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12th Grade > Accountancy

RECONSTITUTION OF A PARTNERSHIP FIRM RETIREMENT DEATH OF A PARTNER MCQs

Total Questions : 30 | Page 1 of 3 pages
Question 1.


A B and C are partners in the firm sharing profits in the ratio of 3 : 2 : 1. B retired and his share was divided equally between A and C. Calculate the new profit sharing ratio of A and C.


  1.     None of these
  2.     3:2
  3.     2:1
  4.     3:1
 Discuss Question
Answer: Option C. -> 2:1
:
C

B’s Share = 2/6


B’s share is divided between A and C in the ratio of 1 : 1.


A gets 1/2 of 2/6 = 2/6 × 1/2 = 1/6


A’s New Share = 3/6 + 1/6 = 4/6


C’s gets 1/2 of 2/6 = 2/6 × 1/2 = 1/6


C’s New share = 1/6+1/6 = 2/6


New ratio = 2:1


Question 2.


The claim of the retiring partner is payable in which of the following form(s)?


  1.     Fully in cash. Fully transferred to loan account to be paid later with some interest on it. Partly in cash and partly as loan repayable later with agreed interest.
  2.     Partly in cash and partly as loan repayable later with agreed interest.
  3.     Fully transferred to loan account to be paid later with some interest on it.
  4.     Fully in cash.
 Discuss Question
Answer: Option A. -> Fully in cash. Fully transferred to loan account to be paid later with some interest on it. Partly in cash and partly as loan repayable later with agreed interest.
:
A

The claim of the retiring partner is payable in  the following form : 



  • Fully in cash.

  • Fully transferred to loan account to be paid later with some interest on it.

  • Partly in cash and partly as loan repayable later with agreed interest.


Question 3.


Amit, Sumit, and Punit share profit and losses in the ratio of 3:2:1, respectively. Amit retires and the remaining partners decide to take Amit’s share in the existing ratio i.e. 2:1. Calculate the new ratio.


  1.     3:1
  2.     2:1
  3.     1:2
  4.     1:1
 Discuss Question
Answer: Option B. -> 2:1
:
B

The existing ratio between Sumit and Punit= 2/6 and 1/6


Amit’s ratio (retiring partner) = 3/6


Amit’s share taken by Sumit and Punit in the ratio of 2:1


Sumit gets = 3/6 * 2/3 = 6/18


Punit gets = 3/6 * 1/3 = 3/18


New ratio between Sumit and Punit is = 6:3 = 2:1


Question 4.


A, B and C are partners in a firm in the ratio 3:2:1. B retires on 31/08/2014. The sales of the firm up to 31/08/2014 were Rs.15,00,000. The net profit ratio of the business is 20% based on last year's profits of Rs. 6,00,000 on sales of Rs.30,00,000. The financial year of the firm is from April to March. Calculate the share of B's profits up to the date of his retirement.


  1.     Rs 15,00,000
  2.     Rs 41,666.67
  3.     Rs 50,000
  4.     Rs 1,00,000
 Discuss Question
Answer: Option D. -> Rs 1,00,000
:
D

Approximate profit up to 31/8/2014 
= 15,00,000 * 20% = Rs 3,00,000
B's share in profits = Rs 3,00,000×26=Rs 1,00,000


Question 5.


A, B, and C are partners in a firm sharing profits in the ratio of 3:2:1. B retires. The goodwill of the firm is valued at Rs. 60,000 and the remaining partners A and C continue to share profits in the ratio of 3:1. By what amount will the capital account of B be credited ?


  1.     Rs. 20,000
  2.     Rs 10,000
  3.     Rs 30,000
  4.     No to be credited
 Discuss Question
Answer: Option A. -> Rs. 20,000
:
A

B's share of goowill =26×60,000=Rs 20,000
So, Amount to be credited =  Rs. 20,000


Question 6.


The total profit as on  31.3.2018 is Rs. 1,25,000 and a partner died on 31st December 2018. Profit earned till 31st December is Rs. 93,750. So what is his share of profit if the profit sharing ratio is equal.


  1.     Rs 31,250
  2.     Rs 41,666.67
  3.     Rs 1,25,000
  4.     Rs 93,750
 Discuss Question
Answer: Option A. -> Rs 31,250
:
A

The deceased partner's claim on profits is only till the date of  death. Profit sharing is given equally. PSR= 1:1:1
Hence, the Rs 93,750 profits till 31st December is shared between the three partners equally.
So, deceased partner's share of profit
=Rs 93,750×13=Rs 31,250


Question 7.


What is the journal entry for recording increasing in value of assets


  1.     Asset A/c Dr
      To Realisation A/c
  2.     Asset A/c Dr
      To Revaluation A/c
  3.     Revaluation A/c Dr
      To Asset A/c
  4.     None of these
 Discuss Question
Answer: Option B. -> Asset A/c Dr
  To Revaluation A/c
:
B

The journal entry is going to be
Asset A/c Dr
  To Revaluation A/c


Question 8.


A, B. and C are partners in a firm sharing profits in the ratio of 3:2:1 B retires. The goodwill of the firm is valued at Rs. 60,000 and the remaining partners A and C continue to share profits in the ratio of 3:1. By what amount will the capital account of B will be credited = 


  1.     Rs. 20,000
  2.     Rs 10,000
  3.     It shall not be credited
  4.     Rs 15,000
 Discuss Question
Answer: Option A. -> Rs. 20,000
:
A

B's share of goodwill will be credited to his capital account =  2/6 * 60,000 =  20,000


Question 9.


If the value of goodwill is Rs. 3,00,000. The PSR of A, B and C is 1:1:1. A retires and new profit sharing ratio is 1:1.  B and C Capital accounts will be debited with what amount?


  1.     Rs. 1,50,000 each
  2.     Rs. 50,000 each
  3.     Rs. 2,50,000 each
  4.     Rs. 10,000 each
 Discuss Question
Answer: Option B. -> Rs. 50,000 each
:
B

Before retirement:
B's share of goodwill = 1/3 * 3,00,000 = 1,00,000
C's share of goodwill = 1/3 * 3,00,000 = 1,00,000
After retirement :
B's share of goodwill = 1/2 * 3,00,000 = 1,50,000
C's share of goodwill = 1/2 * 3,00,000 = 1,50,000
So gain for B & C = 1,50,000- 1,00,000 = 50,000 each
Therefore, B and C capital accounts will be debited with Rs. 50,000 each


Question 10.


The value of the machinery in the balance sheet is 50,000 and after revaluation it came to 35,000. So what is the journal entry we pass - 


  1.     Revaluation A/c Dr.  35,000
          To Machinery A/c  35,000
  2.     Revaluation A/c Dr.  15,000
      To Machinery A/c  15,000
  3.     Machinery A/c Dr.  15,000
          To Revaluation A/c  15,000
  4.     Machinery A/c Dr.  35,000
          To Revaluation A/c  35,000
 Discuss Question
Answer: Option B. -> Revaluation A/c Dr.  15,000
  To Machinery A/c  15,000
:
B

The value of machinery was reduced by Rs 15,000 on revaluation. Hence, the entry is
Revaluation A/c Dr.  15,000
         To Machinery A/c  15,000


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