CBSE Class 12 Accountancy Retirement and Death of Partner Questions

MCQ Questions for NCERT Class 12 Accountancy  Retirement And Death Of Partner  

Question: As per section ------------ of the Indian Partnership Act, a retiring partner becomes entitled to profits after retirement if his dues remain unpaid
(a) Section 73
(b) Section 26
(c) Section 4
(d) Section 37

Answer: D

Question: P, Q and R were partners in a firm in the ratio of 5:4:3. They admit S for 1/7 share. It is agreed that Q would retain his original share. ----------- will be the sacrificing ratio between P and R.
(a) 5:4
(b) 1:1
(c) 5:3
(d) 4:3

Answer: C

Question: At the time of retirement, amount remaining in Investment Fluctuation Reserve after meeting the fall in value of Investment is:
(a) Credited in Sacrificing Ratio
(b) Credited in New Profit Sharing Ratio
(c) Credited in Old Profit Sharing Ratio
(d) Credited in Gaining Ratio 

Answer: C

Question: Retiring partner is compensated for parting with the firm’s future profits in favour of remaining partners. The remaining partners contribute to such compensation amount in:
(a) Gaining Ratio
(b) Sacrificing Ratio
(c) Capital Ratio
(d) Profit Sharing Ratio

Answer: A

Important Questions for NCERT Class 12 Accountancy  Retirement And Death Of Partner 

Question:  What ratio will be used for computation of the amount payable to the retiring partner for goodwill share by the continuing partner?
Answer:- Gaining Ratio

Question:  When should the Profit and Loss Suspense Account be prepared?
Answer:- at the time of death for sharing the expected profit to executor

Question: Ram, Mohan and Sohan were partners sharing profits and losses in the ratio of 5:3:2. On 31st March, 2017 their Balance Sheet was as under:

Sohan died on 1^st August, 2017. It was agreed that:
(i)Goodwill of the firm is to be valued at Rs..1,75,000
(ii)Machinery be valued at Rs. 1,40,000; Patents at Rs.40,000; Land at Rs.1,50,000 on this date
(iii)For the purpose of calculating Sohan’s share in the profit of 2017-18, the profits should be taken to have accrued on the same scale as in 2016-17, which were Rs.75,000
(iv)Sohan mentioned in his will that amount payable to his legal representatives should be used for welfare of the society Prepare Revaluation Account and Sohan’s Capital Account.
Answer:- Profit on revaluation will be
Ram     12500
Mohan   7500
Sohan     5000                 25000
Sohan executors account (balancing figure of Sohan’s capital a/(c) 126000

Question:  George, Reema and Sukhwinder are partners sharing profits in the ratio 5:2:1. Reema dies on 30th April, 2020. The profit for the year ending 31st December, 2019 wasRs. 63,000. Calculate Reema’s share of profit.
Answer: Rs. 7,000

Question:  Kriti, Asma and Ayyar are partners sharing profits in the ratio 4:3:3. On Ayyar’s retirement, the value of firm’s goodwill was agreed at Rs. 30,000. Kriti and Asma agreed to share profits and losses in future in the ratio of 7:3 respectively. Give necessary journal entry in relation to goodwill, without opening its accounts.
Answer:-(i)Kriti’s Gain 3/10
(ii)Ayyar’s Share of Goodwill Rs.9,000
(iii)Kriti’s Capital A/c Dr. 9,000
To Ayyar’s Capital A/c 9,000

Question:  Sumit, Salman and Cedric are partners sharing profits in the ratio of 4:3:2. Salman retires in the present financial year, what will be new ratio of Sumit and Cedric?
Answer:-4:2

Question: Ramesh, Toni and Roni are partners sharing profits in the ratio 3:2:1. Ramesh died on 10 April, 2020. The sales and profit of 2019 were Rs.3,00,000 and Rs.45,000 respectively. Sales from 1^st January, 2020 to April 10 was Rs..1,20,000. Find share of Ramesh’s profit and pass necessary journal entry if:
(i)There is no change in profit sharing ratio of Toni and Roni.
(ii)Toni and Roni decided to share future profits in ratio 3:2.
Answer:- Ramesh’s share of profit 9,000
(i)Profit and Loss Suspense A/c         Dr. 9,000

 To Ramesh’s Capital A/c                           9,000
(ii)Toni’s Capital A/c          Dr. 4,800
Roni’s Capital A/c              Dr. 4,200

To Ramesh’s Capital A/c                                         9,000

Question: Risha and Nisha were partners. The partnership deed provides:
(i)That the accounts be balanced on 31st December each year.
(ii)The profits be divided: Risha ½, Nisha 1/3 and 1/6 carried be Reserve A/c.
(iii)That in the event of death of a partner, her executors will be entitled to the following:
(a)The capital to her credit at the date of death based.
(b)Her proportion of profit to date of death based on the average profits of the last three completed years.
(c)Her share of goodwill based on three years’ purchase of the average profits for the three preceding completed years.
On 31^st December, 2016, the Trial Balance was as under: 

The profits for the last 3 years were 2014- Rs.4,200; 2015-Rs.3,900 and 2016-Rs..4,500. Nisha died on 31^st May, 2017.
Draw up the deceased Partner’s Capital Account
Answer:-a.  Nisha’s share of Profit          Rs.700
b. Nisha’s share of Goodwill                    Rs.5,040
c. Amount payable to Nisha’s Executor’s  Rs. 77,740

Question: A, B and C were partners sharing profits in the ratio 3:2:1. C retired on 1^st October, 2013 on which date capitals of A and B were Rs. 1,00,000 and Rs. 70,000 and C’s loan amounted to Rs. 40,000. The new firm earned a profit of Rs. 30,000 by the use of firms property as on 31st March, 2014.
(i)State which two options are available to C as per requirements u/s 37 of Indian Partnership Act, 1932
(ii)Which option should be opted by C and why?
Answer:- Option (i) Rs.1,200
Option (ii) Rs.5,714
Option(ii) should be opted by C as 5,714 is more than 1,200

Question: Write any three rights of a retiring partner?
Answer:- Any three of these:
1.Share in Reserves and Profits or Losses
2.Share in Revaluation of Assets and Reassessment of Liabilities
3.Share in Goodwill
4.Right to get back his Capital

Question: A, B and C were partners sharing profits in the ratio of 5:3:2. Their Balance Sheet as on 1st April, 2011 was as follows:


C retires on the above date and it was agreed that:

(i) C’s share of goodwill was Rs. 8,000

(ii) 5% provision for doubtful debts was to be made on debtors

(iii)Sundry creditors were valued Rs..4,000 more than the book value Pass necessary journal entries for the above trAnswer:actions on C’s retirement.
Answer:- Journal Entries

Revaluation A/c   Dr.           4,800

To Provision for Doubtful Debts A/c  800

To Sundry Creditors A/c                      4,000

A’s Capital A/c Dr.    2,400

B’s Capital A/c Dr.      1,440

C’s Capital A/c Dr.         960

To Revaluation A/c           4,800

A’s Capital A/c Dr.    5,000

B’s Capital A/c Dr.    3,000

To C’s Capital A/c              8,000

C’s Capital A/c Dr.   57,04

To C’s Loan A/c                   57,040 

Question: G, E and F were partners in a firm as on 31st March, 2017 was as follows

E died on 24^th August, 2017. Partnership deed provides for the settlement of claims on the death of a partner in addition to his capital as under:
(i) The share of profit of deceased partner to be computed up to date of death on the basis of average profits of the past three years which was Rs. 80,000
(ii) His share on profits/losses on revaluation of assets and reassessment of liabilities which were as follows:
Land & Building were revalued at Rs. 94,000, Machinery at Rs. 38,000 and Stock at Rs. 5,000. A provision of 2.5% was to be made on debtors for bad and doubtful debts 
(iii)The net amount payable to E’s executors was trAnswer:ferred to his Loan Account, to be paid later on Prepare Revaluation, Partners’ Capital Accounts. Any surplus or deficit to be trAnswer:ferred to Current Account of Partners.
Answer: a. - Profit on revaluation to be ransferred  to partner’s capital account
E’s capital a/c             20790
F’s capital a/c             5940
G’s capital a/c            2970
a. Partner’s capital account balances
a. G’s capital a/c        76790
b. F’s capital a/c        10970