Test: Retirement And Death Of A Partner - 2


20 Questions MCQ Test Online Tests (Accountancy): CUET Preparation | Test: Retirement And Death Of A Partner - 2


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Attempt Test: Retirement And Death Of A Partner - 2 | 20 questions in 20 minutes | Mock test for Commerce preparation | Free important questions MCQ to study Online Tests (Accountancy): CUET Preparation for Commerce Exam | Download free PDF with solutions
QUESTION: 1

A , B and C are partners in a firm sharing profits in the ratio of 5 : 3 : 2. C died on 31st March 2010. What will be the new ratio of A and B:

Solution:

Ratio of A and B will be 5:3 (after adjusting the old share and acquired share).

QUESTION: 2

Why there is need to calculate New profit share ratio

Solution:

When a partner is retired from the firm, there will be change in the ratio of remaining partners. It is necessary to find out the new ratio of existing partners.

QUESTION: 3

Loan of the retiring partner is disposed off according to the pre decided terms and conditions among the partners. In such cases interest is credited to the Loan A/c on the basis of the amount outstanding at the beginning of each year and the amount paid is ____to loan A/c.

Solution:

Loan of the retiring partner is disposed off according to the pre decided terms and conditions among the partners. In such cases interest is credited to the Loan A/c on the basis of the amount outstanding at the beginning of each year and the amount paid is debited to loan A/c.

Journal Entry 

For Interest: Interest A/c Dr.

                           To Partner's Loan A/c.

For Payment: Partner's Loan A/c. Dr.

                             To Cash/Bank A/c.

QUESTION: 4

Retirement or death of a partner will create a situation for the continuing partners, which is known as:

Solution:

Retirement or death of a partner will create a situation for the continuing partners, which is known as Reconstitution.

QUESTION: 5

New Ratio – Old Ratio = ?

Solution:

At the time of retirement or death of a partner, gain ratio of remaining partners is calculated as follows:
New Ratio – Old Ratio = Gain Ratio

QUESTION: 6

X, Y and Z are partners sharing profits in the ratio of 1/2, 2/5 and 1/10. What will be the new ratio of X and Y after the retirement of Z.

Solution:

After the retirement of Z, new ratio of X and Y will be 5:4.

QUESTION: 7

How sacrificing ratio is differ from gaining ratio on the basis of mode of calculation

Solution:
QUESTION: 8

L, M and N are partners sharing ratio 3:2:1. M died and N the son of M is of the opinion that the rightful owner of his father’s share of profit and the profit of the firm be shared between L and N equally. L does not agree to settle the dispute because there is partnership deed which is showing old profit sharing ratio 3:2:1.

Solution:

The profit should be distributed among the Land N in Ratio 3:1. Profits cannot be shared equally because there is partnership deed and profit should be distributed accordingly.

QUESTION: 9

Why is outgoing partner entitled to a share of goodwill of the firm

Solution:

Goodwill earned by the firm is the effort of all the partners. When a partner retires from the firm, he should get his share of goodwill other than his capital amount (adjusted).

QUESTION: 10

Which of the following is effect of the retirement of a partner?

Solution:

The main effect of retirement of a partner is that the combined share of remaining partners increases.

QUESTION: 11

A, B and C are partners sharing profit in the ratio of 1/2 : 3/10 : 1/5 .Calculate the new profit sharing ratio between A and C ,If B retires

Solution:

New Ratio of A and C will be 5:2
Old Ratio = 1/2, 3/10 and 1/5 i.e. 5:3:2
Share of B = 3/10
Remaining = 5:2

QUESTION: 12

When Retiring partners balance is treated as loan , in the absence of any information, he will get:

Solution:

In the absence of any information regarding interest on loan to the partner, it should be paid @ 6% per annum.

QUESTION: 13

Goodwill given in adjustments (after the balance sheet) will be ____________

Solution:

Goodwill given in outside the balance sheet (in adjustment) is used to calculate the share of outgoing partner only. This goodwill is self generated and should not be distributed or not to be shown in the books of accounts.

QUESTION: 14

L, M and N are partners sharing profit and losses in the ratio of 25:15:9 . M retires. It is decided that the profit sharing ratio between remaining partner will be the same as existing between M and N. Calculate Gaining ratio

Solution:

Old Share 25 : 15 : 9
L’s share = 25/29
Gain Ratio = 45: 75

QUESTION: 15

M, N and H are partners without partnership deed. M wants to get retired. The profit on revaluation on the date was ` 12000.and other partners N and H want to share this in the new ratio 3:2. M wants this to be shared equally How this profit should be shared

Solution:

In the absence of partnership deed profit sharing ratio will be equal. In this case, M is right; profit should be shared equally among the partners i.e. 4,000 equally among all the partners.

QUESTION: 16

Treatment of General Reserve at the time of retirement is:

Solution:

At the time of retirement of a partner, general reserve given in the balance sheet should be credited to all the partners (including outgoing partner) in their old profit sharing ratio.

QUESTION: 17

Which of the following is not prepared at the time of retirement of a partner?

Solution:

Following accounts are prepared at the time of retirement of a partner except profit and loss suspense account:
•Revaluation Account
•Partner’s capital account
•Balance Sheet

QUESTION: 18

Which of the following item is not shown in the credit side of deceased partner’s capital account?

Solution:

Share of loss is not shown in the credit side it is shown in the debit side of deceased partner’s capital account. Following items are shown in the credit side of his account:
•Share of profit
•Revaluation profit
•Share of reserve

QUESTION: 19

If any asset is taken over by a partner at the time of his retirement, how will you record it?

Solution:

Any asset taken by the partner will be shown in the debit side of his capital account. It means his capital account will be reduced by the same.

QUESTION: 20

X, Y and Z are partners sharing profits in the ratio of 1/2, 2/5 and 1/10. What will be the new ratio of X and Y after the retirement of Z.

Solution:

After the retirement of Z, new ratio of X and Y will be 5:4. 

Simplifying, 1/2,  2/5, 1/10  , L.C.M.  is 10

Ratio will be 5:4:1 

Hence , If z will retire then new ratio will be 5:4.

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