Partnership Accounts for CA Foundation: A Full Roadmap with Examples
Admission, retirement, death, dissolution — the 4 scenarios that repeat every year. 18% of Paper 1 marks sit here.
Practice questions on Accommodation# Partnership Accounts — Full CA Foundation Roadmap
Almost every Foundation attempt asks a full 20-mark partnership question. Here's how to never lose marks in it.
The core framework
Fixed vs fluctuating capital
If the question is silent, assume fluctuating.
Profit & Loss Appropriation
Prepare this before the Capital / Current A/c.
Interest on a partner's loan to the firm = charge (in P&L), not appropriation. Silent deed → 6% p.a. (Sec 13(d)).
Scenario 1: Admission
Steps in order:
Scenario 2: Retirement / Death
Scenario 3: Dissolution
Open a Realisation A/c:
Garner vs Murray rule
If a partner is insolvent, solvent partners bear the deficiency in the ratio of their last agreed capitals — not PSR.
Worked mini-example
A (capital ₹60k) and B (capital ₹40k) share 3:2. C admits for 1/5 with ₹30k capital + ₹10k premium.
Common exam traps
Practice 10 full problems across all 4 scenarios — you'll be able to answer any partnership question in your sleep.
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Practice MCQs
Q1. A partnership deed is silent on the method of maintaining capital accounts. Which assumption should you make while preparing partnership accounts?
A) Fixed Capital A/c with all adjustments in Current A/c B) Fluctuating Capital A/c with all movements recorded in it C) Fixed Capital A/c unless partners agree otherwise D) Either method depending on partner preference
Answer: B — Per the roadmap, when the question is silent, assume fluctuating capital. In this method, all adjustments (salary, interest, profit share, drawings) are recorded directly in the Capital A/c, causing the balance to change yearly.
Q2. During partner admission, which ratio is used to distribute accumulated reserves and revaluation gains/losses among existing partners?
A) New profit-sharing ratio B) Old profit-sharing ratio C) Sacrificing ratio D) Gaining ratio
Answer: B — Revaluation gains/losses and accumulated reserves belong to the old partners and must be distributed among them in their old profit-sharing ratio before the admission takes effect.
Q3. If a partner becomes insolvent during partnership dissolution and cannot pay their deficit, the shortfall is borne by solvent partners. In what ratio should this deficiency be distributed?
A) Profit-sharing ratio of remaining partners B) Their last agreed capital ratio C) Equal ratio among solvent partners D) Gaining ratio
Answer: B — Under the Garner vs Murray rule, when a partner is insolvent, solvent partners bear the deficiency in the ratio of their last agreed capitals, not their profit-sharing ratio. This ensures fair allocation based on contribution rather than profit entitlement.
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