Worksheet: Reconstitution of a Partnership Firm : Admission of a Partner | Accountancy Class 12 - Commerce PDF Download

MCQ Questions

Q2: X and Y are partners in a firm with capital of Rs.180000 and Rs.200000. Z was admitted for 1/3rd share in profits and brings Rs.340000 as capital. Calculate the amount of goodwill
(a) 240000
(b) 100000
(c) 150000
(d) 300000

Q3: Match the following with respect to journal entries for treatment of goodwill.

(a) i- B, ii-C, iii-A, iv-D
(b) i- C, ii-D, iii-A, iv-B
(c) i- D, ii-C, iii-A, iv-B
(d) i- D, ii-C, iii-B, iv-A

Q4: General reserve at the time of admission of a partner is transferred to:
(a) Revaluation a/c
(b) Partners’ capital a/c
(c) Neither of two
(d) Profit and loss a/c

Q5: A and B are partners sharing profits and losses in the ratio of 5:3. On admission, C brings Rs.70000 as capital and Rs.43000 against goodwill. New profit ratio between A, B and C is 7:5:4. The sacrificing ratio of A and B is:
(a) 3:1
(b) 1:3
(c) 4:5
(d) 5:9

Q6: At the time of admission of a new partner, the balance of Workmen Compensation Reserve will be transferred to:
(a) Old partners in the old profit sharing ratio
(b) Sacrificing partners in the sacrificing ratio
(c) Revaluation Account
(d) All partners in the new profit sharing ratio

Q7: On the admission of a new partner:
(a) Old partnership is dissolved
(b) Both old partnership and firm are dissolved
(c) Old firm is dissolved
(d) None of the above

Q8: If at the of admission, some balance of profit and loss account appears in the books, it will be transferred to :
(a) Profit and loss adjustment account
(b) All partners’ capital account
(c) Old partners’ capital account
(d) Revaluation account

Q9: Premium brought by newly admitted partner should be:
(a) Credited to sacrificing partners
(b) Credited to all partners in the new profit sharing ratio
(c) Credited to old partners in the old profit sharing ratio
(d) Credited to only gaining partners

Q10: When a new partner brings his share of goodwill in cash, the amount is debited to:
(a) Cash account
(b) Capital accounts of the new partner
(c) Goodwill account
(d) Capital accounts of the old partner

Q11: The balance in the investment fluctuation fund after meeting the fall in book value of investment, at the time of admission of partner will be transferred to:
(a) Revaluation account
(b) Capital accounts of old partners
(c) General reserve
(d) Capital account of all partners

Q12: The proportion in which old partners make a sacrifice:
(a) Ratio of capital
(b) Ratio of sacrifice
(c) Gaining ratio
(d) Profit sharing ratio

Q13: If the new partner brings his share of goodwill in cash, it will be shared by old partners in:
(a) Sacrificing ratio
(b) Old profit sharing ratio
(c) New ratio
(d) Capital ratio

Q14: Which of the following is not the reconstitution of partnership?
(a) Admission of a partner
(b) Dissolution of Partnership
(c) Change in Profit Sharing Ratio
(d) Retirement of a partner

Q15: New partner may be admitted to partnership:
(a) With the consent of all the old partners
(b) With the consent of any one partner
(c) With the consent of 2/3rd of the old partners
(d) With the consent of 3/4th of the old partners

Q16: A, and B are partners sharing profits in the ratio of 2:3. Their balance sheet shows machinery at ₹2,00,000; stock ₹80,000, and debtors at ₹1,60,000. C is admitted and the new profit sharing ratio is 6:9:5. Machinery is revalued at ₹1,40,000 and a provision is made for doubtful debts @5%. A’s share in loss on revaluation amount to ₹20,000. Revalued value of stock will be:
(a) ₹62,000
(b) ₹1,00,000
(c) ₹60,000
(d) ₹98,000

Q17: Yash and Manan are partners sharing profits in the ratio of2:1. They admit Kushagra into partnership for 25% share of profit. Kushagra acquired the share from old partners in the ratio of 3:2. The new profit sharing ratio will be:
(a) 14:31:15
(b) 3:2:1
(c) 31:14:15
(d) 2:3:1

Q18: When goodwill is not recorded in the books at all on admission of a partner:
(a) If paid privately
(b) If brought in cash
(c) If not brought in cash
(d) If brought in kind

Q19: At the time of admission of a new partner, the entry for unrecorded investment will be:
(a) Dr. Investment A/c and Cr. Revaluation A/c
(b) Dr. Partners’ Capital A/c and Cr. Investment A/c
(c) Dr. Revaluation A/c and Cr. Investment A/c
(d) None of the above

Q20: Heena and Sudha share Profit & Loss equally. Their capitals were Rs.1,20,000 and Rs. 80,000 respectively. There was also a balance of Rs. 60,000 in General reserve and revaluation gain amounted to Rs. 15,000. They admit friend Teena with 1/5 share. Teena brings Rs.90,000 as capital. Calculate the amount of goodwill of the firm.
(a) Rs.85,000
(b) Rs.1,00,000
(c) Rs.20,000
(d) None of the above

True Or False

Q2: Hidden goodwill arises when total capital is computed based on the new partner’s capital is less than total capitals of remaining partners after all adjustments.

Q3: New partner may or may not contribute capital at the time of admission.

Q4: New partner may bring his share of goodwill premium in kind.

Q5: Employee Provident Fund is a part of Accumulated profits and reserves.

Q6: The need for valuation of goodwill also arises when the firm is dissolved involving sale of business as a going concern.

Q7: New partner brings goodwill in the firm to get share in the past profits.

Q8: At the time of admission, reserves may be carried forwarded by the partners.

Q9: “As per Section 26 of the Indian Partnership Act, 1932, a person can be admitted as a new partner if it is agreed in the Partnership Deed”.

Q10: Claim of workmen compensation if more than workmen compensation reserve, is debited to revaluation account.

Fill in the blanks

Q2: A and B are partners sharing profits equally. They admit C for 1/3 share in profits. A debtor whose dues of Rs.5000 were written off as bad debts, paid Rs.4000 in full settlement. Bad debts recovered Rs.4000 will be debited to ____ and credited to ____

Q3: On the admission of a new partner, after revaluation has been done, the value of assets and liabilities appear in the books of the firm at ____

Q4: At the time of admission of a partner, new profit sharing is used for sharing future ____

Q5: when the value of goodwill of the firm is not given but has to be inferred on the basis of net worth of the firm, it is called ____

Q6: At the time of admission, it the book value and the market value of investment is same then investment fluctuation reserved is transferred to ____ account of the old partners in their ____ ratio.

Q7: At the time of admission, the assets are revalued and liabilities are reassessed. The increase or decrease in the values is debited or credited in ____

Q8: Revaluation account is a ____

Q9: The newly admitted partner brings his/ her share of capital for which he/she will get ____ in firm.

Q10: Goodwill appearing in the books oat the time of admission of a new partner is written off by debiting ____ and crediting ____

Q11: Why is it necessary to revalue assets and reassess liabilities of a firm in case of admission of a new partner?

Q12: What are the accumulated profit and accumulated losses?

Q13: Explain the treatment of goodwill in the books of a firm on the admission of a new Partner when goodwill already appears in the Balance sheet at its full value and the new partner brings his share of good will in cash.

Q14: Under what circumstances the premium for goodwill paid by the incoming Partner will not recorded in the books of Accounts?