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
Which of the following closely resembles a charge against profits
B
Correct Answer: Deduction from revenue to determine net profit/loss
A charge against profits is an expense that is deducted from the revenue to arrive at the net profit or loss of the firm.
Question 2
Which of the following fits into the definition of appropriation of profits
B
Correct Answer: Distribution of net profit among the partners
Appropriation of profits involves how the net profit (after all charges) is distributed or allocated among the partners.
Question 3
Is a charge against profits paid if the firm incurs a loss?
A
Correct Answer: Yes
Charges against profits are obligations that must be met whether the firm earns a profit or suffers a loss.
Question 4
Is an appropriation of profits made if the firm incurs a loss?
B
Correct Answer: No
Appropriation of profits, being the distribution of profit, can only occur when the firm has earned a net profit.
Question 5
Where is a charge against profits typically recorded?
C
Correct Answer: Profit and Loss Account
Items that are a charge against profits are debited to the Profit and Loss Account to determine the net profit or loss.
Question 6
Where is an appropriation of profits typically recorded?
C
Correct Answer: Profit and Loss Appropriation Account
The distribution of profits among partners is recorded in the Profit and Loss Appropriation Account.
Question 7
Which of the following is first priority for payment for a partnership firm
B
Correct Answer: Charge against profits
Charges against profits are accounted for before any appropriation of profits is made.
Question 8
Rent paid to a partner is an example of
B
Correct Answer: Charge against profits
Rent paid to a partner is considered a charge against profits, as it is an expense of the firm.
Question 9
Salary paid to a partner is an example of
B
Correct Answer: Appropriation of profits
Salary to partners is a way of distributing the profit and is therefore an appropriation of profits.
Question 10
Interest on a partner's loan to the firm is an example of
B
Correct Answer: Charge against profits
Interest on a loan from a partner to the firm is treated as a charge against profits.
Question 11
Interest on drawings by partners is an example of
B
Correct Answer: Appropriation of profits
Interest on drawings coms in profit and loss appropriation A/c and thus an appropriation of profits.
Question 12
Manager's commission is an example of
B
Correct Answer: Charge against profits
A manager is an employee, and their commission is an expense that is charged against the firm's profits.
Question 13
Transfer to general reserve is an example of
B
Correct Answer: Appropriation of profits
Transferring a portion of the profit to a general reserve is a form of appropriation of profits.
Question 14
Interest on capital is generally treated as an appropriation of profits, unless
C
Correct Answer: The question specifically states it is a charge
Interest on capital is usually an appropriation, but it can be treated as a charge if the partnership agreement specifies it.
Question 15
Interest on a loan taken by a partner from the firm is
B
Correct Answer: Charge against profits
Interest on a loan by the firm to a partner is income for the firm and shown in profit and loss A/c
Question 16
To which account are charge against profits debited ?
C
Correct Answer: Profit and Loss Account
All charges against profits are debited to the Profit and Loss Account.
Question 17
Which account is debited for an appropriation of profits?
C
Correct Answer: Profit and Loss Appropriation Account
Appropriations of profits are debited to the Profit and Loss Appropriation Account.
Question 18
Nature of a charge against profits
B
Correct Answer: Expense
A charge against profits represents an expense that the firm must incur, regardless of its profitability.
Question 19
Nature of an appropriation of profits
B
Correct Answer: Distribution of earnings
Appropriation of profits involves distributing the firm's net earnings among the partners in various forms.
Question 20
Net profit or loss transferred to profit and loss appropriation A/c is
A
Correct Answer: Profit after all charges
Net profit or loss transferred to profit and loss appropriation A/c is the net profit after adjusting all the charges against profits
