CBSE Class 12 Accountancy Retirement or Death of a Partner MCQs

Question: A, B and C are partners sharing profit or loss in the ratio of 2 : 3 : 4. A retires and after A’s retirement B and C agreed to share profit or loss in the ratio of 3 : 4 in future. Their gaining ratio will be :

(a) 2 : 3

(b) 4 : 3

(c) 3 :4

(d) 1 : 1

Answer: C

Question: A, B and C were partners in a firm sharing profits and losses in the ratio of 2:2:1. The capital balance are Rs.50,000 for A, Rs.70,000 for B, Rs.35,000 for C. B decided to retire from the firm and balance in reserve on the date was Rs.25,000. If goodwill of the firm was valued at Rs.30,000 and profit on revaluation was Rs.7,500 then, what amount will be payable to B?

(a) Rs.70,820

(b) Rs.76,000

(c) Rs.75,000

(d) Rs.95,000

 Answer: D

Question: P, Q and R are sharing profits and losses equally. R retires and the goodwill is appearing in the books at Rs.30,000. Goodwill of the firm is valued at Rs. 1,50,000. Calculate the net amount to be credited to R's Capital A/c.

(a) Rs.60,000

(b) Rs.50,000

(c) Rs.40,000

(d) Rs. 10,000

Answer: C

Question: A, B and C are partners sharing profits in the ratio of 5 : 2 : 1. If the new ratio on the retirement of A is 3 : 2, what will be the gaining ratio?

(a) 11: 14

(b) 3 : 2

(c) 2 : 3

(d) 14:11

Answer: D

Question: P, Q and R are partners sharing profits in the ratio of 5 : 4 : 3. Q retires and P and R decide to share future profits equally. Gaining Ratio will be :

(a) 5 : 3

(b) 1 : 1

(c) 1 : 3

(d) 3 : 1

Answer: C

Question: A, B and C are partners sharing profits in the ratio of 1/2 : 1/4 : 1/4. New ratio on the retirement of B will be :

(a) 2 : 4

(b) 1 : 2

(c) 2 : 1

(d) 1/4 : 1/2

Answer: C

Question: What treatment is made of accumulated profits and losses on the retirement of a partner?

(a) Credited to all partner’s capital accounts in old ratio.

(b) Debited to all partner’s capital accounts in old ratio.

(c) Credited to remaining partner’s capital accounts in new ratio.

(d) Credited to remaining partner’s capital accounts in gaining ratio.

 Answer: A

Question: At the time of retirement of a partner, profit on revaluation will be credited to:

(a) Capital Account of retiring partner

(b) Capital Accounts of all partners in the old profit-sharing ratio.

(c) Capital Accounts of the remaining partners in their old profit-sharing ratio

(d) Capital Accounts of the remaining partners in their new profit-sharing ratio

Answer: B

Question: What journal entry will be recorded for writing off the goodwill already existing in Balance Sheet at the time of retirement of a partner?

(a) Retiring Partner’s Capital A/c      Dr.

To Goodwill A/c

(b) All Partner’s Capital A/cs (including retiring)      Dr. (in old ratio)

To Goodwill A/c

(c) Remaining Partner’s Capital A/cs           Dr. (in gaining ratio)

To Goodwill A/c

(d) Remaining Partner’s Capital A/cs       Dr. (in new ratio)

To Goodwill A/c

Answer: B

Question: Partner's Capital Account is debited

(a) to record the General Reserve.

(b) to record the gain on revaluation.

(c) to record the Profit and Loss A/c (Dr.).

(d) to record the shortage of capital brought in.

 Answer: A

Question: The amount due to deceased partner is paid to

(a) His Father.

(b) His Wife.

(c) His Legal Heir,

(d) Remaining Partners.

Answer: B

Question: Gaining ratio is

(a) Old Profit-sharing Ratio - New Profit-sharing Ratio.

(b) Old Profit-sharing Ratio - New Profit-sharing Ratio.

(c) New Profit-sharing Ratio - Old Profit-sharing Ratio,

(d) New Profit-sharing Ratio - Old Profit-sharing Ratio.

Answer: B

Question: On retirement of a partner, unrecorded assets are

(a) debited to Revaluation Account.

(b) credited to Revaluation Account.

(c) credited to Partner's Capital Account.

(d) debited to Profit and Loss Appropriation Account.

Answer: B

Question: At the time of retirement of a partner, profit (gain) on revaluation will be credited to the Capital Accounts of

(a) retiring partner.

(b) all partners in their old profit-sharing ratio.

(c) the remaining partners in their old profit-sharing ratio.

(d) the remaining partners in their new profit-sharing ratio.

 Answer: B

Question: increase in liability at the time of retirement of a partner is

(a) credited to Revaluation Account.

(b) debited to Revaluation Account.

(c) debited to Profit and Loss Account.

(d) debited to Profit and Loss Appropriation Account

Answer: B

Question: A, B and C are partners in a firm sharing profit/loss in the ratio of 2 : 2 : 1. On March 31, 2019, C died. Accounts are closed on Dec., 31 every year. The sales for the year 2018 was Rs.6,00,000 and the profits were Rs.60,000. The sales for the period from Jan. 1,2019 to March 31, 2019 were Rs.2,00,000. The share of deceased partner in the current year’s profits on the basis of sales is :

(a) Rs.20,000

(b) Rs.8,000

(c) Rs.3,000

(d) Rs.4,000

 Answer: D

Question: A, B and C were partners sharing profits and losses in the ratio of 2 : 2 : 1. Books are closed on 31st March every year. C dies on 5th November, 2018. Under the partnership deed, the executors of the deceased partner are entitled to his share of profit to the date of death, calculated on the basis of last year’s profit. Profit for the year ended 31 st March, 2018 was Rs.2,40,000. C s share of profit will be :

(a) Rs.28,000

(b) Rs.32,000

(c) Rs.28,800

(d) Rs.48,000

Answer: C

Question: P, Q and R were partners sharing profits in the ratio of their Capital contribution which were Rs.6,00,000; Rs.4,00,000 and Rs.5,00,000 respectively. Their books are closed on 31st March every year. P dies on 24th August, 2018. Under the partnership deed, deceased partner is entitled to his share of profit/loss to the date of death based on the average profits of preceding three years. Profits were 2015 Rs.50,000; 2016 Rs. 1,20,000 (Loss); 2017 Rs.30,000 and 2018 Rs.60,000. P's share of profit/loss will be :

(a) Rs.3,200

(b) Rs.6,400

(c) Rs. 12,000

(d) Rs. 4,800

Answer: D

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) Capital Ratio

(c) Sacrificing Ratio

(d) Profit Sharing Ratio

Answer: A

Question: ‘Gaining Ratio’ means :

(a) Old Ratio - New Ratio

(b) New Ratio - Old Ratio

(c) Old Ratio - Sacrificing Ratio

(d) New Ratio - Sacrificing Ratio

Answer: B

Question: On 1st April, 2019 A, B and C were partners sharing profits and losses in the ratio of 5 : 3 : 2 respectively. On this date B retires. The new profit sharing ratio of A and C will be 3 : 2. Gaining ratio will be :

(a) 1 :2

(b) 2 : 1

(c) 1 : 1

(d) 5 : 2

Answer: A

Question: B, P and L sharing profits in the ratio 4:3:2. B retires, P and L decided to share profits in future in the ratio of 5 : 3. Gaining ratio will be :

(a)11:21

(b)21: 11

(c) 11 : 13

(d) 13 : 11

Answer: B

Question: P, Q and R were partners sharing profits in the ratio 2 : 2 : 1. Q retires and the new profit sharing ratio of P and R will be 3 : 1. Gaining ratio will be :

(a) 1 : 7

(b) 2 : 1

(c) 1 : 2

(d) 7 : 1

Answer: D

Question: Which of the following statement is correct?

(a) Goodwill at the time of retirement of a partner is credited to remaining Partners’ Capital Accounts in sacrificing ratio.

(b) Goodwill at the time of retirement of a partner is credited to remaining Partners’ Capital Accounts in gaining ratio.

(c) Goodwill at the time of retirement of a partner is debited to remaining Partners' Capital Accounts in sacrificing ratio.

(d) Goodwill at the time of retirement of a partner to the extent of retiring Partner's Share is debited to remaining Partners’ Capital Accounts in gaining ratio.

Answer: D

Question: Revaluation Account is prepared to give effect to

(a) change in value of assets alone.

(b) change in value of liabilities alone.

(c) undistributed profits and losses.

(d) change in the values of assets and liabilities.

Answer: D

Question: On the retirement of Hari from the firm of Hari, Ram and Sharma, the Balance Sheet showed a debit balance of Rs. 12,000 in the Profit and Loss Account. For calculating the amount payable to Hari, this balance will be transferred

(a) to the credit of the Capital Accounts of Hari, Ram and Sharma equally.

(b) to the debit of the Capital Accounts of Hari, Ram and Sharma equally.

(c) to the debit of the Capital Accounts of Ram and Sharma equally.

(d) to the credit of the Capital Accounts of Ram and Sharma equally.

 Answer: B

Question: A, B and C are partners sharing profits in the ratio of 3:2:1, C retired. New profit-sharing ratio will be

(a) 1:3.

(b) 3:2.

(c) 1:1.

(d) None of these.

Answer: B

Question: A, S and C are partners sharing profits in the ratio of 3: 2:1, C retired, and new profit-sharing ratio is 3:2. Gaining ratio will be

(a) 3:2.

(b) 1:2.

(c) 2:1.

(d) None of these.

Answer: A

Question: A, B and C are equal partners in a firm. B retires and the remaining partners decide to share the profits of the new firm in the ratio of 5 : 4. Gaining ratio will be :

(a) 1 :1

(b) 1 : 2

(c) 2 : 1

(d) 5 : 4

Answer: C

Question: A, B and C are partners sharing profit or loss in the ratio of 3 : 2 : 1. B retires and after B's retirement A and C agreed to share profit or loss in the ratio of 3 : 2 in future. Their gaining ratio will be :

(a) 3 : 1

(b) 1 : 3

(c) 3:7

(d) None of the above

Answer: C

Question: A, B and C are partners sharing profit or loss in the ratio of 4 : 3 : 2. C retires and after C’s retirement A and B agreed to share profit or loss in the ratio of 4 : 3 in future. Their gaining ratio will be :

(a) 3 : 2

(b) 4 : 3

(c) 3 : 4

(d) 1 : 1

Answer: B

Question: A, B and C were partners sharing profits in the ratio of 4:5:3. C died and remaining partners decided to share profits in the ratio of 7:8, the gaining ratio will be .

(a) 8:7.

(b) 4:5.

(c) 1:1.

(d) 2:1.

 Answer: A

Question: A, B and C were partners, sharing profit and losses in the ratio of 3:2:1. B died, the firm decided to value the goodwill on the basis of 3 years' purchase of average of 5 years profits. The profits of the firm for the last five years before charging interest on capital were Rs. 11,000, Rs. 9,000, Rs. 11,000, Rs. 7,000 and Rs. 8,000. The capital of the firm stood at Rs. 50,000 and interest rate is 8%. Value of goodwill will be

(a) Rs. 10,000.

(b) Rs. 15,600.

(c) Rs. 21,000.

(d) Rs. 11,000.

Answer: B

Question: A, B and C are partners sharing profits in the ratio of 1/4 : 3/10 : 9/20. The New ratio on the retirement of C will be :

(a) 6 : 5

(b) 5 : 6

(c) 4 : 3

(d) 4 : 10

Answer: B

Question: X, y and Z have been sharing profits in the ratio of 4 : 2 : 1 Z retires. X and Y take Z’s share equally. New profit sharing ratio will be :

(a) 5 : 2

(b) 5 : 3

(c) 9 : 5

(d) 4 : 2

Answer: C

Question: P, Q and R have been sharing profits and losses in the ratio of 5 : 3 : 2. Q retires. His share is taken by P and R in the ratio of 2 : 1. New profit sharing ratio will be:

(a) 6 : 4

(b) 7 : 3

(c) 7 : 2

(d) 6 : 3

Answer: B

Question: X, Y and Z were partners sharing profits in the ratio of 2:2:1. Y died on 30th June, 2020 and profit for the accounting year ended 31st March, 2020 was Rs. 36,000. If profit share of deceased partner is to be calculated on the basis of previous year's profit, amount of profit credited to Y’s Capital Account will be

(a) Rs. 3,000.

(b) Rs. 2,400.

(c) Rs. 3,600.

(d) Rs. 2,800.

 Answer: C

Question: Choose the odd one:

(a) Revaluation Account

(b) Realisation of assets.

(c) Adjustment of goodwill.

(d) Gaining ratio.

Answer: B

Question: The Partnership Deed does not have a clause on rate of interest to be paid on amount due to heirs of deceased partner. At what rate interest on the outstanding amount shall be payable?

(a) At the rate at which the banks grant loan.

(b) At the rate of interest provided ¡n the Partnership Act, 1932.

(c) At the rate of interest demanded by the heirs of the deceased partner.

(d) 8% p.a.

Answer: B

Question: On the death of a partner, his share in the profits of the firm till the date of his death is transferred to the

(a) Debit of Profit and Loss Account

(b) Credit of Profit and Loss Account.

(c) Debit of Profit and Loss Suspense Account.

(d) Credit of Profit and Loss Suspense Account

 Answer: C

Question: A, Band Care partners sharing profit and losses in the ratio of 2:2:1.B died, at that time goodwill of the firm valued at Rs. 30,000. What contribution has to be made by A and C in order to pay B's Executor?

(a) Rs. 20,000 and Rs. 10,000.

(b) Rs. 15,000 and Rs. 15,000.

(c) Rs. 8,000 and Rs. 4,000.

(d) Rs. 6,000 and Rs. 6,000.

 Answer: C

Question: A, B and Care partners in a firm, sharing profits in the ration of 2:2:1.Their Capital Accounts stood as Rs. 50,000, Rs. 50,000 and Rs. 25,000 respectively. B died, and balance in the reserve on that date was Rs. 15,000. If goodwill of the firm is Rs. 30,000 and profit on revaluation is Rs. 7,050, what amount will be transferred to B's Executor's Account?

(a) Rs. 50,820.

(b) Rs. 70,820.

(c) Rs. 8,820.

(d) Rs. 60,820.

Answer: B

Question: A, B and C are equal partners. C retires. He surrenders 3/5th of his share in favour of A and 2/5th in favour of B. New ratio will be :

(a) 3 : 2

(b) 8 : 7

(c) 7:8

(d) 2 : 3

Answer: B

Question: P, Q and R are partners sharing profits in the ratio of 4 : 3 : 2.Q retires and his share was taken up by P and R in the ratio 3 : 2. New profit sharing ratio will be :

(a) 16 : 29

(b) 29 : 16

(c) 3 : 2

(d) 2 : 3

 Answer: B

Question: L, P and G are three partners sharing profits in the ratio 15 : 9 : 8. G retires. L and P decided to share profits in equal ratio. Gaining ratio will be :

(a) 15: 9

(b) 9:15

(c) 7 : 1

(d) 1 : 7

Answer: D

Question: On retirement of a partner, goodwill will be credited to the Capital Account of:

(a) Retiring Partner

(b) Remaining Partners

(c) All Partners

(d) None of the Above

Answer: A

Question: On the death of a partner, the amount due to him will be credited to :

(a) All partner’s Capital Accounts

(b) Remaining partner’s Capital Accounts

(c) His Executor’s Account

(d) Governments’ Revenue Account

 Answer: C

Question: How goodwill is recorded on the retirement of a partner?

(a) Remaining Partner’s Capital A/cs Dr.     (In Gaining Ratio)

To Retiring Partner’s Capital A/c       (with his share of goodwill)

(b) Remaining Partner’s Capital A/cs Dr.     (In New Ratio)

To Retiring Partner’s Capital A/c     (with his share of goodwill)

(c) Goodwill A/c Dr.

To All Partner’s Capital A/cs       (In Old Ratio)

(d) Goodwill A/c Dr.

To Retiring Partner’s Capital A/c    (with his share)

Answer: A

Question: Retiring partner is compensated by the continuing partners in their

(a) Gaining Ratio.

(b) Capital Ratio.

(c) Sacrificing Ratio.

(d) Profit-sharing Ratio.

Answer: A