Reconstitution Of A Partnership Firm Admission Of A Partner Questions MCQs Total Questions : 30

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Question 1. X & Y are partners sharing profit in the ratio of 5:3. Z is admitted as a new partner. X surrendered 1/5th of his share & Y surrendered 1/3rd of his share in favor of Z. What shall be the sacrificing ratio ?
1.    4:5
2.    1:1
3.    3:2
4.    3:1
: B

X surrenders 1/5th of his share = 1/5 of 5/8 = 1/8 y surrenders 1/3rd of his share = 1/3 of 3/8 = 1/8 Sacrificing ratio = 1:1
Question 2. is the ratio in which the old or existing partners forego their share of profit in favour of the new or incoming partner.
1.    Sacrificing Ratio
2.    New Ratio
3.    Old Ratio
4.    Gaining Ratio
: A

Sacrificing ratio is the ratio in which the old or existing partners forego their share of profit in favour of the new or incoming partner.
Question 3. A and B are partners sharing profits and losses in the ratio of 3:2. They admit C into the partnership for one-fourth share of the profits while A and B as between themselves sharing profits and losses equally. The new profit sharing ratio (NR) between A, B and C will be:
1.    3:2:2
2.    3:3:2
3.    4:2:2
4.    None of these
: B

C's share =1/4=2/8 Balance share= 1-1/4=3/4 Balance share to be shared equally. A's share = 3/4*1/2=3/8 B's share= 3/4*1/2 =3/8 New Profit sharing ratioof A,B & C = 3:3:2
Question 4. Which of the following is not a method for valuation of goodwill?
1.    Capitalisation method
2.    Realisation method
3.    Super profit method
4.    Average profit method
: B

Realisation method is not a method for valuation of goodwill
Question 5. Accumulated profits and reserves are distributed to partners in their ___
1.    Sacrificing Ratio
2.    New Profit Sharing Ratio
3.    Old Profit Sharing Ratio
4.    Gaining Ratio
: C

Accumulated profits and reserves are distributed to partners in their old profit sharing ratio.
Question 6. In case of revaluation account is prepared, the assets & liabilities appear in the books of the reconstituted firm at their:
1.    realisable figures
2.    revalued figures
3.    market values
4.    old book values
: B

In case of revaluation account is prepared, the assets & liabilities appear in the books of the reconstituted firm at their revalued figures.
Question 7. Number of years of purchase refers to the number of years the firm will be able to earn _____ in future.
1.    Profits
2.    Losses
3.    Either A or B
4.    None of these
: A

Number of years of purchase refers to the number of years the firm will be able to earnthe profits in future.
Question 8. A and B are partners sharing profits in the ratio of 5:3. They admit C and the new profit sharing ratio is agreed at 4:2:1.The sacrificing ratio will be:
1.    3:5
2.    2:1
3.    1:1
4.    5:3
: A

sacrificing share= old share -new share A's sacrificing share= 5/8-4/7=3/56 B's sacrificing share= 3/8-2/7=5/56 Sacrificing ratio= 3:5
Question 9. Capitalised Value of Super Profits =
1.    None of these
2.    Super Profits * (100 / Normal Rate of Return)
3.    Average Profits * (100 / Normal Rate of Return)
4.    Average Profits * (100 / Average Rate of Return)
: B

Capitalised Value of Super Profits = Super Profits *(100 / Normal Rate of Return)
Question 10. Goodwill brought in by the incoming partner in cash for joining in a partnership firm is adjusted by giving affect to old partners capital accounts in:
1.    capital ratio
2.    sacrificing ratio
3.    new profit sharing ratio
4.    old profit sharing ratio
: B

Goodwill brought in by the incoming partner in cash for joining in a partnership firm is adjustedby giving affect toold partners capital accounts insacrificing ratio.
Question 11. What is the journal entry passed when an asset is brought in by new partner?
1.    Cash A/c Dr     To Asset A/c
2.    Asset A/c Dr    To New Partner's Capital A/c
3.    Cash A/c Dr    To New Partner's Capital A/c
4.    New Partner's Capital A/c Dr    To Cash A/c
: B

The journal entry passed when an asset is brought in by new partner is:
Asset A/c Dr
To New Partner's Capital A/c
Question 12. Capitalised Value of Super Profits =
1.    None of these
2.    Super Profits * (100 / Normal Rate of Return)
3.    Average Profits * (100 / Normal Rate of Return)
4.    Super Profits * (100 / Average Rate of Return)
: B

Capitalised Value of Super Profits = Super Profits *(100 / Normal Rate of Return)
Question 13. Old ratio of A,B & C is 5:4:1.Calculate the new profit sharing ratio, when C acquires 1/5th Share from A & B equally.
1.    None of these
2.    3:4:3
3.    4:3:3
4.     3:3:4
: C

Old ratio between A:B:C = 5:4:1. C acquires 1/5th Share from A & B equally B’s sacrifice= 1/5 X 1/2 = 1/10
A’s sacrifice= 1/5 X 1/2 = 1/10 C`s gain= 1/5 A = 5/10 -1/10 = 4/10 B = 4/10 - 1/10 = 3/10 C= 1/10 + 1/5 = 3/10 A:B:C = 4:3:3
Question 14. Profit and losses ratio is for 3:2:1, for A, B and C respectively. From 1st April 2018, they decide to share profit and losses equally. Value of Goodwill of the firm is Rs 24,000. Who amongst the following has made a sacrifice?
1.    None of these
2.    Both A & B
3.    A only
4.    B only
: C

Old ratio: 3:2:1 New ratio: 1:1:1 Sacrificing or gaining ratio= Old ratio – New ratio A’s share= 3/6 – 1/3 = -1/6 (sacrifice)
Question 15. A and B share profits and losses in the ratio of 3/5 and 2/5 respectively and having capital account balances of Rs 1,00,000 each. At the time of revaluation, the firm’s total book value  of assets was Rs 60,000 while they can only be sold for Rs 40,000. Which of the following is the balance of A’s capital account after revaluation of firm’s assets?
1.    Rs 72,000
2.    Rs 88,000
3.    Rs 1,12,000
4.    Rs 1,00,000
: B

A`s capital before revaluation = 1,00,000 Revaluation loss = 60,00 - 40,000 = 20,000 A`s share in loss= 20,000 X 3/5 = 12,000 New capital = 1,00,000 - 12,000 = Rs 88,000
Question 16. Which of the following is not a method to calculate goodwill by using capitalization method ?
1.    None of these
2.    Capitalisation of Future Profits Method
3.    Capitalisation of Super Profits Method
4.    Capitalisation of Average Profits Method
: B

There are two ways of calculating Goodwill under this method: (i) Capitalisation of Average Profits Method (ii) Capitalisation of Super Profits Method
Question 17. General Reserve is distributed among partners in the ____________ ratio.
1.    None of these
2.    Equal
3.    New
4.    Old
: D

General Reserve is distributed among partners in the old ratio.
Question 18. Under which method, goodwill is calculated by dividing super profits with normal rate of return
1.    Capitalisation method
2.    Weighted profits method
3.    Average profits method
4.    Super profits method
: A

Capitalisation method = Super Profits / Normal Rate of Return
Question 19. Profit/loss on revaluation of assets is shared by the old partners in their :
1.    old profit sharing ratio
2.    sacrificing ratio
3.    new profit sharing ratio
4.    capital ratio