Question : Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R)
Assertion (A): On reconstitution of a firm, 'Interest on Drawings' sshown in P & L Appropriation A/c.
Reason (R): On admission of a partner, 'Interest on Drawings' are charge against the profits.
In the context of the above statements, which one of the following is correct?
Codes:
Option 1: (A) is correct, but (R) is wrong.
Option 2: Both (A) and (R) are correct.
Option 3: (A) is wrong, but (R) is correct.
Option 4: Both (A) and (R) are wrong.
Correct Answer: (A) is correct, but (R) is wrong.
Solution : Answer = (A) is correct, but (R) is wrong.
Assertion (A) is correct because on reconstitution of a firm, 'Interest on Drawings' is shown in the Profit and Loss Appropriation Account. Reason (R) is incorrect because on the admission of a partner, 'Interest on Drawings' is not charged against profits but rather adjusted against the partner's capital. Hence, the correct option is 1.
Question : Assertion (A) : Profit and Loss Appropriation account shows the correct profit earned by the firm.
Reason (R) : The net Profit adjusted after takin into account the interest on capital, Interest on drawings, Salaries/ Commission Paid
Question : Given below are two statements, one labelled as Assertion (A) and the other labeled as Reason (R):
Assertion (A): Revaluation A/c is prepared at the time of Admission of a partner.
Reason (R): The profit
Question : Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): Interest Coverage Ratio expresses the relationship between profits available for payment of interest and the amount of
Question : Assertion (A): A partner's interest on capital is paid only from profits. Reason (R): Interest on capital is a profit appropriation that must be provided regardless of profit or loss.
Question : Assertion (A): A loan from a relative of a partner is an external liability.
Reason (R): It is not transferred to the Realisation Account.
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile