CUET Accountancy MCQs Unit III Reconstitution of Partnership

CUET Accountancy Reconstitution of Partnership Goodwill MCQs

Question: Goodwill can be classified into which categories

a) Purchased Goodwill

b) Self generated Goodwill

c) Both

d) None of the options

Answer: Purchased Goodwill

Question: Which Methods of valuation of goodwill

a) All of the options

b) Super profit method

c) Capitalization method

d) Average profit method

Answer: All of the options

Question: When a partner does bring cash for goodwill, an account is raised at

a) New Profit sharing

b) Old Profit sharing Value

c) Profit Sharing

d) None of the options

Answer: New Profit sharing

Question: Weighted Average method of calculating goodwill is used when

a) Both

b) Profit has increasing trend

c) Profit has decreasing trend

d) None of the options

Answer: Both

Question: Revaluation account is prepared on

a) Reconstitution of partnership firm.

b) Dissolution of partnership firm

c) Both

d) None of the options

Answer: Reconstitution of partnership firm.

Question. As per AS-26 -------------------Goodwill is recorded in the books of accounts.

a) Purchased

b) Self-generated

c) Both (a) and (b)

d) None of these

Answer: None of these

Question. The average profit over the last five years was ₹. 60000. The normal yield on capital in-vested in such a business is estimated at 10% pa) Capital invested in the business is ₹. 500000. Amount of goodwill, it is based on 3 years purchase of last 5 years super profit will be

a) 1, 00,000

b) 1, 80,000

c) 30000

d) 1, 50,000.

Answer: 1, 00,000

Question. Interest on Capital of Partners is a

a) Charge on profit

b) Loss to the firm

c) Profit to the firm

d).None of these

Answer: Loss to the firm

Question. A partnership Deed provides for the payment of interest on capital, but there was a loss in-stead of profits during the year 2020-21. At what rate will the interest on capital be al-lowed?

a) 6% p.a

b) 12%p.a

c) The rate specified in the partnership deed

d) No interest on capital will be allowed

Answer: No interest on capital will be allowed

Question. A, B & C are partners in a firm sharing profits & losses in the ratio of 5:3:2. A guaranteed profit of ₹.20, 000 to c) Net profit for the year ending 31st March 2021, was ₹.80, 000. A’s share in the profit of the firm will be

a) ₹.36,000

b) ₹.16,000

c) ₹.38,000

d) ₹.44,000

Answer: ₹.36,000

Question: Super profit method is for goodwill valuation

a) Super profit x No. of years

b) Average profit x No. of years

c) Weighted Average profit x No. of years

d) None of the options

Answer: Super profit x No. of years

Question: In which ratio the profit or loss on revaluation is shared by the old partners

a) Old Profit sharing ratio

b) New Profit sharing ratio

c) Equally

d) None of the options

Answer: Old Profit sharing ratio 

Question: The valuation of goodwill is not necessary in sole trading

a) On closing the firm

b) On making a partner

c) On selling the firm

d) None of the options

Answer: On closing the firm

Question: When the value of goodwill is not given at the time of admission of a new partner, it IS inferred from the capital of the new firm and profit sharing ratio. This concept is called

a) Hidden Goodwill

b) Purchased Goodwill

c) Average Goodwill

d) None of the options

Answer: Hidden Goodwill

Question: Account is prepared only one time in during the life of firm

a) Realisation Account

b) Revaluation A/c

c) Profit & loss A/c

d) None of the options

Answer: Realisation Account

Question. Capital employed by a partnership firm is ₹. 5, 00,000. Its average profit is ₹. 60,000. The normal rate of return for a similar type of business is 10%. The amount of super profit is.

a) ₹ 50000

b) ₹ 10000

c) ₹ 6000

d) ₹ 56000

Answer: ₹ 6000

Question. X and Y are partners in a firm having Rs.4, 00,000 & Rs.8, 00,000 respectively. The part-nership deed provides for charging interest on drawings @5% p a) X withdrew Rs.1, 00,000 for his personal use during the year 2020-21.Y withdrew Rs.1, 00,000 from his capital on 1.9,2020. The amount of interest that will be charged on partners’ drawings are

a) X-.₹.2,000 & Y-₹.4,000

b) ₹.5,000 from X &Y

c) X-₹.5,000 &Y- Nil

d) X-₹.2,500 & Y-Nil

Answer: X-₹.5,000 &Y- Nil

Question. Goodwill of the firm on the basis of 2 years’ purchase of average profit of the last 3 years is ₹.25, 000. Find Average profit

a) ₹.50, 000,

b) ₹.37, 500

c) ₹.12, 500

d) None of these

Answer: ₹.12, 500

Question. Goodwill is valued at the time of

a) Change in profit sharing Ratio

b) Admission of a partner

c) Retirement of a partner

d) All of the above

Answer: Retirement of a partner

Question: Which goodwill is recorded in books of accounts ?

a) Purchased Goodwill

b) Self -generated Goodwill

c) Both

d) None of the options

Answer: Purchased Goodwill

Question: A new Partner can be admitted in the firm, When

a) All partners Agreed

b) Some Partners Agreed

c) Dormant Partner agreed

d) None of the options

Answer: All partners Agreed

Question: find the goodwill of firm using capitalisation method, the total capital employed in the firm 80000 Rs., reasonable rate of return 15%, Profit for the year 120000 Rs.

a) 720000

b) 820000

c) 120000

d) None of the options

Answer: 720000

Question: The balance of revaluation A/c is transferred to old partners capital account in their

a) Old Profit sharing ratio

b) New profit sharing ratio

c) Equal ratio

d) None of the options

Answer: Old Profit sharing ratio

Question. A B and C are partners sharing profits equally. A drew regularly ₹ 4,000 at the beginning of every month for six months ended 30th September 2020. Calculate interest of A’s draw-ing @ 5% p.a)

a) ₹ 200

b) ₹ 1,200

c) ₹ 350

d) ₹ 700

Answer: ₹ 1,200

Question. X & Y are partners sharing profits and losses in the ratio of 2:1 with capitals ₹.1,00,000 and ₹.80,000 respectively. The interest on capital has been provided to them @8% instead of 10%. In the rectifying entry

a) Y will be debited by ₹.400

b) Y will be credited by ₹.400

c) Y will be debited by ₹.800

d) Y will be credited by ₹.800

Answer: Y will be debited by ₹.400

Question. Bobby and Sanjay were partners sharing profits & losses in the ratio of 5:3. On 1st April 2020, their capital accounts showed balances of ₹.3, 00,000 and ₹.2, 00,000 respectively. The Partnership Deed provided for interest on capital @10% p.a and the firm earned a profit of Rs.45, 000 for the year ended 31st March 2021. The interest on partners’ capitals to Bobby & Sanjay will be:

a) ₹.22,500 to both partners

b) ₹.27,000 & ₹.18,000 respectively

c) ₹.28,125 & ₹.16,875 respectively

d) None of the above

Answer: ₹.27,000 & ₹.18,000 respectively
 

CUET Accountancy Accounting For Partnership Firms MCQs

Question: For transfer of Profit from Profit and Loss Appropriation account to Reserve account, which account to be credited

(a) Reserve Account

(b) Profit and Loss Appropriation account

(c) Profit and Loss Adjustment Account

(d) Profit and Loss account

Answer: Reserve Account

Question: In the general form of partnership, liabilities of partners are

(a) Unlimited

(b) Limited

(c) Limited to the Business capital

(d) None of the options

Answer: Unlimited

Question: When good will is brought in cash by new partner, method is known as

(a) Premium method

(b) Revolution method

(c) Memorandum revolution method.

(d) None of the options

Answer: Premium method

Question: Every partner has a right to be consulted in all matters affecting the business of

(a) Partnership

(b) Sole - tradership

(c) JSC

(d) None of the options

Answer: Partnership

Question: If a partner takes over an asset of the firm, his capital account

(a) Will be debited with the amount as agreed

(b) Will be credited with the market value of the asset

(c) Will be debited with book value of the asset

(d) None of the options

Answer: Will be debited with the amount as agreed

Question. X, Y and Z are partners in a firm sharing profits and losses in the ratio of 6:4:1.X guaranteed a profit of ₹15,000 to Z. The net profit for the year ending 31 March, 2020 was `99,000. X’s share in the profit of the firm will be:

(a) ₹30,000 

(b) ₹15,000 

(c) ₹48,000 

(d) ₹45,000

Answer: ₹48,000 

Question. X and Y are equal partners. They had advanced a loan of ₹40,000, contributed equally to the firm on 1st August, 2019. The partnership deed is silent regarding the payment of interest on loan. What amount of interest on loan is payable to X, if the firm closes its books of account on 31st March every year?

(a) Nil 

(b) ₹2,400 

(c) ₹1,600 

(d) ₹800

Answer: ₹800

Question. Abha and Bharat were partners. They shared profits and losses equally. On April 1st, 2019 their capital accounts showed balances of ₹3,00,000 and ₹2,00,000 respectively. Calculate the share of divisible profit of the partners if the partnership deed provided for interest on capital @10% p.a. and the firm earned a profit of ₹50,000 for the year ended 31st March, 2020.

(a) Abha ₹30,000; Bharat ₹20,000 

(b) Abha ₹25,000; Bharat ₹25,000

(c) Abha ‘Nil’; Bharat ‘Nil’ 

(d) None of the above

Answer: Abha ‘Nil’; Bharat ‘Nil’ 

Question. Under which of the following situation interest on partners’ capitals shall not be provided?

(a) If the firm has incurred net loss during the year.

(b) If partners’ capitals are equal and their profit sharing ratio is also equal.

(c) Both ((a) and ((b)

(d) If the net profit is less than the total amount payable to partners as interest on capitals.

Answer: Both ((a) and ((b)

Question. Ram and Shyam are partners sharing profits/losses equally. Ram withdrew ₹1,000 p.m. regularly on the first day of every month during the year 2019-20 for personal expenses. If interest on drawings is charged @ 5% p.a. What will be the interest on the drawings of Ram?

(a) ₹50 

(b) ₹27 

(c) ₹600 

(d) ₹325

Answer: ₹325

Question: If all the partners, but one, are solvent it is

(a) Dissolution of firm

(b) Dissolution of partnership agreement

(c) May or may not cause dissolution

(d) None of the options

Answer: Dissolution of firm

Question: Amount due to out going partner is shown in the balance sheet as his

(a) Loan

(b) Liability

(c) Asset

(d) Capital

Answer: Loan

Question: In case of retirement of a partner full good will is credited to the accounts of

(a) All partners

(b) Only retiring partner

(c) Only remaining partner

(d) None of the options

Answer: All partners

Question: At the time of a new partner Good will

(a) Belongs only to the old partner who have credited it

(b) Belongs to all partners, new and old

(c) Belongs only to the new partners who is going to be admitted.

(d) None of the options

Answer: Belongs only to the old partner who have credited it

Question: Value of good will agreed upon Rs. 30000 on C,S admission and allowing him share of total profit Good will is brought in cash, the amount of good-will be as

(a) Rs. 7500

(b) Rs. 30000

(c) Rs. 120000

(d) Rs. 150000

Answer: Rs. 7500

Question: Drawings of the partners are

(a) Debited to capital Account

(b) Debited to profit & loss Account

(c) Credited to profit & loss Account

(d) Credited to capital Account

Answer: Debited to capital Account

Question: In the revaluation account a decrease in the value of plant and machinery

(a) Appears on the debit side.

(b) Appears on the credit side.

(c) Appears on the debit side of good will account

(d) Does not appear at all

Answer: Appears on the debit side.

Question: If all the partners, but one are insolvent it is

(a) Dissolution of firm

(b) Dissolution of an agreement

(c) May or may not cause dissolution

(d) None of the options

Answer: Dissolution of firm

Question: Oustensible partners are those who

(a) do not contribute any capital but get some share of profit for lending their name to the business

(b) contribute very less capital but get equal profit

(c) do not contribute any capital and without having any interest in the business, lend their name to the business

(d) contribute maximum capital of the business

Answer: do not contribute any capital and without having any interest in the business, lend their name to the business

Question:  Vikas is a partner in a firm. His drawings during the year ended 31st March, 2019 were Rs. 72,000. If interest on drawings is charged @ 9% p.a. the interest charged will be :

(a) Rs.324

(b) Rs.6,480

(c) Rs.3,240

(d) Rs.648

Answer: Rs.3,240

Question:  If a fixed amount is withdrawn by a partner in each quarter, interest on the total amount is charged for months

(a) 3

(b) 6

(c) 4.5

(d) 7.5

Answer: 6

Question:  On 1st June, 2018 a partner introduced in the firm additional capital Rs. 50,000. In the absence of partnership deed, on 31st March, 2019 he will receive interest:

(a) Rs.3,000

(b) Zero

(c) Rs.2,500

(d) Rs. 1,800

Answer: Zero

Question:  Y is a partner in a firm. He withdrew regularly Rs.3,000 at the end of every month for the six months ending 31st March, 2019. If interest on drawings is charged @ 10% p.a. the interest charged will be :

(a) Rs.375

(b) Rs.450

(c) Rs.525

(d) Rs.900

Answer: Rs.375

Question:  Interest on partner’s drawings will be credited to

(a) Profit and Loss Account

(b) Profit and Loss Appropriation Account

(c) Partner’s Capital Accounts

(d) None of the Above

Answer: Profit and Loss Appropriation Account

Question:  Sushil is a partner in a firm. He withdrew Rs.4,000 per month in the middle of every month during the year ended 31st March, 2019. If interest on drawings is charged @ 8% p.a. the interest charged will be :

(a) Rs.2,080

(b) Rs. 1,760

(c) Rs.3,840

(d) Rs. 1,920

Answer: Rs. 1,920

Question:  P, Q and R sharing profits in the ratio of 2 : 1 : 1 have fixed capitals of Rs.4,00,000, Rs.3,00,000 and Rs.2,00,000 respectively. After closing the accounts for the year ending 31st March, 2019 it was discovered that interest on capitals was provided @ 6% instead of 8% p.a. In the adjusting entry :

(a) Cr. P Rs. 1,000; Dr. Q Rs.1,500 and Cr. R Rs.500

(b) Dr. P Rs.500; Cr. Q Rs. 1,500 and Dr. R Rs. 1,000

(c) Cr. R. Rs.500; Dr. Q Rs. 1,500 and Cr. R Rs. 1,000

(d) Dr. P Rs. 1,000; Cr. Q Rs. 1,500 and Dr. R Rs.500

Answer: Dr. P Rs. 1,000; Cr. Q Rs. 1,500 and Dr. R Rs.500

Question:  Net profit of a firm is Rs.79,800. Manager is entitled to a commission of 5% of profits after charging his commission. Manager’s Commission will be:

(a) Rs.4,200

(b) Rs.380

(c) Rs.3,990

(d) Rs.3,800

Answer: Rs.3,800

Question: When all partners are insolvent creditors will be

a) Paid rate ably

b) Paid fully

c) Taken over by the partners

d) Paid by government

Answer: Paid rate ably

Question: Money withdrawn by a partner on 1st July Rs. 20,000 and interest on drawings is fixed @ 6% (Books are closed on 31st March.) The amount of interest will be Rupees

a) 900

b) 600

c) 1200

d) No interest will be charged.

Answer: 900

Question: Under fluctuating Capital method how many accounts of each partner is maintained

a) 1

b) 4

c) 3

d) 5

Answer: 1

Question: A Sleeping Partner is also known as

a) Dormant Partner

b) Active Partners

c) Nominal Partners

d) Minor Partner

Answer: Dormant Partner

Question: If dates of drawings are not given, interest on drawings is charged for _______ months

a) 6

b) 3

c) 9

d) 12

Answer: 6

Question: Interest on capital Allowed in Partnership firm

a) Invalid

b) Valid

c) 0.1

d) 0.05

Answer: Invalid

Question: In the absence of an agreement, Interest on loan advanced by the partner to the firm is allowed at the rate of

a) 6%

b) 5%

c) 12%

d) 9%

Answer: 6%

Question: Under fixed capital methods, profit will be credited to

a) Current Account

b) Capital Account

c) Drawings

d) Profit & Loss

Answer: Current Account

Question. Guarantee given to partner ‘A’ by the other partners ‘B & C’ means :

a) In case of loss ‘A’ will not contribute towards that loss.

b) In case of insufficient profits ‘A’ will receive only the minimum guarantee amount.

c) In case of loss or insufficient profits ‘A’ will withdraw the minimum guarantee amount.

d) All of the above.

Answer: In case of loss or insufficient profits ‘A’ will withdraw the minimum guarantee amount.

Question. The relation of partner with the firm is that of:

a) An Owner

b) An Agent

c) An Owner and an Agent

d) Manager

Answer: An Owner and an Agent

Question. Partners are supposed to pay interest on drawing only when by the

a) Provided, Agreement

b) Permitted, Investors

c) Agreed, Partners

d) ‘A’ & ‘C’ above

Answer: ‘A’ & ‘C’ above

Question. X, Y and Z are partners in the ratio of 5 : 4 : 3. 2fhas given to Z a guarantee of minimum Rs. 10,000 profit. For the year ending 31st March, 2019, firm’s profit is Rs.28,800. X’s share in profit will be :

a) Rs.9,200

b) Rs.9,600

c) Rs.7,200

d) Rs. 12,000

Answer: Rs.9,200

Question. When is the Partnership Act enforced?

a) when there is no partnership deed

b) where there is a partnership deed but there are differences of opinion between the partners

c) when capital contribution by the partners varies

d) when the partner’s salary and interest on capital are not incorporated in the partnership deed

Answer: when there is no partnership deed
 

CUET Accountancy Admission Of A Partner MCQs

Question: Sacrificing ratio is ascertained at the time of

a) Admission of a new partner

b) Death of partner

c) Retirement of partner

d) None of the options

Answer: Admission of a new partner

Question: On the admission of a new partner, if goodwill account is to be raised then this should be debited to

a) Goodwill Account

b) Old Partners capital Account

c) Profit & Loss Appropriation A/c

d) None of the options

Answer: Goodwill Account

Question: Profit Sharing ratio is the ration in which the partners have agreed to share

a) Profit & Losses

b) Profit only

c) Losses only

d) None of the options

Answer: Profit & Losses

Question: In the absence of agreement to the contrary , partners share profit and losses in the

a) Equal ratio

b) Rate of average capital

c) 0.25

d) None of the options

Answer: Equal ratio

Question: When the incoming partner pays his share of goodwill privately to the sacrificing partner outside the business Which account should be debited in the books of account

a) No entry should be recorded

b) Premium for goodwill A/c

c) Partners capital A/c

d) None of the options

Answer: No entry should be recorded

Question: A and B are partners sharing profits and losses as 2 : 1. C is admitted and profit sharing ratio becomes 4:3:2. Goodwill is valued at Rs.94,500. C brings required goodwill in cash. Goodwill amount will be Credited to :

a) A 114,000 and B Rs. 7,000

b) A Rs. 12,000 and B Rs. 9,000

c) A Rs.21,000

d) A Rs.94,500

Answer: A Rs.21,000

Question: Profit or Loss on revaluation of assets and reassessment of liabilities is transferred to Partners' Capital Accounts in their

a) Capital Ratio.

b) Equal Ratio.

c) Old Profit-sharing Ratio.

d) Gaining Ratio.

Answer: Old Profit-sharing Ratio.

Question: A and B share profits and losses equally. They have Rs.20,000 each as capital. They admit C as equal partner and goodwill was valued at Rs.30,000. C is to bring in Rs.30,000 as his capital and necessary cash towards his share of goodwill. Goodwill Account will not remain open in books. If profit on revaluation is Rs. 13,000, find the closing balance of the capital accounts.

a) Rs.31,500; Rs.31,500; Rs.30,000

b) Rs.31,500; Rs.31,500; Rs.20,000

c) Rs.26,500; Rs.26,500; Rs.30,000

d) Rs.20,000; Rs.20,000; Rs.30,000

Answer: Rs.31,500; Rs.31,500; Rs.30,000

Question: P and S are partners sharing profits in the ratio of 3 : 2. R is admitted with 1/5th share and he brings in Rs.84,000 as his share of goodwill which is Credited to the Capital Accounts of P and S respectively with Rs.63,000 and Rs.21,000. New profit sharing ratio will be :

a) 3 : 1 : 5

b) 9 : 7 : 4

c) 3 : 2 : 5

d) 7 : 9 : 4

Answer: 9 : 7 : 4

Question: X and Y are partners sharing profits and losses in the ratio of 3:2. Z was admitted for the 1/5th share and for this he brings Rs. 150,000, as capital. If capitals are to be proportionate to profit-sharing ratio, the respective capitals of the partners will be

a) Rs. 3,00,000: Rs. 3,00,000: Rs.1,50,000.

b) Rs. 3,60,000: Rs. 2,40,000: Rs. 1,50,000.

c) Rs. 1,50,000: Rs.' 1,50,000: Rs. 1,50,000.

d) Rs. 1,50,000: Rs. 2,00,000: Rs. 4,00,000.

Answer: Rs. 3,60,000: Rs. 2,40,000: Rs. 1,50,000.

Question: A and B are partners. They admit C for 1/3rd share. In future the ratio between A and B would be 2 : 1. Sacrificing ratio will be :

a) 2:1

b) 1 : 1

c) 5 : 1

d) 1 : 5

Answer: 1 : 5

Question: A, B and C are partners sharing in the ratio of 5 : 4 : 3. They admit D for 1/7 th share. It is agreed that B would retain his original share. Sacrificing ratio will be :

a) A, B and C - 5:4:3

b) A and C -4 : 3

c) A and C - 5:4

d) A and C - -5:3

Answer: A and C - -5:3

Question:  The excess amount which the firm can get on selling its assets over and above the saleable value of its assets is called:

a) Surplus

b) Super profits

c) Reserve

d) Goodwill

Answer: Goodwill

Question: In which of the following situation, partner’s capital a/c is credited?

a) Transfer of accumulated profit or reserves

b) Transfer of revaluation loss

c) Writing off the existing book value of goodwill

d) All of the above

Answer: Transfer of accumulated profit or reserves

Question: Any change in the relationship of existing partners which results in an end of the existing agreement and enforces making of new· agreement is called:

a) Revaluation of partnership

b) Reconstitution of partnership

c) Realisation of partnership

d) None of the above

Answer: Reconstitution of partnership
 

CUET Accountancy Reconstitution Of Firm MCQs

Question: The partners whose share decrease as a result of change in profit sharing ratio are known as

a) Sacrificing Partners

b) Gaining Partners

c) Sleeping Partners

d) None of the options

Answer: Sacrificing Partners

Question: A firm is reconstituted , whenever there is a

a) All of the options

b) Retirement of Existing Partner

c) Death of a partner

d) Admission of a new partner

Answer: All of the options

Question: Z is admitted to a firm for 1/4 share in the profits for which he brings in Rs. 10000towards premium for goodwill, it will be taken by the old partners in

a) The Sacrificing ratio

b) The old Profit sharing ratio

c) The new profit sharing ratio

d) None of the options

Answer: the Sacrificing ratio

Question: When A and B , sharing profits and losses in the ratio of 3:2, Admit C as a partner giving him 1/5th share of profits, this will be given by A and B

a) In the ratio of their profits

b) Equally

c) In the ratio of their capitals

d) None of the options

Answer: In the ratio of their profits

Question: At the time of retirement of a partner, if goodwill appears in the balance sheet, it must be written off, the capital accounts of all partners are debited in

a) The old profit sharing ratio

b) The new profit sharing ratio

c) The capital ratio

d) None of the options

Answer: The old profit sharing ratio

Question: At the time of admission of a new partner, General reserve appearing in the old balance sheet is transferred to

a) Old partners capital Account

b) New partners capital account

c) All Partners capital A/c

d) None of the options

Answer: Old partners capital Account

Question: X and Y shares profits in the ratio of 2:3, how they decided to share profits equally in the future, Which partner will sacrifice and in which ratio

a) Y Sacrifice 1/10

b) X Sacrifice 1/10

c) Both

d) None of the options

Answer: Y Sacrifice 1/10

Question: Revaluation account or Profit & loss adjustment account is

a) Nominal Account

b) Real Account

c) Personal Account

d) None of the options

Answer: Nominal Account

Question: Gaining ratio is the ratio with which the profit share of the partners

a) Increase

b) Decrease

c) Both

d) None of the options

Answer: Increase

Question: Employees Provident fund is

a) Not Distributed among the partners

b) Distributed among the partners

c) Distributed in profit sharing ratio

d) None of the options

Answer: Not Distributed among the partners

Question: The balance in the investment fluctuation fund, after meeting the loss on revaluation of investments, at the time of admission of a partner will be transferred to

a) Old partners capital Account

b) The revaluation Account

c) Personal Account

d) None of the options

Answer: Old partners capital Account

Question: New Profit sharing ratio is

a) Old Share+Acquire Share

b) New Share +Old Share

c) Old Share-Acquire share

d) None of the options

Answer: Old Share+Acquire Share

Question: Decrease in the value of Liabilities on reconstitution of the partnership firm results into

a) Gain to the Existing Partner

b) Loss to the Existing Partner

c) Neither Gain of loss to Existing partner

d) None of the options

Answer: Gain to the Existing Partner 

Question: On reconstitution of the partnership firm, increase in the value of the assets will result into

a) Gain to the Existing Partner

b) Loss to the Existing Partner

c) Neither Gain of loss to Existing partner

d) None of the options

Answer: Gain to the Existing Partner

Question: The partners whose share Increase as a result of change in profit sharing ratio are known as

a) Gaining Partners

b) Sacrificing Partners

c) Sleeping Partners

d) None of the options

Answer: Gaining Partners

Question: Profit & loss adjustment account, which

a) Both

b) Increase value of the assets

c) Decrease Value of Liabilities

d) None of the options

Answer: Both

Question: X and Y are partners sharing profits in the ratio of 2:1, they admit Z into the partnership for 1/4th share in profits for which brings in Rs. 20000 as his share of capital. Hence the adjusted capital of X and Y will be

a) 40000 and 20000 Rs. Respectively

b) 32000 and 16000 respectively

c) 60000 and 30000 Rs. Respectively

d) None of the options

Answer: 40000 and 20000 Rs. Respectively

Question: On the death of a partner, credit balance of profit and loss account appearing in the balance sheer should be credited to the capital accounts of

a) All partners including the deceased partner in their profit sharing ratio

b) The remaining partners in the new profit sharing ratio

c) Equally

d) None of the options

Answer: All partners including the deceased partner in their profit sharing ratio
 

CUET 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: 3 :4

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: Credited to all partner’s capital accounts in old ratio.

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: credited to Revaluation Account.

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: Gaining Ratio

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: change in the values of assets and liabilities.

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: Rs. 15,600.

Question: Choose the odd one:

(a) Revaluation Account

(b) Realisation of assets.

(c) Adjustment of goodwill.

(d) Gaining ratio.

Answer: Realisation of assets.

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: 8 : 7

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: Gaining Ratio.

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: Rs.95,000

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: to record the General Reserve.

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: debited to Revaluation Account.

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: 1 :2

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: 3:2.

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: 8:7.

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: At the rate of interest provided ¡n the Partnership Act, 1932.

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: 1 : 7

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: 1 : 3

Question: The amount due to deceased partner is paid to

(a) His Father.

(b) His Wife.

(c) His Legal Heir,

(d) Remaining Partners.

Answer: Remaining Partners.

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: Rs. 4,800

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: 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.

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: 6 : 5