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Test: Retirement And Death Of A Partner - 2 - Commerce MCQ


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20 Questions MCQ Test Accountancy Class 12 - Test: Retirement And Death Of A Partner - 2

Test: Retirement And Death Of A Partner - 2 for Commerce 2024 is part of Accountancy Class 12 preparation. The Test: Retirement And Death Of A Partner - 2 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Retirement And Death Of A Partner - 2 MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Retirement And Death Of A Partner - 2 below.
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Test: Retirement And Death Of A Partner - 2 - 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:

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 1

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

Test: Retirement And Death Of A Partner - 2 - Question 2

Why there is need to calculate New profit share ratio

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 2

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.

Test: Retirement And Death Of A Partner - 2 - 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.

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - 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 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.

Test: Retirement And Death Of A Partner - 2 - Question 4

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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 4

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

Test: Retirement And Death Of A Partner - 2 - Question 5

New Ratio – Old Ratio = ?

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 5

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

Test: Retirement And Death Of A Partner - 2 - 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.

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 6

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

Test: Retirement And Death Of A Partner - 2 - Question 7

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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 7
Detailed
The sacrificing ratio and gaining ratio are two important concepts in partnership accounting. They are used to calculate the distribution of profits and losses when there is a change in the partnership.
The sacrificing ratio is the ratio in which the existing partners sacrifice their share in the profits in order to admit a new partner. On the other hand, the gaining ratio is the ratio in which the existing partners gain the share of the outgoing partner.
The mode of calculation for the sacrificing ratio and gaining ratio is different. Let's compare the two:
Sacrificing Ratio:
- The sacrificing ratio is calculated by taking the difference between the old ratio and the new ratio.
- The old ratio is the ratio in which the existing partners share the profits before the change.
- The new ratio is the ratio in which the partners share the profits after the change, including the share of the new partner.
- The sacrificing ratio measures the extent to which the existing partners sacrifice their share in the profits.
Gaining Ratio:
- The gaining ratio is calculated by taking the difference between the new ratio and the old ratio.
- The old ratio is the ratio in which the existing partners share the profits before the change.
- The new ratio is the ratio in which the partners share the profits after the change, including the share of the outgoing partner.
- The gaining ratio measures the extent to which the existing partners gain the share of the outgoing partner.
In summary, the sacrificing ratio is calculated by taking the difference between the old and new ratio, while the gaining ratio is calculated by taking the difference between the new and old ratio.
Test: Retirement And Death Of A Partner - 2 - 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.

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 8

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.

Test: Retirement And Death Of A Partner - 2 - Question 9

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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 9

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).

Test: Retirement And Death Of A Partner - 2 - Question 10

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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 10

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

Test: Retirement And Death Of A Partner - 2 - 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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 11

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

Test: Retirement And Death Of A Partner - 2 - Question 12

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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 12

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

Test: Retirement And Death Of A Partner - 2 - Question 13

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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 13

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.

Test: Retirement And Death Of A Partner - 2 - 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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 14

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

Test: Retirement And Death Of A Partner - 2 - 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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 15

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.

Test: Retirement And Death Of A Partner - 2 - Question 16

Treatment of General Reserve at the time of retirement is:

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 16

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.

Test: Retirement And Death Of A Partner - 2 - Question 17

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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 17

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

Test: Retirement And Death Of A Partner - 2 - Question 18

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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 18

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

Test: Retirement And Death Of A Partner - 2 - Question 19

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

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 19

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.

Test: Retirement And Death Of A Partner - 2 - 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.

Detailed Solution for Test: Retirement And Death Of A Partner - 2 - Question 20

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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