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Test: Change In Profit Sharing Ratio - 2 - Commerce MCQ


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20 Questions MCQ Test - Test: Change In Profit Sharing Ratio - 2

Test: Change In Profit Sharing Ratio - 2 for Commerce 2024 is part of Commerce preparation. The Test: Change In Profit Sharing Ratio - 2 questions and answers have been prepared according to the Commerce exam syllabus.The Test: Change In Profit Sharing Ratio - 2 MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Change In Profit Sharing Ratio - 2 below.
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Test: Change In Profit Sharing Ratio - 2 - Question 1

________ ratio in which the partners share all the accumulated profits, reserves, losses and fictitious assets in case of reconstitution of partnership firm

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 1

All accumulated profits, reserves, losses and fictitious assets will be distributed by the old partners in their old ratio at the time of reconstitution of partnership firm.

Test: Change In Profit Sharing Ratio - 2 - Question 2

Why do existing partners change their profit sharing ratio:

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 2

Sometimes old partners may change their existing profit sharing ratio without admitting a new partner or without retirement or death of a partner. The main reason of change in existing ratio is to make ratio favorable as per the contribution of partners’ capitals and to compensate a partner who is actively participating in the management of firm.

Test: Change In Profit Sharing Ratio - 2 - Question 3

In case of change in profit sharing ratio among the existing partners who will compensate the existing partners:

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 3

Whenever there is change in the existing profit sharing ratio, a gainer partner will compensate the sacrificing partner, for this purpose these steps should be followed by the partners:
1.Find out the Gainer due to change in existing profit sharing ratio
2.Find out the Sacrificing partner
3.Now, Debit the gainer partner and credit the sacrificing partner

Test: Change In Profit Sharing Ratio - 2 - Question 4

The significance of calculating sacrificing ratio:

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 4

Sacrificing ratio tells us the amount of sacrifice made by the partner. That’s why sacrificing partner is credited while prepapring journl entries so that gainer partner may compensate the sacrificing partner.

Test: Change In Profit Sharing Ratio - 2 - Question 5

Goodwill of the firm is 30,000. Gain of A is 1/6 and Sacrifice of B is 1/6. How will be adjust goodwill?

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 5

In this case adjustment will be made as follows:
1.Goodwill of the firm Rs.30,000 (given)
2.A’s Gain share in goodwill 30,000 × 1/6 = 5,000
3.B’s Sacrifice share of goodwill 30,000 × 1/6 = 5,000
Now, Debit the gainer and credit the sacrificing partner.

Test: Change In Profit Sharing Ratio - 2 - Question 6

X, Y and Z are sharing profits and losses in the ratio of 5:3:2. Who will be debited and who will be credited, when they have decided to share profits equally in future?

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 6

Adjustment of partners capital accounts:
1.X will be credited because of his sacrifice 5/30
2.Y will be debited because of his gain 1/30
3.Z will be debited because of his gain 4/30
Now, Y and Z debit and X will be credited.

Test: Change In Profit Sharing Ratio - 2 - Question 7

A, B and C are sharing profits and losses in the ratio 10:6:4 with effect from 01/04/2013 they decide to share profit and losses equally. Which partner has to sacrifice

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 7

Calculation of sacrifice or gain:
1.Old Ratio 10:6:4
2.New Ratio 1:1:1
3.A’s Sacrifice (old – new share) 
4.B is gainer (old – new share)
5.C is gainer (old – new share)

Test: Change In Profit Sharing Ratio - 2 - Question 8

Vinod and Pandey are partners sharing profits in the ratio of 7:3 respectively. On 1.4.2015 they have decided to change their profit sharing ratio to 6:4. Calculate sacrifice/gain of Vinod.

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 8

Calculation of sacrifice or gain:
Formula = Old Share – New Share
Vinod = 7/10 – 6/10 = 1/10 Sacrifice
Pandey = 3/10 – 4/10 = -1/10 Gain

Test: Change In Profit Sharing Ratio - 2 - Question 9

X, Y and Z are partners sharing profits in the ratio of 4:3:2. They admit a new partner M in the partnership firm for 1/3rd share in future profit. What will be the new ratio of all the partners?

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 9

Test: Change In Profit Sharing Ratio - 2 - Question 10

VK, MK and JK are partners sharing profits equally. Now they have decided to share future profits in their capital ratio i.e. 5:3:2. Idenfity who two partners are sacrificing.

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 10

Calculation of sacrificing share:
Formula = Old ratio – New ratio
VK = 1/3 – 5/10 = 5/30 Gain
Mk = 1/3 – 3/10 = 1/30 Sacrifice
JK = 1/3 – 2/10 = 4/30 Sacrifice

Test: Change In Profit Sharing Ratio - 2 - Question 11

X, Y and Z are sharing profits in the ratio of 50%; 40% and 10% respectively. Now, they have decided to share future profits equally. Identify the gainer partner.

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 11

Calculation of gain or sacrifice:
Formula : Old Share – New Share 
X = 5/10 – 1/3 = 1/6 Sacrifice 
Y = 4/10 – 1/3 = 1/15 Sacrifice
Z = 1/10 - 1/3 = 7/30 Gain

Test: Change In Profit Sharing Ratio - 2 - Question 12

AK, BK and CK are sharing profits in the ratio of 2:1:1. They have decided to share future profits in the ratio of 3:2:1. Find out the gainer partner.

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 12

Calculation of gain or sacrifice:
Formula : Old Share – New Share 
AK = 2/4 – 3/6 = No Sacrifice/ No Gain
BK = 1/4 – 2/6 = 1/12 Gain
CK = 1/4 - 1/6 = 1/12 Sacrifice

Test: Change In Profit Sharing Ratio - 2 - Question 13

X, Y and Z are partners sharing profits in the ratio of 4:3:2. The partners have decided to share future profits in the ratio of 3:1:1. Find out the gainer partner.

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 13

Calculation of gain or sacrifice:
Formula : Old Share – New Share 
X = 4/9 – 3/5 = 7/45 Gain 
Y = 3/9 – 1/5 = 6/45 Sacrifice
Z = 2/9 - 1/5 = 1/45 Sacrifice

Test: Change In Profit Sharing Ratio - 2 - Question 14

P and Q are sharing profit and losses equally .With effects from current year they decided to share profits in the ratio of 4:3.Calculate individual partner’s gain and Sacrifice

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 14

Calculation of gain or sacrifice:
Formula : Old Share – New Share 
P = 1/2 – 4/7 = 1/14 Gain 
Q = 1/2 – 3/7 = 1/14 Sacrifice

Test: Change In Profit Sharing Ratio - 2 - Question 15

A,B and C who are presently sharing profit and losses in the ratio of 5:3:2, decide to share future profits and losses in the ratio of 2:3:5 with effect from 1st April 2012.Balance sheet shown land building of 100000.What should be accounting g treatment if it decide it valued them at Rs.125000.By what amount revolution account should be credited in

Test: Change In Profit Sharing Ratio - 2 - Question 16

P, Q and R who are presently sharing profits and losses in the ratio 5:3:2 decide to share future profits and losses in the ratio of 2:3:5 with effect from 1st April 2012. Balance sheet show Plant & Machinery of Rs.200000 and Provision for depreciation of Plant & Machinery Rs.10000.By what amount revaluation account should be debited if it is decided that Provision for depreciation be increased to Rs.19000.

Test: Change In Profit Sharing Ratio - 2 - Question 17

X, Y and Z are partners sharing profits in the ratio of 8/14; 4/14 and 2/14. Profit and Loss account shows a loss of Rs.2,800. Now partners have decided to share future profits in the ratio of 4:2:2. Who is the gainer and with what amount?

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 17

Adjustment of loss at the time of change in profit sharing ratio:
Old Ratio = 8:4:2 OR 4:2:1
New Ratio = 4:2:2 OR 2:1:1
Formula = Old – New ratio
X’s Sacrifice 2/28; Y’s Sacrifice 1/28 and Z’s Gain 3/28.

Test: Change In Profit Sharing Ratio - 2 - Question 18

Ram and Rohit shared profit and loss in the ratio of 3:2. With effect from 01/04/2012 they agreed to share profits equally. The goodwill of the firm was valued at 30000. Which partner account should be debited in this case for the adjustment

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 18

Adjustment of goodwill amount at the time of change in profit sharing ratio:
Old Ratio = 3:2
New Ratio = 1:1
Ram’s Sacrifice = 3/5 – 1/2 = 1/15
Rohit’s Gain = 2/5 – 1/2 = 1/15
Rohit’s Gain of goodwill amount = 30,000 × 1/10 = 3,000

Test: Change In Profit Sharing Ratio - 2 - Question 19

A, B and C are sharing profits and losses in the ratio 5:3:2 with effect from 01/04/2013 they decide to share profit and losses equally. Calculate B partner’s gain share

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 19

Calculation of gain or sacrificing ratio:
Formula : Old Share – New Share 
A = 5/10 – 1/3 = 5/30 Sacrifice 
B = 3/10 – 1/3 = 1/30 Gain
C = 2/10 - 1/3 = 4/30 Gain

Test: Change In Profit Sharing Ratio - 2 - Question 20

Geeta and Sita are partners in a firm sharing-profits in the ratio of 3 : 2. They decide to share future profits equally. For this purpose the goodwill of the firm has been valued at Rs. 50,000. Record necessary adjustment entry for the same.

Detailed Solution for Test: Change In Profit Sharing Ratio - 2 - Question 20

Adjutment of goodwill amount at the time of change in profit sharing ratio:
Old Ratio = 3:2 and New Ratio 1:1
Geeta’s Sacrifice = 3/5 – 1/2 = 1/10
Sita’s Gain = 2/5 – 1/2 = 1/10 
Share in goodwill = 50,000 × 1/10 = 5,000

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