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This a MCQ (Multiple Choice Question) based practice test of Chapter 3 - Admission of a Partner of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinations
Q Why a new partner is admitted in the firm?
- a)To Increase the Number of partners
- b)To Increase the Capital of the firm.
- c)To Increase the Profit sharing Ratio
- d)To increase the goodwill of the firm
Correct answer is 'B'. Can you explain this answer?
Verified Answer
This a MCQ (Multiple Choice Question) based practice test of Chapter 3...
The main purpose of admission of a new partner is to increase the capital of the firm. When old partners feel that the capital they have employed in the business is not enough for the future growth of the business. They may admit a new partner to maintain or to build up the financial strength of the business.
Most Upvoted Answer
This a MCQ (Multiple Choice Question) based practice test of Chapter 3...
Explanation:
When a new partner is admitted in the firm, it is usually done for the following reasons:
1. To Increase the Capital of the Firm:
Admitting a new partner in the firm means that more capital will be available to the business. This capital can be used to expand the business, invest in new projects or purchase new equipment. The new partner brings in additional funds which can be used for the growth of the firm.
2. To Increase the Profit Sharing Ratio:
A new partner can be admitted in the firm to increase the profit sharing ratio. This means that the existing partners can reduce their share of profits and transfer it to the new partner. This can be done to keep the new partner motivated and to ensure that they contribute effectively to the business.
3. To Increase the Number of Partners:
Admitting a new partner in the firm increases the number of partners. This can be beneficial in terms of decision-making and sharing of responsibilities. The workload can be distributed among the partners and the firm can benefit from the skills and expertise of the new partner.
4. To Increase the Goodwill of the Firm:
The admission of a new partner can also help in enhancing the goodwill of the firm. A new partner can bring in new contacts, customers and suppliers, which can help in the growth of the business. The reputation of the new partner can also contribute to the goodwill of the firm.
In conclusion, admitting a new partner in the firm can be beneficial in terms of increasing the capital, profit sharing ratio, number of partners, and goodwill of the firm.
When a new partner is admitted in the firm, it is usually done for the following reasons:
1. To Increase the Capital of the Firm:
Admitting a new partner in the firm means that more capital will be available to the business. This capital can be used to expand the business, invest in new projects or purchase new equipment. The new partner brings in additional funds which can be used for the growth of the firm.
2. To Increase the Profit Sharing Ratio:
A new partner can be admitted in the firm to increase the profit sharing ratio. This means that the existing partners can reduce their share of profits and transfer it to the new partner. This can be done to keep the new partner motivated and to ensure that they contribute effectively to the business.
3. To Increase the Number of Partners:
Admitting a new partner in the firm increases the number of partners. This can be beneficial in terms of decision-making and sharing of responsibilities. The workload can be distributed among the partners and the firm can benefit from the skills and expertise of the new partner.
4. To Increase the Goodwill of the Firm:
The admission of a new partner can also help in enhancing the goodwill of the firm. A new partner can bring in new contacts, customers and suppliers, which can help in the growth of the business. The reputation of the new partner can also contribute to the goodwill of the firm.
In conclusion, admitting a new partner in the firm can be beneficial in terms of increasing the capital, profit sharing ratio, number of partners, and goodwill of the firm.
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This a MCQ (Multiple Choice Question) based practice test of Chapter 3...
If a firm wants to expand its business and there is lack of capital then new partner is admitted as he has to bring the amount of capital and therefore there is increase in capital of firm...
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This a MCQ (Multiple Choice Question) based practice test of Chapter 3- Admission of a Partner of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinationsQ Why a new partner is admitted in the firm?a)To Increase the Number of partnersb)To Increase the Capital of the firm.c)To Increase the Profit sharing Ratiod)To increase the goodwill of the firmCorrect answer is 'B'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about This a MCQ (Multiple Choice Question) based practice test of Chapter 3- Admission of a Partner of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinationsQ Why a new partner is admitted in the firm?a)To Increase the Number of partnersb)To Increase the Capital of the firm.c)To Increase the Profit sharing Ratiod)To increase the goodwill of the firmCorrect answer is 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for This a MCQ (Multiple Choice Question) based practice test of Chapter 3- Admission of a Partner of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinationsQ Why a new partner is admitted in the firm?a)To Increase the Number of partnersb)To Increase the Capital of the firm.c)To Increase the Profit sharing Ratiod)To increase the goodwill of the firmCorrect answer is 'B'. Can you explain this answer?.
This a MCQ (Multiple Choice Question) based practice test of Chapter 3- Admission of a Partner of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinationsQ Why a new partner is admitted in the firm?a)To Increase the Number of partnersb)To Increase the Capital of the firm.c)To Increase the Profit sharing Ratiod)To increase the goodwill of the firmCorrect answer is 'B'. Can you explain this answer? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about This a MCQ (Multiple Choice Question) based practice test of Chapter 3- Admission of a Partner of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinationsQ Why a new partner is admitted in the firm?a)To Increase the Number of partnersb)To Increase the Capital of the firm.c)To Increase the Profit sharing Ratiod)To increase the goodwill of the firmCorrect answer is 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for This a MCQ (Multiple Choice Question) based practice test of Chapter 3- Admission of a Partner of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinationsQ Why a new partner is admitted in the firm?a)To Increase the Number of partnersb)To Increase the Capital of the firm.c)To Increase the Profit sharing Ratiod)To increase the goodwill of the firmCorrect answer is 'B'. Can you explain this answer?.
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