Test: Reconstitution of a Partnership Firm : Retirement/Death of a Partner- Assertion & Reason Type Questions - Commerce MCQ

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Nisha, Okra and Piya are partners. Nisha retires and her capital account after making adjustment for reserves and profit on revaluation exists at ₹`90,000. Okra and Piya have agreed to pay her ₹1,30,000 in full settlement of his claim. It implies that ₹40,000 (₹1,40,000 – ₹90,000) is Nisha’s share of goodwill of the firm. This will be treated by debiting ₹40,000 in Okra’s and Piya’s Capital Accounts in their gaining ratio and crediting Nisha’s Capital A/c.

Reason (R): If the firm has agreed to settle the account of the retiring partner by paying him/her a lump-sum amount, then the amount paid to him/her in excess of his adjusted capital shall be treated as his/ her share of goodwill.

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Retirement of partner is legal when done at will and with the consent of the partner.

Reason (R): According to Section 32 (1) of the Indian Partnership Act, 1932, “a partner may retire from the firm with the consent of all the partners or at his will, by giving written notice to all the other partners of his intention to retire.”

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): On retirement, the old partnership agreement comes to an end and a new partnership agreement comes into existence between the remaining partners.

Reason (R): Retirement of the partnership leads to the reconstitution of the firm.

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Partnership comes to an end with the death of a partner but the firm may continue its business with a new partnership agreement.

Reason (R): Death of a partner leads to the restructuring of the firm and not to the dissolution of the partnership firm.

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): When goodwill is not appearing in the books, retiring or deceased partner’s capital account is to be credited with his share of goodwill and gaining partners' capital accounts are to be debited in gaining ratio.

Reason (R): Goodwill needs to be compensated by the gaining partners in the gaining ratio.