MCQ ON THEORY
BASIC CONCEPTS OF PARTNERSHIP
1. Partnership is defined as “the relation between
persons who have agreed to share the profits of
a business carried on by ………….. acting for
all.”
(a) All
(b) Any of them
(c) (a) or (b)
(d) (a) and (b)
2. Persons who have entered into partnership with
one another are individually known as ………….
(a) Firm
(b) Firm name
(c) Partnership
(d) Partner
3. Persons who have entered into partnership with
one another are collectively a called as
…………
(a) Firm
(b) Firm name
(c) Partnership
(d) Partner
4. The name under which the business of
partnership is carried on is called …………..
(a) Firm
(b) Firm name
(c) Partnership
(d) Partner
5. To form partnership there must be agreement
between at least …………
(a) Three persons
(b) Two persons
(c) Four persons
(d) None of the above
6. Maximum number of persons for a valid
partnership for banking business is ………….
(a) 15
(b) 20
(c) 25
(d) 10
7. The maximum number of persons permissible
for a valid partnership for doing any business
other than banking business is …………….
(a) 15
(b) 20
(c) 25
(d) 10
8. Which of the following is/are essential feature of
partnership?
(a) Association of two or more persons
(b) Agreement/contract
(c) Carrying on business
(d) All of above
9. Partnership can be formed for the purpose of
carrying …………..
(a) Charitable activities
(b) Social activities
(c) Business
(d) All of above
10. Which of the following is conclusive evidence of
partnership……………
(a) Sharing of profits
(b) Mutual agency
(c) Carrying of some business
(d) All of above
11. The capital account of a partner may be a
………….
(a) Fixed Capital Account
(b) Fluctuating Capital Account
(c) (a) or (b)
(d) None of the above
12. In partnership under fixed capital account
method, which of the following account is
opened?
(a) Partner’s Capital Account
(b) Partner’s Current Account
(c) (a) or (b)
(d) (a) & (b)
13. In partnership under fixed capital account
method, recording the transactions relating to
drawings, interest on capital, commission,
salary, share of profit or loss are made in
……………
(a) Partner’s Capital Account
(b) Partner’s Current Account
(c) (a) or (b)
(d) (a) & (b)
14. In partnership under fluctuating capital account
method, recording the transactions relating to
drawings, interest on capital, commission,
salary, share of profit or loss are made in
………….
(a) Partner’s Capital Account
(b) Partner’s Current Account
(c) (a) or (b)
(d) (a) & (b)
15. If there is no partnership deed or if there is no
provision in it indicating a contrary intention
……….. has a right to take part in the conduct of
the business of the firm and also the right of free
access to all records, books and accounts of the
firm.
(a) Working partner
(b) Every partner
(c) Sleeping partner
(d) Partner by estoppels
16. If there is no partnership deed or if there is no
provision in it indicating a contrary intention,
partners share profits and losses ………….
(a) In their capital ratio
(b) In their opening capital ratio
(c) Equally
(d) In last agreed capital ratio
17. If there is no partnership deed or if there is no
provision in it indicating a contrary intention and
where a partner has advanced any loan to the
firm and the agreement provides for interest, but
does not specify any rate, the rate shall be
…………
(a) 6% p.a.
(b) 6%
(c) 10% p.a.
(d) 12% p.a.
18. If there is no partnership deed or if there is no
provision in it indicating a contrary intention,
…………. is to be charged on drawings
(a) 6% p.a.
(b) No interest
(c) 12% p.a.
(d) 10% p.a.
19. In absence of specific provisions in the
partnership deed ……….. salary would be paid
to the partners
(a) Rs. 10,000 per month
(b) Rs. 10,000 per annum
(c) Rs. 20,000 per annum
(d) No
20. …………….. is a very short duration special
purpose partnership entered into by two or more
persons jointly to carry out business with a view
to earn profit and loss in an agreed ratio.
(a) Consignment
(b) Partnership at will
(c) Implied partnership
(d) Joint venture
21. ………… is limited to a specific venture.
(a) Express partnership
(b) Partnership at will
(c) Implied partnership
(d) Joint venture
22. The doctrine of implied authority is ………….. to
co-ventures
whereas
it
…………..
to
partnership.
(a) Is applicable, not applicable
(b) Not applicable, is applicable
(c) Not applicable, not applicable
(d) None of the above
GOODWILL & VARIOUS METHODS FOR
VALUATION OF GOODWILL
23. ………… may be described as the aggregate of
those intangible attributes of a business which
contribute to its superior earning capacity over a
normal return on investment.
(a) Image of firm
(b) Goodwill
(c) Work quality
(d) None of the above
24. Which of the following factor generally
contribute to the value of goodwill of a firm?
(a) Efficiency of management
(b) Risk involved in the business
(c) Location of the business
(d) All of above
25. Which of the following factor generally
contribute to the value of goodwill of a firm?
(a) Quality of goods sold by the firm
(b) Reputation of the owners
(c) Risk involved in the business
(d) All of above
26. In which of the following case the need for the
valuation of goodwill in a firm may arise?
(a) Admission of new partner
(b) While changing profit sharing ratio
(c) Retirement or death of partner
(d) All of above
27. Which of the following formula is used to
calculate goodwill under simple average profit
method?
(a) Goodwill = Weighted average profit x No. of
year purchase
(b) Goodwill = Average profit x No. of year
purchase
(c) Goodwill = Super profit x No. of years
purchases
(d) Goodwill = Super profit x Annuity factor
28. Which of the following formula is used to
calculate goodwill under super profit method?
(a) Goodwill = Weighted average profit x No. of
year purchase
(b) Goodwill = Average profit x No. of year
purchase
(c) Goodwill = Super profit x No. of years
purchases
(d) Any of the above
29. Which of the following formula is used to
calculate goodwill under weighted average profit
method?
(a) Goodwill = Weighted average profit x No. of
year purchase
(b) Goodwill = Average profit x No. of year
purchase
(c) Goodwill = Super profit x No. of years
purchases
(d) Goodwill = Super profit x Annuity factor
30. Which of the following formula is/are used for
valuation goodwill under super profit basis?
(a) Goodwill = Super profit x No. of years
purchases
(b) Goodwill = Super Profit x Annuity factor
(c) Goodwill =
Super profit
x 100
Capitalization rate
(d) Any of the above
INTEREST ON CAPITAL & DRAWINGS
31. Interest on partners capital is chargeable
………….
(a) To the extent of available profit
(b) Where there is loss
(c) Fully chargeable even if profit is not sufficient
(d) None of the above
32. When a partner draws a fixed sum at the
beginning of each month, interest on total
drawings will be equal to interest of …………..
at an agreed rate.
(a) 2.5 months
(b) 5.5 months
(c) 6.5 months
(d) 6 months
33. When a partner draws a fixed sum at the middle
of each month, interest on total drawings will be
equal to interest of ………….. at an agreed rate.
(a) 2.5 months
(b) 5.5 months
(c) 6.5 months
(d) 6 months
34. When a partner draws a fixed sum at the end of
each month, interest on total drawings will be
equal to interest of ..……….. at an agreed rate.
(a) 2.5 months
(b) 5.5 months
(c) 6.5 months
(d) 6 months
ADMISSION OF PARTNER
35. A new partner can be admitted with the consent
of …………………
(a) Any other partner
(b) Majority partner
(c) All existing partners
(d) None of above
36. Scarifying ratio is different between ………. &
………….
(a) Old ratio & New ratio
(b) Old ratio & Capital ratio
(c) New ratio & Capital ratio
(d) None of above
37. Reserves created out of profits or balance in
Profit and Loss Account at the time of admission
of a new partner must be transferred to the
capital accounts of the old partners in the
…………….
(a) New profit sharing ratio
(b) Old profit sharing ratio
(c) Scarifying ratio
(d) Capital ratio
38. To revalue assets & liabilities on admission,
retirement or death of partner ………… is
opened.
(a) Goodwill Account
(b) Suspense Account
(c) Adjustment Account
(d) Revaluation Account
39. Profit or loss on revaluation is shared among the
partners in …………. ratio.
(a) Old profit sharing
(b) New profit sharing
(c) Capita
(d) Equal
40. Sometimes, all the partners including the new
partner may agree not to alter the book value of
assets and liabilities even when they agree to
revalue them. In order to record this, ……………
is opened.
(a) Revaluation Account
(b) Memorandum Revaluation Account
(c) Goodwill Account
(d) Suspense Account
41. The amount that the incoming partner pays for
goodwill is known as ……………..
(a) Adjusted goodwill
(b) Premium for capital
(c) Premium for goodwill
(d) Hidden goodwill
42. When required amount for premium for goodwill
is brought in by new partner and this amount is
immediately withdrawn by the old partner, then
such premium for goodwill shared by old partner
in …………..
(a) New profit sharing ratio
(b) Old profit sharing ratio
(c) Scarifying ratio
(d) Capital ratio
43. When required amount for premium for goodwill
is not brought in by new partner, goodwill
account is raised in the books of the firm by
debiting goodwill account and crediting partners
capital account in ………………
(a) New profit sharing ratio
(b) Old profit sharing ratio
(c) Scarifying ratio
(d) Capital ratio
44. When required amount for premium for goodwill
is not brought in by new partner, goodwill
account is raised in the books of the firm by
debiting goodwill account and crediting partners
capital account in old profit sharing ratio and
written off in ..……….. if it is agreed not show
goodwill in the books of the firm OR
ALTERNATIVELY premium for goodwill should
be adjusted through partners’ capital accounts
partner’s capital by debiting new partners share
of goodwill to his account and crediting old
partners’ capital accounts in …………..
(a) New profit sharing ratio, Scarifying ratio
(b) Old profit sharing ratio, Scarifying ratio
(c) Scarifying ratio, New profit sharing ratio
(d) Capital ratio, New profit sharing ratio
45. Sometime the value of goodwill has to be
inferred from the agreement of capitals and
profit sharing ratio among the partners, is known
as ………….
(a) Adjusted goodwill
(b) Premium for capital
(c) Premium for goodwill
(d) Hidden goodwill
46. Guaranteed profit is generally given to
…………..
(a) Incoming partner
(b) Retiring partner
(c) Sub partner
(d) All the three
47. When a partner is given guarantee by the other
partner, loss on such guarantee will be borne by
……………
(a) All the other partners
(b) Partnership firm
(c) Partner with highest ratio
(d) Partner giving guarantee
RETIREMENT & DEATH OF PARTNER
48. A partner may retire ……………..
(a) With the consent of all the partners
(b)In accordance with an express agreement by
the partners
(c) Where the partnership is at will, by giving
notice in writing to all the other partners of his
intention to retire
(d) Any of the above
49. Gain ratio = …………. Minus …………
(a) Old ratio, New ratio
(b) Old ratio, Capital ratio
(c) New ratio, Old ratio
(d) None of above
50. The amount due to the retiring partner can be
made by ……………
(a) Lump Sum Payment Method
(b) Instalment Payment Method
(c) Both (a) & (b)
(d) (a) or (b)
51. Before a partner retires, reserves created out of
profits or balances in profit and loss account
must be transferred to the capital accounts of all
the partners in ……………
(a) New profit sharing ratio
(b) Old profit sharing ratio
(c) Scarifying ratio
(d) Gain ratio
52. Balance in revaluation account is transferred to
old partners in ……………
(a) New profit sharing ratio
(b) Old profit sharing ratio
(c) Scarifying ratio
(d) Gain ratio
53. Increase in liability at the time of retirement of
partner is …………..
(a) Debited to goodwill account
(b) Debited to profit & loss account
(c) Debited to revaluation account
(d) Credited to revaluation account
54. Decrease in liability at the time of retirement of
partner is …………………
(a) Debited to goodwill account
(b) Debited to profit & loss account
(c) Debited to revaluation account
(d) Credited to revaluation account
55. Increase in assets at the time of retirement of
partner is …………….
(a) Debited to goodwill account
(b) Debited to profit & loss account
(c) Debited to revaluation account
(d) Credited to revaluation account
56. Decrease in assets at the time of retirement of
partner is ……………..
(a) Debited to goodwill account
(b) Debited to profit & loss account
(c) Debited to revaluation account
(d) Credited to revaluation account
57. The executors of the deceased partner are
entitled to a share of profit earned by the firm
from the date of last balance sheet and to the
date of death. Which of the entry will be passed
for this purpose? (Name of the deceased
partner was Mr. X)
X A/c
To revaluation A/c
X A/c
To Profit & Loss A/c
X A/c
To memorandum Revaluation A/c
X A/c
To Profit & Loss Suspense A/c
Dr.
Dr.
Dr.
Dr.
DISSOLUTION OF A FIRM
58. Dissolution of partnership between all the
partners of firm is called ………….
(a) Reconstitution of firm
(b) Dissolution of firm name
(c) Dissolution of firm
(d) Dissolution of partnership
59. A firm is dissolved when ……………
(a) The partners of the of the firm decide to
dissolve it
(b) All the partners or all the partners except one
become insolvent
(c) The business of the firm is declared illegal
(d) All of above
60. A firm is dissolved when …………..
(a) In case partnership at will, a partner gives
notice of dissolution
(b) The Court orders dissolution of the firm
(c) All the partners or all the partners except one
become insolvent
(d) All of above
61. The Court orders dissolution of the firm in which
of the following case?
(a) Where a dissolution appears to the Court to
be just and equitable
(b) Where a business cannot be carried on
except at a loss
(c) Where there is persistent disregard of
partnership agreement by a partner
(d) All of above
62. The Court orders dissolution of the firm in which
of the following case?
(a) Where a partner is guilty of misconduct
affecting the business
(b) Where a partner suffers from permanent
incapacity
(c) Where a partner has become of unsound
mind
(d) All of above
63. In setting the accounts of a firm after dissolution,
losses, including deficiencies of capital, shall be
paid ………….
(a) Out of profits
(b) Out of capital
(c) By the partners individually in the proportions
in which they were entitled to share profits
(d) First out of profits, next out of capital, and,
lastly, if necessary, by the partners individually
in the proportions in which they were entitled to
share profits
64. Upon dissolution, the firm’s assets shall be first
applied in …………….
(a) In paying the debts of the firm to third parties
(b) Payment of partners loan
(c) Payment of partners capital
(d) Distribution of surplus to partners in profit
sharing ratio
65. Upon dissolution, the firm’s assets shall be first
applied in paying the debts of the firm o third
parties, shall thereafter be applied in
……………………
(a) In paying the debts of the firm to third parties
(b) Payment of partners loan
(c) Payment of partners capital
(d) Distribution of surplus to partners in profit
sharing ratio
66. Upon dissolution, the firm’s assets shall be first
applied in paying the debts of the firm to third
parties, shall thereafter be applied in payment of
partners loan, shall then be applied in payment
of partners capital.
(a) In paying the debts of the firm to third parties
(b) Payment of partners loan
(c) Payment of partners capital
(d) Distribution of surplus to partners in profit
sharing ratio
67. Upon dissolution, the firm’s assets shall be first
applied in paying the debts of the firm to third
parties, shall thereafter be applied in payment of
partners loan, shall then be applied in payment
of partners capital and still surplus remains it
should used for …………….
(a) In paying the debts of the firm to third parties
(b) Payment of partners loan
(c) Payment of partners capital
(d) Distribution of surplus to partners in profit
sharing ratio
68. Upon dissolution, which is the proper order for
application of the firm’s assets?
I. Payment of partners loan
II. In paying the debts of the firm to third parties
III. Distribution of surplus to partners in profit
sharing ratio
IV Payment of partners capital
(a) I, IV, III, II
(b) II, I, IV, III
(c) II, I, III, IV
(d) I, II, III, IV
69. The private property of a partner should be used
to ……………..
(a) Pay his private debts first
(b) If there is any surplus it can be used to pay
firm’s liabilities
(c) (a) and (b)
(d) None of above
70. Firm’s assets should be first used to pay
……………
(a) Firm’s liabilities
(b) Private liabilities
(c) Firm’s liabilities and if surplus remains then it
can be used to pay his private liabilities of
partner
(d) None of above
71. Which of the following is prepared only at the
time of dissolution of the firm?
(a) Revaluation Account
(b) Realization Account
(c) Profit & Loss Adjustment Account
(d) Any of above
72. Which of the following account’s balance will not
be transferred to realization account?
(a) Provision for bad debts
(b) Debtors Account
(c) Building Account
(d) Cash & Bank Account
73. The effect of the revaluation of assets and
liabilities is recorded in ……………
(a) Capital Account
(b) Suspense Account
(c) Realization Account
(d) Revaluation Account
74. In which of the following account, accounting
entries are made on the basis of the difference
between book value and revalued figures?
(a) Capital Account
(b) Suspense Account
(c) Realization Account
(d) Revaluation account
75. In which of the following account, accounting
entries are made at the book value of assets
and liabilities?
(a) Capital Account
(b) Suspense Account
(c) Realization Account
(d) Revaluation account
76. If a partner on his admission pays to the other
partner an amount for goodwill (also known as
premium) and it is agreed that the partnership
would be for a fixed term, then, if the firm is
dissolved before the expiry of such a term, the
partner will be entitled to a refund of a ratable
amount of the premium so paid. However, such
a refund cannot be claimed ……………
(a) When the firm is dissolved due to the death
of a partner
(b) When the dissolution takes place mainly due
to the misconduct of the partner making the
claim
(c) Where the dissolution is in pursuance of an
agreement that no such refund will be made
(d) Any of the above
77. ………….. rule is applicable at the time of any
partner becoming insolvent.
(a) Garner vs Murray
(b) Derry vs Peek
(c) Salomon vs A. Salomon & Co. Ltd.
(d) Mohiri Bibi vs Dhamodas Ghose
78. Garner Vs Murray Rule requires …………..
(a) That the solvent partners should bear the
loss arising due to insolvency of a partner in
their last agreed capital ratio
(b) That the solvent partners should bring in
cash equal to their respective shares of the loss
on realization
(c) Both (a) & (b)
(d) None of above
79. In which of the following case Garner vs Murray
rule is not applicable?
(a) Only one partner is solvent
(b) All partners are insolvent
(c) Partnership deed provides for a specific
method to be followed in case of insolvency of
a partner
(d) All of the above
80. When the partners capital accounts are fixed, as
per the decision in the Garner vs Murrary case,
any loss arising due to the capital deficiency in
the insolvent partners’ capital accounts is to be
borne by solvent partners in the ratio of
…………………
(a) Profit sharing ratio
(b) Scarifying ratio
(c) Gaining ratio
(d) Last agreed capital ratio
PRACTICAL MCQ
VALUATION OF GOODWILL
81. The profits of last 5 years are Rs. 60,000; Rs.
67,500; Rs. 52,500; Rs. 75,000 & Rs. 60,000.
Find the value of goodwill, if it is calculated on
average profits of last 5 years on the basis of 3
years of purchase.
(a) Rs. 63,750
(b) Rs. 1,91,250
(c) Rs. 1,89,000
(d) Rs. 2,13,750
82. On 1st April 2011 on the admission of a new
partner, it is agreed that goodwill of the firm is
valued at 3 years purchase of average profits for
the last 5 years. The profits for last 5 years have
been as follows:
Year ended
Profit/(loss)
31st March, 2011
16,110
31st March, 2012
11,850
31st March, 2013
8,145
31st March, 2014
(600)
31st March, 2015
12,750
Value of goodwill will be …………….
(a) Rs. 28,953
(b) Rs. 29,673
(c) Rs. 28,673
(d) Rs. 29,953
83. On 1st April 2011on the admission of a new
partner, it is agreed that goodwill of the firm is
valued at 2 years purchase of weighted average
profits for the last 3 years. The profits for last 3
years have been as follows:
Year ended
Profit
Weight
31st March, 2011
45,000
1
31st March, 2012
52,500
2
31st March, 2013
72,000
3
Value of goodwill will be …………….
(a) Rs. 1,22,000
(b) Rs. 2,22,000
(c) Rs. 1,22,222
(d) Rs. 1,20,000
84. Find the goodwill from the following information:
Capital employed – Rs. 11,00,000
Rate of normal return – Rs. 10%
Future maintainable profit – Rs. 2,00,000
No. of year purchases – 3 years
(a) 6,00,000
(b) 2,70,000
(c) 9,00,000
(d) 3,70,000
85. Find the goodwill of the firm using capitalization
method from the following information:
Total capital employed in the firm Rs.4,80,000
Rate of normal return – 15%
Profits for the year Rs. 90,000
(a) Rs. 4,20,000
(b) Rs. 3,11,000
(c) Rs. 1,20,000
(d) Rs. 2,20,000
86. Average profit of a firm is Rs.1,20,000. The rate
of capitalization is 12%. Assets and liabilities of
the firm are Rs.10,00,000 and Rs. 4,25,000
respectively.
(a) 3,25,000
(b) 2,25,000
(c) 5,25,000
(d) 4,25,000
87. A firm of X, Y and Z has a total capital
investment of Rs.3,60,000. The firm earned net
profit during the last four years as Rs. 56,000,
Rs. 64,000, Rs. 96,000 and Rs. 80,000. The fair
return on the net capital employed is 15%.
Value of goodwill if it is based on 3 years
purchased of the average super profits of past
four years.
(a) Rs. 37,500
(b) Rs. 50,000
(c) Rs. 60,000
(d) Rs. 40,000
88. Find the goodwill from the following information:
Capital employed – Rs.8,25,000
Rate of normal return – Rs. 10%
Future maintainable profit – Rs. 1,50,000
Annuity factor – Rs. 3.17
(a) 4,75,500
(b) 2,61,525
(c) 3,13,975
(d) 2,13,975
89. The net profits after tax of Z & Co. for the past 5
years are as follows:
Year
Profit
2007-2008
2,56,000
2008-2009
2,64,000
2009-2010
3,76,000
2010-2011
4,86,000
2011-2012
5,30,500
The capital employed is Rs. 16,00,000. Rate of
normal return is 15%. Calculate the value of the
goodwill on the basis of annuity method on
super-profits basis, taking the present value of
an annuity of Rs. 1 for the 4 years at 15% as
Rs. 2.855.
(a) Rs. 7,65,000
(b) Rs. 8,67,800
(c) Rs. 5,70,000
(d) Rs. 4,06,838
90. The net profits after tax of NZ & Co. for the past
5 years are as follows:
Year
Profit
2010-2011
20,000
2011-2012
2,61,000
2012-2013
3,12,000
Closing stock for 2011-2012 and 2012-2013
includes the defective items of Rs.22,000 and
Rs.62,000 respectively which were considered
as having no market value. Calculate goodwill
on average profit method.
(a) Rs. 2,37,000
(b) Rs. 1,77,000
(c) Rs. 1,37,000
(d) Rs. 1,73,000
91. From the following information calculate the
value of goodwill.
The adjusted forecast maintainable profit is
Rs.40,000, Capital employed is Rs.2,00,000,
Normal rate of return is 15%, Capitalization rate
is 20%.
(a) Rs. 50,000
(b) Rs. 75,000
(c) Rs. 40,000
(d) Rs. 60,000
92. The net profits of a business, after providing for
income tax for the last 5 years were: Rs. 80,000,
Rs.1,00,000, Rs. 1,20,000, Rs. 1,25,000 and
Rs. 2,00,000 respectively. The capital employed
in the business is Rs. 10,00,000 and the normal
rate of return is 10%. Calculate the value of the
goodwill on the basis of the annuity method
taking the present value of annuity of Rs. 1 for 5
years at 10% is 3.7907.
(a) Rs. 84,768
(b) Rs. 95,768
(c) Rs. 94,768
(d) Rs. 60,000
93. Capital employed by a partnership firm is Rs.
1,00,000. Its average profit is Rs. 20,000.
Normal rate of return is 15%. Value of goodwill.
(a) 33,333
(b) 30,000
(c) 23,333
(d) 43,667
94. The profits and losses for the last years are:
Year
Profit/(loss)
2001-2002
( 20,000)
2002-2003
(5,000)
2003-2004
1,96,000
2004-2005
1,52,000
The average capital employed in the business is
Rs. 4,00,000. The rate of interest expected from
capital invested is 12%. The remuneration of
partners is estimated to be Rs. 2,000 p.m. not
charged in the above losses/profits. Calculate
the value of goodwill on the basis of 2 years
purchase of super profits based on the average
of four years.
(a) Rs. 18,000
(b) Rs. 17,500
(c) Rs. 17,000
(d) Rs. 16,500
95. H and M are partners in a firm sharing profits
and losses in the ratio of 3:2. Their capitals are
Rs. 90,000 and Rs. 60,000 respectively. They
admit K as a new partner who will get 1/6th
share in the profits of the firm. K brings in Rs.
37,500 as his capital. Calculate hidden
goodwill?
(a) 37,500
(b) 75,000
(c) 56,250
(d) 60,000
NEW PROFIT SHARING RATIO
96. A and B are partner sharing profits and losses in
the ratio of 3:2. C is coming as a new partner for
1/3rd share. Calculate new profit sharing ratio
among A, B and C.
(a) 6:4:5
(b) 5:4:6
(c) 3:2:3
(d) 2:3:3
97. H and M are partners in a firm sharing profits
and losses in the ratio of 2:5. They admit K as a
new partner who will get 1/6th share in the profits
of the firm. Calculate new profit sharing ratio
among H, M and k.
(a) 10:25:7
(b) 7:25:10
(c) 25:10:7
(d) 10:7:25
98. R & S are in partnership sharing profits and
losses in the ratio of 3:2. They take T as a new
partner. Calculate the new profit sharing ratio. If
T purchases 1/10th share from R.
(a) 27:18:5
(b) 28:17:5
(c) 5:4:1
(d) 19:19:12
99. R & S are in partnership sharing profits and
losses at the ratio of 3:2. They take T as a new
partner. Calculate the new profit sharing ratio. If
R & S agree to sacrifice 1/10th share to T in the
ratio of 2:3.
(a) 27:18:5
(b) 28:17:5
(c) 5:4:1
(d) 19:19:12
100. R & S are in partnership sharing profits and
losses in the ratio of 3:2. They take T as a new
partner. Calculate the new profit sharing ratio.
If T simply gets 1/10th share of profit.
(a) 27:18:5
(b) 28:17:5
(c) 5:4:1
(d) 19:19:12
101. A and B are equal partners. They admit C and
D as partners with 1/5th and 1/6th share
respectively. What is the profit sharing ratio of
all the partners?
(a) 27:18:5:6
(b) 28:17:5:6
(c) 5:4:5:6
(d) 19:19:12:10
102. A, B and C are partners in a firm sharing
profits and losses in the ratio of 4:3:2. B
decided to retire from the firm. Calculate the
new profit sharing ratio of A and C if B gives
his share to A and C in the original ratio of A
and C.
(a) 7:2
(b) 25:11
(c) 11:7
(d) 2:1
103. A, B and C are partners in a firm sharing
profits and losses in the ratio of 4:3:2. B
decided to retire from the firm. Calculate the
new profit sharing ratio of A and C if B gives
his share to A and C in equal proportion.
(a) 7:2
(b) 25:11
(c) 11:7
(d) 2:1
104. A, B and C are partners in a firm sharing
profits and losses in the ratio of 4:3:2. B
decided to retire from the firm. Calculate the
new profit sharing ratio of A and C if B gives
his share to A and C in the ratio of 3:1.
(a) 7:2
(b) 25:11
(c) 11:7
(d) 2:1
105. A, B and C are partners in a firm sharing
profits and losses in the ratio of 4:3:2. B
decided to retire from the firm. Calculate the
new profit sharing ratio of A and C if B gives
his share to A only.
(a) 7:2
(b) 25:11
(c) 11:7
(d) 7:3
106. A, B and C are partners sharing profits and
losses in the ratio of 3:2:1. B retired from the
firm. Partners A and C decided to take his
share in 3:1 ratio. What is the new ratio of the
partners A and C?
(a) 3:2
(b) 3:1
(c) 3:7
(d) 2:1
107. N and Z are partners sharing profits and
losses in the ratio of 5:3. They admitted S and
agreed to give him 3/10th of the profit. What is
the new ratio after C’s admission?
(a) 34:20:12
(b) 49:22:29
(c) 35:21:24
(d) 35:42:17
108. A and B are partners sharing profits in the
ratio of 5:3, they admitted C giving him 3/10th
share of profit. If C acquires 1/5 from A and
1/10 from B, new profit sharing ratio will be:
(a) 5:6:3
(b) 2:4:6
(c) 18:24:38
(d) 17:11:12
109. A, B & C are partners sharing profits and
losses in the ratio of 6:3:3, they agreed to take
D into partnership for 1/8th share of profits.
Find the new profit sharing ratio.
(a) 12:27:36:42
(b) 14:7:7:4
(c) 1:2:3:4
(d) 7:5:3:1
110. A, B and C are partners with profits sharing
ratio 4:3:2. B retires. If A & C shares profits of
B in 5:3, then find the new profit sharing ratio.
(a) 47:25
(b) 17:11
(c) 31:11
(d) 14:21
111. Ram & Rahim partners sharing profits and
losses in the ratio of their effective capital.
They had Rs.2,00,000 and Rs. 1,20,000
respectively in their capital accounts as on 1 st
January 2012. Ram introduced a further
capital of Rs. 20,000 on 1st April 2012 and
another Rs. 10,000 on 1st July, 2012. On 30th
September 2012 Ram withdrew Rs. 80,000.
On 1st July 2012, Rahim introduced further
capital of Rs. 60,000. Calculate the profit
sharing ratio of Ram & Rahim.
(a) 4:3
(b) 3:4
(c) 2:3
(d) 3:2
SCARIFYING RATIO
112. A and B are partners sharing profits and
losses in the ratio of 3:2 C is coming as a new
partner for 1/3rd share. Calculate scarifying
ratio between A and B.
(a) 6:5
(b) 5:4
(c) 3:2
(d) 2:3
113. A and B are partners sharing profits and
losses in the ratio of 5:3. C is coming as a new
partner for 1/6th share. Calculate scarifying
ratio between A and B.
(a) 6:5
(b) 5:3
(c) 3:2
(d) 2:3
114. X and Y are partners sharing profits and
losses in the ratio of 5:3. Z is coming as a new
partner. New profit sharing ratio among S,Y &
Z will be 3:2:1. Calculate scarifying ratio
between X and Y.
(a) 2:1
(b) 1:3
(c) 3:1
(d) 5:3
115. P and Q are partners sharing profits and
losses in the ratio of 11:7. Z is coming as a
new partner. New profit sharing ratio among X,
Y & Z will be 11:9:5. Calculate scarifying ratio
between X and Y.
(a) 77:13
(b) 13:77
(c) 11:9
(d) 11:7
116. N and D are in partnership sharing profits and
losses equally. They agreed to take G as a
partner. New profit sharing ratio of N, D and G
becomes 4:2:3. Sacrificing ratio is ………….
(a) 1:1
(b) 1:5
(c) 5:1
(d) 4:2
117. A & B are equal partners. They take C as a
third partner for 1/3rd profit. Sacrificing ratio is
…………….
(a) 1:1
(b) 1:5
(c) 5:1
(d) 4:2
118. A, B & C are equal partners. They decided to
take D as a partner. The new profit sharing
ratio is 3:3:2:2. Sacrificing ration is ………….
(a) 1:1:4
(b) 1:5:4
(c) 5:1:4
(d) 4:2:4
GAINING RATIO
119. A, B and C are partners sharing profits and
losses in the ratio of 3:2:1. B retired from the
firm. What is the gain ratio of the partners A
and C?
(a) 3:2
(b) 3:1
(c) 3:7
(d) 2:1
120. X, Y and Z are partners sharing profits and
losses in the ratio of 3:2:1. Y retired from the
firm. New profit sharing ratio between X & Z is
5:3. What is the gain ratio of the partners X
and Z?
(a) 3:2
(b) 3:1
(c) 3:7
(d) 3:5
121. A, B and C are partners in a firm sharing
profits and losses in the ratio of 4:3:2. B
decided to retire from the firm. B gives his
share to A and C in the original ratio of A and
C. What is the gain ratio?
(a) 1:2
(b) 25:11
(c) 11:7
(d) 2:1
122. A, B and C are partners in a firm sharing
profits and losses in the ratio of 4:3:2. B
decided to retire from the firm. B gives his
share to A and C in equal proportion. What is
the gain ratio?
(a) 7:2
(b) 25:11
(c) 11:7
(d) 1:!
123. A, B and C are partners in a firm sharing
profits and losses in the ratio of 4:3:2. B
decided to retire from the firm. B gives his
share to A and C in ratio of 3:1. What is the
gain ratio?
(a) 7:2
(b) 3:1
(c) 11:7
(d) 2:1
124. A, B and C are partners in a firm sharing
profits and losses in the ratio of 4:3:2. B
decided to retire from the firm. B gives his
share to A only. What is the gain ratio?
(a) 3:(b) - :3
(c) 11:7
(d) 2:1
TREATMENT OF GOODWILL
125. A and B are partners sharing profits and
losses in the ratio of 3:2. C is coming as a new
partner who pays Rs.25,000 as premium for
goodwill. The profit sharing ratio among A, B
and C is equal. If premium money is retained
in business which of the following journal entry
is correct for sharing premium for goodwill?
A Capital A/c
Dr.
B Capital A/c
Dr.
To Premium for Goodwill A/c
20,000
5,000
Premium for
Goodwill A/c
Dr.
To A Capital A/c
To B Capital A/c
Premium for Goodwill
A/c
Dr.
To A Capital A/c
To B Capital A/c
Premium for Goodwill
A/c
Dr.
To A Capital A/c
To B Capital A/c
25,000
25,000
5,000
20,000
25,000
20,000
5,000
25,000
15,000
10,000
126. A and B are partners in a firm sharing profits
and losses in the ratio of 3:2. C joins the firm
for 1/3rd share, and is to pay Rs.20,000 as
premium for goodwill but cannot pay anything.
As between A and B, they decided to share
profits and losses equally. Required journal
entry ……………
A Capital A/c
Dr.
B Capital A/c
Dr.
To Goodwill A/c
Goodwill A/c
Dr.
To A Capital A/c
To B Capital A/c
Goodwill A/c
Dr.
To A Capital A/c
To B Capital A/c
Premium for Goodwill
A/c
Dr.
To A Capital A/c
To B Capital A/c
36,000
24,000
60,000
60,000
36,000
24,000
60,000
30,000
30,000
60,000
24,000
36,000
127. A and B are partners in a firm sharing profits
and losses in the ratio of 3:2. C joins the firm
for 1/3rd share, and is to pay Rs.40,000 as
premium for goodwill but cannot pay anything.
As between A and B, they decided to share
profits and losses equally. Goodwill already
appearing in balance sheet is 1,00,000.
Required journal entry …………….
A Capital A/c
B Capital A/c
To Goodwill A/c
Goodwill A/c
To A Capital A/c
To B Capital A/c
Dr.
Dr.
72,000
48,000
Dr.
1,20,000
1,20,000
72,000
48,000
Goodwill A/c
Dr.
To A Capital A/c
To B Capital A/c
Premium for Goodwill A/c Dr.
To A Capital A/c
To B Capital A/c
20,000
12,000
8,000
20,000
8,000
12,000
128. N and Z are partners in a firm sharing profits
and losses in the ratio of 3:2. S joins the firm
for 1/3rd share, and is to pay Rs.5,000 as
premium for goodwill but cannot pay anything.
As between N and Z, they decided to share
profits and losses equally. It was agreed that
goodwill has to be adjusted through partner’s
capital account. Required journal entry
……………….
N Capital A/c
Z Capital A/c
To S A/c
S Capital A/c
To N Capital A/c
To Z Capital A/c
Dr.
Dr.
4,000
1,000
5,000
Dr.
S Capital A/c
Dr.
To N Capital A/c
To Z Capital A/c
Premium for Goodwill A/c Dr.
To N Capital A/c
To Z Capital A/c
5,000
4,000
1,000
5,000
1,000
4,000
20,000
8,000
12,000
129. H and M are partners in a firm sharing profits
and losses in the ratio of 3:2. Their capitals
are Rs.60,000 and Rs. 40,000 respectively.
They admit K as a new partner who will get
1/6th share in the profits of the firm. K brings in
Rs. 25,000 as his capital. It was agreed that
goodwill has to be adjusted through partner’s
capital account. Required journal entry
…………
H Capital A/c
Dr.
M Capital A/c
Dr.
To K A/c
K Capital A/c
Dr.
To H Capital A/c
To M Capital A/c
K Capital A/c
Dr.
To H Capital A/c
To M Capital A/c
Premium for Goodwill A/c Dr.
To H Capital A/c
To M Capital A/c
10,000
15,000
25,000
25,000
15,000
10,000
25,000
10,000
15,000
25,000
10,000
15,000
130. A, B & C are in partnership sharing profits and
losses in the ratio of 2:2:1. They want to admit
D into partnership with 1/5 share. D brings in
Rs. 30,000 as capital and Rs.10,000 as
premium for goodwill. If premium money is
retained in business which of the following
journal entry is correct for sharing premium for
goodwill?
A Capital A/c
Dr.
B Capital A/c
Dr.
C Capital A/c
Dr.
To Premium for Goodwill A/c
Premium for Goodwill A/c Dr.
To A Capital A/c
To B Capital A/c
To C Capital A/c
Premium for Goodwill A/c Dr.
To A Capital A/c
To B Capital A/c
To C Capital A/c
Premium for Goodwill A/c Dr.
To A Capital A/c
To B Capital A/c
To C Capital A/c
4,000
4,000
2,000
10,000
10,000
2,000
4,000
4,000
10,000
4,000
4,000
2,000
10,000
3,000
3,000
4,000
131. A & B are equal partners. They wanted to take
C as a third partner and for this purpose
goodwill was valued at Rs. 1,20,000. The
journal entry for adjustment of value of
goodwill through partners’ capital account will
be …………….
A Capital A/c
Dr.
B Capital A/c
Dr.
To C A/c
C Capital A/c
Dr.
To A Capital A/c
To B Capital A/c
C Capital A/c
Dr.
To A Capital A/c
To B Capital A/c
Premium for Goodwill A/c Dr.
To A Capital A/c
To B Capital A/c
20,000
20,000
40,000
40,000
20,000
20,000
40,000
15,000
25,000
40,000
20,000
20,000
132. A, B & C are equal partners. They decided to
take D who brought in Rs.36,000 as goodwill.
The new profit sharing ratio is 3:2:2:2. The
journal entry for goodwill will be ………………
A Capital A/c
B Capital A/c
C Capital A/c
To A/c
Cash A/c
To A Capital A/c
To B Capital A/c
To C Capital A/c
Cash A/c
To A Capital A/c
To B Capital A/c
To C Capital A/c
Goodwill A/c
To A Capital A/c
To B Capital A/c
To C Capital A/c
Dr.
Dr.
Dr.
6,000
6,000
24,000
Dr.
36,000
36,000
6,000
6,000
24,000
Dr.
36,000
24,000
6,000
6,000
Dr.
36,000
12,000
12,000
12,000
133. A, B & C are equal partners. C wanted to retire
for which value of goodwill is considered as
Re.90,000. The necessary journal entry will
be:
A Capital A/c
Dr.
B Capital A/c
Dr.
To C A/c
C Capital A/c
Dr.
To A Capital A/c
To B Capital A/c
C Capital A/c
Dr.
To A Capital A/c
To B Capital A/c
Premium for Goodwill A/c Dr.
To A Capital A/c
To B Capital A/c
15,000
15,000
30,000
30,000
15,000
15,000
30,000
10,000
20,000
30,000
10,000
20,000
134. A, B and C are equal partners. D is admitted
to the firm for one-fourth share. D brings
Rs.20,000 capital and Rs.5,000 being half of
the premium for goodwill. The value of
goodwill of the firm is ………….
(a) 20,000
(b) 40,000
(c) 10,000
(d) None of above
135. A and B are partners with capitals of
Rs.14,000 and Rs. 28,000 respectively and
sharing profits equally. They admitted C as
their third partner with 1/4 profits of the firm on
the payment of Rs. 16,800. The amount of
hidden goodwill is …………
(a) 8,400
(b) 14,000
(c) 11,200
(d) None of the above
136. X and Y share profits and losses in the ratio of
2:1. They take Z as a partner and the new
profit sharing ratio becomes 3:2:1. Z brings
Rs. 4,500 as premium for goodwill. The full
value of goodwill will be …………
(a) 24,000
(b) 27,000
(c) 18,000
(d) 4,500
137. A and B are partners sharing the profit in the
ratio of 3:2. They take C as the new partner,
who is supposed to bring Rs.25,000 against
capital and Rs.10,000 against goodwill. New
profit sharing ratio is 1:1:1. C is able to bring
Rs. 30,000 only. How this will be treated in the
books of the firm.
(a) A and B will share goodwill brought by C
as Rs.4,000 : Rs. 1,000
(b) Goodwill not brought, will be adjusted to
the extent of Rs. 15,000 in old profit sharing
ratio.
(c) Both (a) & (b)
(d) None of above
INTEREST ON CAPITAL, INTEREST
DRAWINGS, INTEREST ON LOAN
ON
138. Z, a partner withdraws the following sums
during the year ended 31st March 2011:
On 1st May 2010
Rs. 1,000
On 1st August 2010
Rs. 3,000
On 1st January 2011
Rs. 2,000
On 1st March 2011
Rs. 1,000
Calculate interest on his drawing @ 6% p.a
(a) Rs. 310
(b) Rs. 210
(c) Rs. 410
(d) Rs. 510
139. On 1st April 2010, A’s capital account showed
a balance of Rs. 1,75,000 while B’s capital
account showed a balance of Rs. 35,000. In
2010-2011 the firm earned a profit of Rs.
52,500 before adjustment for salary to B
amounting to Rs. 10,500 for the year and
interest on capital @ 7% per annum. On final
distribution of profit in profit sharing ratio of 3:2
A and B will be get share of profit …………….
(a) 10,920 & 16,380
(b) 16,380 & 10,920
(c) 28,630 & 23,870
(d) 25,200 & 16,800
140. N, S and Z are three partners. They withdraws
fixed sum of Rs.2,000 per month as follows:
N draws at the beginning of each month, S
withdraws at the middle of each month and Z
withdraws at the end of each month. Rate of
interest on drawings is 8% p.a. Interest on
drawing for three partners respectively will be
………………..
(a) 87, 80 & 73
(b) 1,040, 960 & 880
(c) 880, 960 & 1,040
(d) 867, 800 & 733
141. N and Z are two partners. During the year N
withdraws Rs. 37,000 on 1.5.2012 & Z
withdraws Rs. 45,000 on 15.8.2012. Accounts
are closed on 31.12.2012. Rate of interest on
drawings is 10% p.a. Interest on drawing for
two
partners
respectively
will
be
………………….
(a) 2,775 & 2,063
(b) 2,063 & 2,775
(c) 2,467 & 1,688
(d) 1,688 & 2,467
142. N, S and Z are three partners. They withdraw
fixed sum of Rs. 15,000 per quarter as follows:
N draws at the beginning of each quarter, S
withdraws at the middle of each quarter and Z
withdraws at the end of each quarter. Rate of
interest on drawings is 12% p.a. Interest on
drawing for three partners respectively will be
…………..
(a) 11,700, 10,800 & 9,900
(b) 975, 900 & 825
(c) 2,700, 3,600 & 4,500
(d) 4,500, 3,600 & 2,700
143. X & Y are two partners with a capital of Rs.
60,000 & 40,000 respectively. They are
allowed interest @ 10% p.a. on capital. Find
the interest allowed to X and Y.
(a) 2,000 & 3,000
(b) 4,000 & 6,000
(c) 3,000 & 2,000
(d) 6,000 & 4,000
144. A has Rs. 30,000 capital in the beginning of
the year and introduces Rs. 10,000 during the
year. If rate of interest on capital is 20% p.a.,
interest on A’s capital is Rs. ……………
(a) 7,000
(b) 8,000
(c) 9,000
(d) 10,000
145. R & S are partners with the capital of Rs.
37,500 and Rs. 22,500 respectively. Interest
payable on capital is 10% p.a. Find the
interest on capital for both the partners when
the profits earned by the firm is Rs. 3,600.
(a) Rs. 3,750 and Rs. 2,250
(b) Rs. 1,800 and Rs. 1,800
(c) Rs. 2,250 and Rs. 1,350
(d) None of the above
146. X, Y and Z are partners in a firm. Profits
before interest on partner’s capital was Rs.
12,000. Y demanded interest @ 15% p.a. on
his loan of Rs. 1,60,000. Partnership deed is
silent on this point. Calculate the amount of
interest payable to Y on his loan.
(a) 24,000
(b) 9,600
(c) 12,000
(d) 16,000
147. R & S are partners with the capital of Rs.
2,40,000 and Rs. 1,20,000 respectively.
Interest payable on capital is 10% p.a. Profit
before interest on partner’s capital was Rs.
12,000. Calculate the interest on capital for
both the partners.
(a) 12,000 & 6,000
(b) 8,000 & 4,000
(c) 6,000 & 12,000
(d) 10,000 & 5,000
SHARE OF PROFIT
148. According to the partnership deed of A & B, B
is entitled to a salary of Rs. 500 per month.
Profit sharing ratio is 5:3. During the year the
firm earned a profit, before charging salary to
B Rs. 25,000. Calculate share of profit of A &
B.
(a) 13,750 & 8,250
(b) 13,875 & 7,875
(c) 10,000 & 6,000
(d) 11,875 & 7,125
149. A and B start business on 1st January 2009,
with capitals of Rs. 30,000 and Rs. 20,000.
According to the partnership deed, B is
entitled to a salary of Rs. 500 per month and
interest is to be allowed on capitals at 6% p.a.
Profit sharing ratio is 5:3. During the year the
firm earned a profit, before charging salary to
B and interest on capital amounting to Rs.
25,000. During the year A withdrew Rs. 8,000
and B withdrew Rs. 10,000 for domestic
purposes. Closing balance of partners capital
account for A = ? & B = ?
(a) 33,800 & 23,200
(b) 23,200 & 33,800
(c) 41,800 & 33,200
(d) 33,200 & 41,800
150. P & Q started business with capital of Rs.
70,000 and Rs. 42,000 on 1st January 2012. Q
is entitled to a salary of Rs.560 p.m. Interest is
allowed on capitals and is charged on
drawings at 6% p.a. Profits are to be in ratio of
3:2. During the middle of the year, P withdrew
Rs. 11,200 and Q withdrew Rs. 14,000. The
profit for the year before appropriation came to
Rs. 42,000. Calculate share of profit of P & Q.
(a) 10,470 & 10,470
(b) 12,564 & 8,376
(c) 8,376 & 12,564
(d) 17,590 & 11,726
151. B and M are partners sharing profits and
losses in the ratio of 3:2 having the capital of
Rs.40,000 and Rs. 25,000 respectively. They
are entitled to 9% p.a. interest on capital
before distributing the profits. During the year
firm earned Rs. 3,900 after allowing interest
on capital. Profits apportioned among B and M
is ……………..
(a) Rs. 2,340 and Rs. 1,560
(b) Rs. 2,340 and Rs. 1,500
(c) Rs. 2,500 and Rs. 1,400
(d) None of the above
152. S and G are partners sharing profits and
losses in the ratio of 4:1. M was manager who
received the salary of Rs. 1,000 p.m. in
addition to a commission of 5% on net profits
after charging such commission. Profits for the
year is Rs. 1,69,500 before charging salary.
Find the total remuneration of M.
(a) Rs. 19,500
(b) Rs. 22,000
(c) Rs. 21,750
(d) Rs. 19,000
153. A, B and C had capitals of Rs. 50,000; Rs.
40,000 and Rs. 30,000 respectively for
carrying on business in partnership. The firm’s
reported profit for the year was Rs. 80,000.
Find out the share of profit of each partner
after providing interest on an advance by A of
Rs. 20,000.
(a) 26,267 to each partner
(b) 26,267 for two partners & 26,666 for one
partner
(c) Rs. 30,000 to each partner
(d) Rs. 33,333 for A, Rs. 26,667 for B and Rs.
20,000 for C
REVALUATION ACCOUNT
154. A and B shares profit and loss equally. They
admit C as an equal partner and assets were
revalued as follows : Stock at Rs. 20,000
(book value Rs. 12,000); Machinery at Rs.
60,000 (book value Rs.55,000). Find the
profit/loss on revaluation to be shared among
A, B and C.
(a) Profit 6,500 & 6,500
(b) Profit 4,000 & 4,000
(c) Profit 2,500 & 2,500
(d) None of above
155. A and B shares profit and loss equally. They
admit C as an equal partner and assets were
revalued as follow: Stock at Rs.10,000 (book
value Rs.12,000); Machinery at Rs. 50,000
(book value Rs.55,000).Building would be
appreciated by 10% (book value Rs. 15,000).
Find the profit/loss on revaluation to be shared
among A and B.
(a) Profit 2,750 & 2,750
(b) Loss 2,750 & 2,750
(c) Profit 2,500 & 2,750
(d) None of above
156. A and B are partners sharing profit in the ratio
of 5:3. C was admitted on the following terms:
New profit sharing ratio will be 7:5:3
Machinery would be appreciated by 10%
(book value Rs. 1,80,000)
Building would be depreciated by 6% (book
value Rs. 1,50,000)
To create provision for bad debts 5% on
Debtors of Rs. 40,000
Find the distribution of profit/loss on
revaluation between A & B.
(a) Profit 4,083 & 2,917
(b) Profit 2,625 & 4,375
(c) Profit 2,917 & 4,083
(d) Profit 4,375 & 2,625
157. X and Y are partners sharing profits in the
ratio of 3:2. Z was admitted on the following
terms:
New profit sharing ratio will be 5:3:2
Machinery would be depreciated by 8% (book
value Rs. 1,08,000)
Building would be appreciated by 15% (book
value Rs. 1,50,000)
To create provision for bad debts 5% on
Debtors of Rs. 25,000
Unrecorded debtors of Rs. 1,250 would be
brought into books
Creditors amounting to Rs. 2,750 died and
need not to pay anything
Find the distribution of profit/loss on
revaluation between X & Y.
(a) Profit 3,210 & 2,140
(b) Profit 6,150 & 4,340
(c) Profit 1,710 & 1,140
(d) Profit 1,140 & 1,710
158. P, Q & R are three partners sharing profit &
loss in 5:3:2 ratio. P retires from the firm. Q &
R decided to continue in new ratio 3:2. On the
date of retirement stock, sundry debtors and
provisions for bad debts stand in the books at
Rs. 50,000, 45,000 & 4,500. The partners
decided to revalue assets as under:
Stock to be reduced to 90%, provisions for
bad, debts to be brought to 15%. Find the
distribution of profit/loss on revaluation.
(a) Loss to be shared by P, Q & R – Rs. 5,875,
3,525 & 2,350 respectively
(b) Loss to be shared by Q & R – Rs. 4,350 &
2,900 respectively
(c) Loss to be shared by P, Q & R – Rs. 3,625,
2,175 & 1,450 respectively
(d) Profit to be shared by P, Q & R – Rs.
5,875, 3,525 & 2,350 respectively
CALCULATION OF CAPITAL
159. C was admitted in a firm with 1/4th share of the
profits of the firm. C contributes Rs. 37,500 as
his capital, A and B are other partners with the
profit sharing ratio as 3:2. Find the required
capital of A and B, if capital should be in profit
sharing ratio taking C’s as base capital:
(a) Rs. 67,500 and Rs. 40,000 for A and B
respectively.
(b) Rs. 67,500 and Rs. 45,000 for A and B
respectively
(c) Rs. 80,000 and Rs. 52,500 for A and B
respectively
(d) Rs. 77,500 and Rs. 65,000 for A and B
respectively
160. X and Y are partners sharing profits in the
ratio 5:3. They admitted Z for 1/5th share of
profits, for which he paid Rs. 72,000 against
capital and Rs. 36,000 against goodwill. Find
the capital balances for each partner taking
Z’s capital as base capital.
(a) Rs. 1,80,000, Rs. 72,000 and Rs. 72,000
(b) Rs. 1,80,000, Rs. 72,000 and Rs. 1,08,000
(c) Rs. 1,80,000, Rs. 1,08,000 and
Rs. 72,000
(d) Rs. 1,80,000, Rs. 1,08,000 and Rs.
1,08,000
161. A and B are partners sharing profits and
losses in the ratio of 3:2 (A’s Capital is
Rs.30,000 and B’s Capital is Rs.15,000). They
admitted C and agreed to give 1/5th share of
profits to him. How much C should bring in
towards his capital?
(a) Rs. 9,000
(b) Rs. 12,000
(c) Rs. 14,500
(d) Rs. 11,250
DISSOLUTION OF FIRM
162. K and A are partners in a firm. They share
profits and losses in the ratio of 4:1. They
decided to dissolve the firm. K Capital –
Rs.1,60,000, A Capital- Rs. 1,00,000, Total
assets – Rs. 3,95,000, Total liabilities – Rs.
1,35,000. On dissolution assets realized Rs.
4,25,000 & liabilities settled at Rs. 1,10,000.
Net profit or loss on realization =
(a) Profit 3,15,000
(b) Loss 80,000
(c) Loss 55,000
(d) Profit 55,000
163. K and A are partners in a firm. They share
profits and losses in the ratio of 4:1. They
decided to dissolve the firm. K Capital – Rs.
1,60,000, A Capital – Rs. 1,00,000, Total
assets – Rs. 3,95,000, Total liabilities – Rs.
1,35,000. On dissolution assets realized
Rs.3,50,000 & liabilities including unrecorded
liability settled at Rs. 1,50,000. Net profit or
loss on realization =
(a) Profit 30,000
(b) Loss 60,000
(c) Profit 60,000
(d) Loss 30,000
164. A, B & C are partners firm. Their capital
balances were: A – Rs. 24,000, B – Rs. 8,000,
C – Rs. 4,000. Their current balances were: A
– Rs. 10,800 (Cr.), B – Rs. 2,000 (Dr.), C –
Rs. 6,000 (Dr.). C become insolvent and could
not meet his liability to the firm so partners
decided to dissolve the firm. Realization loss
came to Rs. 31,200. Amount to be
paid/(receivable) to/from A & B on final
settlement should be Rs. …………… & Rs.
………….. (Apply Garner vs Murray principle)
(a) 25,500 & 2,900
(b) 15,100 & (7,500)
(c) 2,900 & 25,500
(d) 45,200 & 18,400
Question No.
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(a)