital is allowed:
B
Correct Answer: Only if Partnership Deed provides for it
Interest on capital is allowed only if Partnership Deed provides or partners have agreed orally.
Question 3
In absence of Partnership Deed, interest on capital is:
B
Correct Answer: Not allowed
As per Partnership Act, 1932, interest on capital is not allowed to partners in absence of Partnership Deed.
Question 4
The nature of interest on capital (unless specified as charge) is:
C
Correct Answer: An appropriation of profit
Interest on capital is normally an appropriation of profit unless specified as charge in Partnership Deed.
Question 5
Interest on capital as appropriation is allowed only when:
B
Correct Answer: Firm has earned profit or has distributable profit
Interest on capital as appropriation is allowed only if firm has earned profit or has distributable profit.
Question 6
Interest on capital (as appropriation) is transferred to:
C
Correct Answer: Debit of P&L Appropriation Account
Interest on capital as appropriation is transferred to the debit of Profit & Loss Appropriation Account.
Question 7
If interest on capital is specified as 'charge' in Partnership Deed:
C
Correct Answer: It is transferred to P&L Account and allowed even if loss
When specified as charge, interest on capital is transferred to debit of P&L Account and allowed whether firm earns profit or incurs loss.
Question 8
Interest on capital is calculated on:
A
Correct Answer: Capital invested during the period for which it remained in business
Interest on capital is calculated on capital invested during the period for which capital remained in the business.
Question 9
If capital is introduced during the year, interest is calculated:
C
Correct Answer: From the date of introduction to end of accounting period
If capital is introduced during the year, interest is calculated from the date of introduction to the end of accounting period.
Question 10
If capital is withdrawn during the year, interest is calculated:
B
Correct Answer: From beginning to the date of withdrawal on withdrawn amount
If capital is withdrawn during the year, interest is calculated from beginning of year to date of withdrawal on the withdrawn amount.
Question 11
When opening capital and additional capital introduced during year are given, interest is calculated on:
B
Correct Answer: Opening capital for full period + Additional capital for period invested
Interest is calculated on opening capital for full period and on additional capital from date of introduction to year end.
Question 12
Under fixed capital method, If only closing capital is given and there is no introduction or withdrawal during year:
D
Correct Answer: Opening capital equals closing capital
If no introduction or withdrawal during year, under fixed method opening capital equals closing capital, so interest is calculated on that amount.
Question 13
Formula to calculate opening capital from closing capital is:
