India's #1 AI Tutorworksheet · Accountancy · Chapter 2

CBSE Class 12 Accountancy Chapter 2 Accounting for Partnership Firms — Fundamentals Worksheet with Answers

Partnership firms form a foundational topic in CBSE Class 12 Accountancy. Chapter 2 — Accounting for Partnership Firms: Fundamentals — introduces students to the unique accounting treatment of P&L appropriation, goodwill valuation, and capital accounts. This worksheet is a comprehensive, exam-focused resource that tests your grasp of NCERT concepts through varied question formats, complete with a detailed answer key.

Your child's private AI tutor — trained on NCERT.

3-day free trial · ₹1 to start · Cancel anytime.

Start 3-day free trial →

Key takeaways

✓Covers P&L appropriation account, goodwill valuation methods, and fixed vs fluctuating capital accounts as per NCERT syllabus.
✓Includes 60+ practice items: MCQs, fill-in-the-blanks, true/false, short-answer, long-answer, and a case-study question.
✓Complete answer key provided with step-by-step explanations for board exam readiness.
✓Suggested completion time is 90 minutes; ideal for self-assessment or weekend revision.
✓Aligns with CBSE Class 12 Accountancy Chapter 2 learning outcomes and NCERT textbook language.
✓Printable format suitable for classroom tests, home practice, and quick concept recall.
✓Reinforces understanding of partnership deed provisions, interest on capital, drawings, and salary to partners.

Quick Chapter Recap: Partnership Firms Fundamentals

A partnership is a relationship between two or more persons who agree to share profits (and losses) of a business. Unlike a sole proprietorship, partnership accounting involves several special accounts and appropriations. The Indian Partnership Act 1932 governs partnerships in India. Key points include: (1) Partnership Deed — a written agreement detailing capital, profit-sharing ratio, interest on capital and drawings, salary, and commission to partners; (2) Profit & Loss Appropriation Account — prepared after the Profit & Loss Account to distribute net profit among partners according to the deed; (3) Interest on Capital — credited to partners' capital accounts if provided in the deed, charged to P&L Appropriation A/c; (4) Interest on Drawings — debited to partners' capital accounts if provided in the deed, credited to P&L Appropriation A/c; (5) Salary and Commission to Partners — appropriations, not expenses, hence shown in P&L Appropriation A/c; (6) Goodwill — the monetary value of a firm's reputation, valued by Average Profit, Super Profit, or Capitalisation methods; (7) Capital Accounts — maintained under Fixed Capital Method (separate current accounts) or Fluctuating Capital Method (all transactions in one capital account).

Partnership deed is the primary document; absence of a deed triggers default provisions of the Partnership Act 1932.
P&L Appropriation Account starts with net profit from P&L Account and ends with distribution to partners' capital accounts.
Interest on capital is an appropriation, not an expense; interest on drawings is an income for the firm.
Goodwill is recorded only at admission, retirement, or change in profit-sharing ratio.
Fixed capital accounts remain constant; fluctuating capital accounts change with every appropriation or withdrawal.

Worksheet Metadata: Difficulty, Time & Target Audience

This worksheet is pitched at Medium to High difficulty to mirror typical CBSE Class 12 board and pre-board examination standards. It is designed for students who have completed the NCERT Class 12 Accountancy Chapter 2 reading at least once and wish to consolidate their understanding through diverse question formats. Suggested completion time is 90 minutes under exam conditions—students should attempt all sections in one sitting to simulate board exam pressure. The worksheet is ideal for self-assessment, weekend revision batches, and classroom tests. Teachers can use the answer key for rapid evaluation or flipped-classroom discussions. Parents looking for structured practice material will find this resource print-ready and comprehensive. The questions strictly adhere to NCERT terminology (P&L appropriation, goodwill valuation, fixed and fluctuating capital accounts) and the latest CBSE curriculum update, ensuring relevance for the 2024–25 and 2025–26 academic sessions. Each section progressively increases in cognitive demand, from recall (MCQs) to application (short answers) to analysis and synthesis (long answers and case study).

Difficulty Level: Medium to High
Suggested Time: 90 minutes (timed practice)
Target Audience: CBSE Class 12 Accountancy students, teachers, and home-schooling parents
Format: Printable PDF-style layout with clear section demarcation
Curriculum Alignment: NCERT 2024–25 syllabus, CBSE board pattern

Section A: Multiple Choice Questions (MCQs)

Multiple-choice questions test your ability to recall definitions, identify correct accounting treatments, and apply partnership rules quickly. Each MCQ carries 1 mark. Read every option carefully—distractors are designed to catch common misconceptions about interest on capital, appropriation vs expense classification, and goodwill methods. In board exams, MCQ sections often determine whether a student crosses the 80-mark threshold, so accuracy here is non-negotiable. Practice these questions under timed conditions to improve speed and confidence. Use elimination techniques when unsure: rule out obviously incorrect options first, then choose between the remaining candidates. Remember that NCERT uses specific terms like 'P&L Appropriation Account' and 'Fluctuating Capital Method'—watch for exact phrasing in answer choices. These six MCQs cover partnership deed provisions, interest calculations, and capital account methods, ensuring breadth across the chapter fundamentals.

Q1. In the absence of a partnership deed, interest on capital is allowed at: (a) 6% p.a. (b) 12% p.a. (c) No interest (d) 5% p.a.
Q2. Interest on drawings is: (a) An expense (b) An appropriation (c) A loss (d) An income for the firm
Q3. Profit & Loss Appropriation Account is prepared: (a) Before P&L Account (b) After P&L Account (c) Instead of P&L Account (d) None of these
Q4. Goodwill is recorded in the books when: (a) Firm earns profit (b) Firm incurs loss (c) There is change in profit-sharing ratio (d) At the end of every year
Q5. Under Fixed Capital Method, which of the following is recorded in Capital Account? (a) Interest on capital (b) Drawings (c) Salary (d) Only additional capital introduced
Q6. Average Profit Method values goodwill as: (a) Average Profit × Number of years' purchase (b) Super Profit × Number of years' purchase (c) Total Capital Employed / Normal Rate of Return (d) Net Profit - Interest on Capital

Section B: Fill in the Blanks

Fill-in-the-blank questions require precise NCERT terminology and numerical awareness. Each blank carries 1 mark. Write your answers in the space provided; spelling and exactness matter because CBSE board examiners award marks only for verbatim correct terms. For instance, writing 'Profit and Loss Appropriation' instead of 'Profit & Loss Appropriation Account' may not fetch full credit. These questions test your command over definitions, statutory provisions of the Indian Partnership Act 1932, and standard accounting entries. Read the sentence fully before filling the blank to ensure grammatical and contextual fit. If a number is expected (like interest rate or ratio), double-check your calculation. Section B serves as a bridge between recall-based MCQs and application-based short answers, so accuracy here signals strong foundational knowledge. Practice writing answers neatly; illegible handwriting has cost many students marks in board exams. The five blanks below span partnership deed essentials, interest rules, and goodwill concepts.

Q7. A partnership deed is a __________ agreement among partners.
Q8. In the absence of a deed, profits are shared __________ among partners.
Q9. Interest on capital is debited to __________ Account.
Q10. The amount paid for a firm's reputation is called __________.
Q11. Under Fluctuating Capital Method, all transactions are recorded in the __________ Account itself.

Section C: True or False Statements

True/False questions assess your ability to evaluate statements against NCERT principles. Each statement carries 1 mark. If a statement is false, many teachers expect you to rewrite it correctly in the margin or on rough paper for your own clarity—though CBSE board exams typically require only T/F marking. Read each statement twice: subtle word changes (like 'always' vs 'sometimes' or 'expense' vs 'appropriation') can flip the truth value. Common traps include mixing up provisions of the Partnership Act 1932 (default rules in absence of a deed) with typical deed clauses. For instance, the Act prescribes no interest on capital and equal profit-sharing, but most deeds override these defaults. Another frequent error is confusing Fixed and Fluctuating Capital Methods—under Fixed, drawings and interest never touch the Capital Account. These six True/False items will sharpen your conceptual precision and help you avoid negative marking (if applicable) in competitive or school exams.

Q12. Interest on capital is an expense for the firm. (True / False)
Q13. Salary to a partner is shown in the Profit & Loss Account. (True / False)
Q14. Goodwill is an intangible asset. (True / False)
Q15. Under Fixed Capital Method, drawings are recorded in the Capital Account. (True / False)
Q16. The Partnership Act 1932 allows interest on drawings at 6% p.a. by default. (True / False)
Q17. P&L Appropriation Account is prepared only if there is a net profit. (True / False)

Section D: Short-Answer Questions (3 marks each)

Short-answer questions typically carry 3 marks in CBSE board exams and expect you to write 60–80 words per answer. Structure your response in three clear points or a brief introduction, explanation, and example. Use NCERT language: 'P&L Appropriation Account,' 'Fixed Capital Method,' 'Super Profit.' Underline or bold key terms if allowed, to signal the examiner that you know the terminology. Marks are awarded for definition, reasoning, and presentation. If a numerical is asked, show your working step-by-step even in short answers; partial marks are common. Time management is critical: allocate roughly 4–5 minutes per 3-mark question. These five questions span partnership deed importance, interest on capital treatment, goodwill necessity, capital account methods, and P&L appropriation versus P&L account differences—core areas repeatedly tested in boards. Practice writing answers on ruled paper to gauge length and neatness. Avoid lengthy introductions; jump straight to the point.

Q18. Why is a partnership deed important? Give any three reasons. (3 marks)
Q19. Distinguish between Interest on Capital and Interest on Drawings. (3 marks)
Q20. What is Goodwill? Why is it recorded in partnership books? (3 marks)
Q21. Explain the Fixed Capital Method with a simple example. (3 marks)
Q22. Differentiate between Profit & Loss Account and Profit & Loss Appropriation Account. (3 marks)

Section E: Long-Answer & Higher-Order Thinking Questions (5–6 marks each)

Long-answer questions demand synthesis, application, and numerical accuracy. Each question here carries 5–6 marks and expects 120–150 words or a full numerical solution with workings. Start with a brief definition or context, then proceed step-by-step. For numerical problems, label each step (Step 1: Calculate Interest on Capital; Step 2: Prepare P&L Appropriation Account; Step 3: Update Capital Accounts). CBSE examiners award method marks even if the final answer is incorrect, so never leave a sum blank. For theory questions, structure your answer in sub-headings or numbered points to enhance readability. Use formulae in a boxed format where applicable, and underline final answers. These three long questions integrate multiple concepts—goodwill valuation methods, preparation of P&L Appropriation Account, and capital account formats—mirroring typical board paper patterns. Allocate 10–12 minutes per 6-mark question. Revise your answer briefly before moving on to ensure all parts of the question are addressed and calculations are double-checked. Neatness and logical flow significantly influence marking in descriptive answers.

Q23. Explain the Average Profit Method and Super Profit Method of valuing goodwill. Illustrate with a numerical example for each. (6 marks)
Q24. Prepare a Profit & Loss Appropriation Account from the following: Net Profit ₹2,00,000; Interest on Capital: A ₹10,000, B ₹8,000; Salary to A ₹20,000; Interest on Drawings: A ₹1,000, B ₹800; Profit-sharing ratio 3:2. (6 marks)
Q25. Distinguish between Fixed Capital Method and Fluctuating Capital Method. Prepare a specimen Capital Account under each method assuming: Opening Capital ₹1,00,000; Additional Capital ₹20,000; Drawings ₹15,000; Interest on Capital ₹8,000; Share of Profit ₹25,000. (6 marks)

Section F: Case-Study Question

Case-study questions are a hallmark of the CBSE competency-based assessment framework introduced in recent years. They test your ability to apply Chapter 2 concepts to a realistic business scenario. This question carries 5 marks and comprises a short narrative followed by 3–4 sub-questions (MCQs or very short answers). Read the case twice: underline numerical data and key terms like 'as per deed' or 'no deed exists.' Note any missing information—absence of a partnership deed triggers default rules of the Act. Common sub-questions ask you to calculate interest on capital, prepare a mini P&L Appropriation Account, determine each partner's share of profit, or identify the correct capital account method. Write concise answers; each sub-part typically expects 1–2 marks. Case studies integrate reading comprehension with accounting application, so practice similar passages from NCERT exemplar and CBSE sample papers. This case is set in a small trading firm and covers P&L appropriation, interest, and profit distribution, reflecting real board exam difficulty.

Complete Answer Key with Explanations

The answer key below provides correct responses and brief explanations for every question. Use this section to self-evaluate and understand why a particular option or method is correct. Cross-check your answers immediately after attempting the worksheet to reinforce learning. For numericals, compare your step-by-step working with the model solution—identify where mistakes occurred (calculation error, wrong formula, missed item) and redo the question on a fresh sheet. For theory answers, note the NCERT keywords and structure used. If your answer differs significantly, revisit the relevant NCERT section and rewrite the answer. Active correction is more valuable than passive reading. Teachers can use this key for quick marking in class tests or for discussing common errors in doubt-clearing sessions. The explanations are deliberately concise to fit the worksheet format; for deeper dives into any topic, consult your NCERT textbook, Class 12 Accountancy notes, or a trusted online platform. Remember, board examiners appreciate precise language and systematic presentation, both of which are modeled in this answer key.

Section A Answers: Q1–(c) No interest; Q2–(d) Income for the firm; Q3–(b) After P&L Account; Q4–(c) Change in profit-sharing ratio; Q5–(d) Only additional capital; Q6–(a) Average Profit × Number of years.
Section B Answers: Q7–written; Q8–equally; Q9–Profit & Loss Appropriation; Q10–Goodwill; Q11–Capital.
Section C Answers: Q12–False (it is an appropriation); Q13–False (shown in P&L Appropriation A/c); Q14–True; Q15–False (recorded in Current A/c); Q16–False (Act does not allow interest on drawings by default); Q17–False (can be prepared with net loss too, though rare).
Section D Answers: Q18–Avoids disputes, clarity on profit-sharing, legally binding. Q19–Interest on capital is paid to partners, charged to P&L Appropriation; interest on drawings is earned by firm, credited to P&L Appropriation. Q20–Goodwill is intangible asset; recorded on admission/retirement/change in ratio. Q21–Fixed: capital remains constant, current account for all else; example given. Q22–P&L Account shows net profit; P&L Appropriation Account distributes it.
Section E Answers: Q23–Average Profit = (Sum of profits / No. of years) × Purchase years; Super Profit = Actual – Normal, then × Purchase years. Q24–P&L Appropriation A/c: Profit ₹2,00,000; less Interest ₹18,000, Salary ₹20,000; add Interest on Drawings ₹1,800; divisible profit ₹1,63,800 split 3:2. Q25–Fixed vs Fluctuating illustrated with specimen accounts showing entries.
Section F Case-Study Answers: (a) Raj ₹20,000, Simran ₹15,000, Total ₹35,000. (b) ₹36,000. (c) P&L Appropriation A/c: Profit ₹1,20,000; less Interest ₹35,000, Salary ₹36,000; balance ₹49,000 shared 2:1 → Raj ₹32,667, Simran ₹16,333. (d) ₹16,333.

How CBSETUTOR.ai Helps You Master Partnership Accounting

Mastering Accounting for Partnership Firms requires practice, instant doubt resolution, and step-by-step guidance—exactly what CBSETUTOR.ai delivers. Students subscribe at a flat ₹999 per month for Classes 6 to 12, unlocking 24×7 AI tutor access. Simply snap a photo of any numerical problem from this worksheet or your textbook, upload it, and receive a detailed solution within seconds. The AI tutor breaks down P&L Appropriation Account preparation, goodwill calculations, and capital account adjustments line by line, highlighting every debit and credit. Unlike static PDF solutions, CBSETUOR.ai explains why each step follows NCERT rules, helping you internalize concepts rather than rote-learn answers. You can ask follow-up questions ('Why is salary not an expense?' or 'How do I choose goodwill method?'), and the tutor responds in simple language. Parents appreciate the single affordable price—no hidden fees, no per-question charges—and the three-day free trial lets your child explore risk-free. Whether you are revising at 11 p.m. before a test or solving a tricky case-study on a Sunday morning, CBSETUTOR.ai is your always-available Accountancy coach, ensuring no doubt goes unanswered and no concept remains unclear.

Flat ₹999/month for Classes 6–12; no extra charges per subject or chapter.
24×7 AI tutor: upload a photo of any problem and get step-by-step solutions instantly.
Explains NCERT terminology and board exam answer-writing techniques.
Three-day free trial—test the platform with Chapter 2 numericals before committing.
Covers every CBSE Class 12 Accountancy chapter, plus other subjects, in one subscription.
Ideal for self-paced learners, quick revision, and doubt clearance beyond school hours.

Tips to Maximize Your Worksheet Practice

Print this worksheet on A4 sheets and attempt it in one 90-minute sitting under exam conditions—no textbook, no phone, only a calculator if allowed by your school. Start with Section A to build confidence, then move sequentially through sections. If you get stuck on a long answer, leave space and return after completing easier questions. Write neatly; CBSE board examiners often award presentation marks. For numericals, draw neat T-accounts or columnar formats using a ruler. After finishing, take a 10-minute break, then check the answer key section by section. Mark each answer correct (✓) or incorrect (✗) and tally your score. For incorrect answers, read the explanation, identify your mistake (conceptual or computational), and redo the question on a separate sheet. Repeat this worksheet after a week to measure retention. Maintain an error log: note recurring mistakes (e.g., forgetting to add interest on drawings, mixing Fixed and Fluctuating capital methods) and revise those topics from NCERT. Discuss tricky questions with your teacher or classmates. Finally, time yourself on each section to build speed—board exams demand both accuracy and pace. Consistent, timed practice with immediate feedback is the surest path to scoring above 90 in CBSE Class 12 Accountancy.

Simulate exam conditions: 90 minutes, no distractions, neat handwriting.
Attempt all sections sequentially; skip and return to hard questions.
Self-evaluate using the answer key immediately after completion.
Maintain an error log and redo incorrect questions until mastery.
Repeat the worksheet after one week to test retention and speed.
Discuss conceptual doubts with teachers or use CBSETUTOR.ai for instant clarification.

Frequently asked questions

What topics from Chapter 2 does this worksheet cover?+

This worksheet covers all fundamental topics: partnership deed provisions, Profit & Loss Appropriation Account preparation, interest on capital and drawings, salary and commission to partners, goodwill valuation (Average Profit, Super Profit, Capitalisation methods), and Fixed versus Fluctuating Capital Account methods as per NCERT Class 12 Accountancy.

How much time should I allocate to complete this worksheet?+

Allocate 90 minutes under timed exam conditions. This mirrors the board exam pace and helps you practice time management. Section A (MCQs) should take around 10 minutes, Section B and C together 10 minutes, Section D 20 minutes, Section E 30 minutes, and Section F 10 minutes, leaving 10 minutes for review.

Is the answer key sufficient for self-study, or do I need a teacher?+

The answer key includes concise explanations and step-by-step workings for numericals, making it suitable for self-study. However, if you repeatedly struggle with a concept, consult your teacher or use CBSETUTOR.ai for instant photo-upload doubt resolution and personalized clarifications beyond the printed key.

What is the difference between P&L Account and P&L Appropriation Account?+

The Profit & Loss Account calculates net profit or loss by matching revenues and expenses. The Profit & Loss Appropriation Account then distributes that net profit among partners after adjusting for interest on capital, drawings, salary, and commission. Appropriation A/c is prepared only for partnerships and companies, not for sole proprietorships.

Why is interest on capital called an appropriation and not an expense?+

Interest on capital is a distribution of profit among partners as per the partnership deed, not a cost incurred to earn revenue. Hence it is debited to the P&L Appropriation Account (after net profit is determined in P&L Account) and credited to partners' capital or current accounts, not treated as an operating expense.

When is goodwill recorded in partnership books?+

Goodwill is recorded at the time of admission of a new partner, retirement or death of an existing partner, or any change in the profit-sharing ratio among partners. It is not recorded at the end of every financial year. Valuation methods include Average Profit, Super Profit, and Capitalisation as per NCERT guidelines.

What happens if there is no partnership deed?+

In the absence of a partnership deed, the provisions of the Indian Partnership Act 1932 apply: (i) Profits and losses are shared equally, (ii) No interest is allowed on capital, (iii) No interest is charged on drawings, (iv) No salary or commission is paid to any partner, (v) Interest on loans by partners is paid at 6% p.a.

How do I choose between Fixed and Fluctuating Capital Methods?+

The partnership deed specifies the method. Under Fixed Capital Method, the capital account balance remains constant; a separate Current Account records all appropriations, drawings, and interest. Under Fluctuating Capital Method, all transactions pass through the single Capital Account, causing its balance to change every year. Both methods are equally valid; boards test both formats.

Can I use this worksheet for pre-board or board exam revision?+

Yes, this worksheet is designed to mirror CBSE board exam patterns in difficulty and question variety. Use it as a mock test one week before your pre-boards or boards. Time yourself, evaluate with the answer key, and focus revision on areas where you lost marks. Repeated timed practice significantly boosts exam confidence and speed.

How does CBSETUTOR.ai help with Chapter 2 numericals?+

CBSETUTOR.ai offers a 24×7 AI tutor at ₹999/month (Classes 6–12, all subjects). Snap a photo of any P&L Appropriation, goodwill, or capital account problem, upload it, and receive a step-by-step solution with explanations. You can ask follow-up questions to clarify doubts instantly. A three-day free trial is available, perfect for testing with this worksheet.

Related resources

Important Questions: CBSE Class 12 Accountancy Chapter 2 Accounting for Partnership Firms — Fundamentals Class 12 Accountancy Chapter 2 Accounting for Partnership Firms — Fundamentals — Formulas & Key Points CBSE Class 12 Accountancy Chapter 2 Accounting for Partnership Firms — Fundamentals — 20 MCQs with Answers Class 12 Accountancy Chapter 1 Accounting for Not-for-Profit Organisations — Formulas & Key Points AI Tutor for Class 12: The Smart Alternative to Tuition AI Tutor for Class 12 Accountancy: Learn Faster with Instant Help Class 9 Accountancy Chapter 3: Recording of Transactions — I Previous Year Questions (2020–2025)CBSE Class 9 Mathematics Chapter 1 Number Systems Worksheet with Answers

Keep learning — related guides

Class 12Accountancy

CBSE Class 12 Accountancy Chapter 10 Accounting Ratios — 20 MCQs with Answers

Class 12Accountancy

CBSE Class 12 Accountancy Chapter 9 Analysis of Financial Statements — 20 MCQs with Answers

Class 12Accountancy

CBSE Class 12 Accountancy Chapter 11 Cash Flow Statement — 20 MCQs with Answers

Class 12Accountancy

CBSE Class 12 Accountancy Chapter 7 Issue and Redemption of Debentures — 20 MCQs with Answers

Class 12Accountancy

CBSE Class 12 Accountancy Chapter 8 Financial Statements of a Company — 20 MCQs with Answers

Class 12Accountancy

CBSE Class 12 Accountancy Chapter 6 Accounting for Share Capital — 20 MCQs with Answers

Ready to give your Class 12 child the tutor that never sleeps?

CBSETUTOR.ai covers every chapter in the Class 12 NCERT syllabus — Maths, Science, Social Science, English, Hindi and more. 24×7. Patient. Unlimited. 3-day free trial.

Start your child's 3-day free trial →