Fundamentals

Question 1

What is the definition of a partnership according to Class 12 CBSE Accountancy?

Answer 1

A partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

Question 2

True or False: In a partnership, the liability of partners is limited to the amount of capital contributed.

Answer 2

False

Question 3

What is meant by ‘Goodwill’ in the context of a partnership?

Answer 3

Goodwill is the value of the reputation and connections of a business.

Question 4

What is the formula to calculate the amount of interest on partners’ capital?

Answer 4

Interest on partners’ capital = Capital x Rate of interest / 100

Question 5

What is the formula to calculate the amount of interest on partners’ drawings?

Answer 5

Interest on partners’ drawings = Drawings x Rate of interest / 100

Question 6

What is the meaning of ‘Sacrificing Ratio’ in relation to partnerships?

Answer 6

Sacrificing Ratio is the ratio in which partners agree to reduce their shares of profit.

Question 7

What is the formula to calculate the amount of interest on partners’ loan?

Answer 7

Interest on partners’ loan = Loan x Rate of interest / 100

Question 8

What is the formula to calculate the amount of salary to a partner?

Answer 8

Salary to a partner = Fixed amount + Share of profit / (100 - Commission on profit) x Commission on profit

Question 9

In a partnership, what is the difference between ‘Guarantee’ and ‘Indemnity’?

Answer 9

Guarantee is a promise to pay the debts of the firm in case of insolvency, while Indemnity is a promise to make good any loss suffered by the firm due to the negligence of a partner.