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Partnership Practice Questions

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Published in: Accounts
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This file consists of MCQ questions for Partnership Basics. Very helpful for the 12th Grade student to revise.

Shambhu I / Bangalore

year of teaching experience

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Teaches: Accounts, ACCA, CA - CPT, CA Foundation, CA Intermediate, CMA Foundation, Costing, CS - Foundation, Accountancy, Business Mathematics, Business Organisation, Business Studies, Commerce Subjects

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  1. MCQ Questions Reconstitution of Partnership Firm: Admission of a Partner Class 12 MCQs Questions with Answers Question 1 . Goodwill is nothing more than probability that the old customer will resort to the old place. This definition of goodwill was given by: (a) Spicer and Pegler (b) ICAI (c) Lord Elton (d) AICPA Answer Question 2. Goodwill is to be calculated at one and half year' purchase of average profit of last 5 years. The firm earned profits during 3 years as 20,000 18,000 and 9,000 and suffered losses of 2,000 and in last 2 years. The amount of goodwill will be : (a) 12,000 (b) 10,000 (c) 1 5,000 (d) None of these Answer Question 3. When there is no Goodwill Account in the books and goodwill is raised... ....account will be
  2. debited : (a) Partner's Capital (b) Goodwill (c) Cash (d) Reserve Answer Question 4. The amount of goodwill is paid by new partner : (a) for the payment of capital (b) for sharing the profit (c) for purchase of assets (d) None of these Answer Question 5. At the time of admission of a new partners general reserve appearing in the old Balance Sheet is transferred to: (a) All Partner's Capital Accounts (b) New Partner's Capital Account (c) Old Partners'. Capital Accounts (d) None of these Answer Question 6. Profit or Loss on Revaluation is borne by: (a) Old Partners (b) New Partners (c) All Partners (d) Only Two Partners Answer
  3. Question 7. Share of goodwill brought by new partner in case is shared by old partners in : (a) Sacrificing Ratio (b) Old Ratio (c) New Ratio (d) Equal Ratio Answer Question 8. A, Band Care three partners sharing profits and losses in the ratio of 4:3:2. D is admitted for 1/10 share, the new ratio will be : (d) None of these Answer Question 9. A and B are partners in a firm sharing profits in the ratio of 3:2. They admit C as a new partner for 1 rd share in the profits of the firm. The new profit sharing ratio of A, B and C would be : Answer Question 10. X and Y are partners sharing profits in the ratio of . They admit Z for 1/5 th share who contributed for his share of goodwill. The total value of goodwill of the firm will be :
  4. (b) 50,000 Answer Question 11. A, B and C are partners in a firm. If D is admitted as a new partner, then: (a) Old firm is dissolved (b) Old firm and old partnership is dissolved (c) Old Partnership is reconsitituted (d) None of these Answer Question 12. In which ratio, the cash brought in for goodwill by the new partner is shared by the existing partners : (a) Profit sharing ratio (b) Capital ratio (c) Sacrificing ratio (d) None of these Answer Question 13. Sacrificing ratio is ascertained at the time of: (a) Death of a partner (b) Retirement of a partner (c) Admission of a partner (d) None of these Answer
  5. Question 14. If at the time of admission of new partner, Profit and Loss Account balance appears in the books, it will the transferred to: (a) Profit & Loss Appropriation A/c (b) All Partners' Capital A/cs (c) Old Partners' Capital A/cs (d) Revaluation A/c Answer Question 15. State the 'true' statement: (a) Profit & Loss Adjustment A/c is prepared for revaluated of assets and liabilities on the admission of a partner (b) The new partner is liable for the past losses of the firm (c) In case the new partner is unable to bring in cash for goodwill, Goodwill Account may be raised in the firm's books as per AS-26 (d) When a partner is admitted, there is dissolution of firm Answer Question 16. Excess of the credit side over the debit side of Revaluation account is: (a) Profit (b) Loss (c) Gain (d) Expense Answer Question 17. Balance sheet prepared after new partnership agreement, assets and liabilities are recorded at: (a) Original Value (b) Revalued Figure (c) At Vall_le (d) Either of (a) or (b)
  6. Answer Question 18. Assets and Liabilities are shown at their revalued values in : (a) New Balance Sheet (b) Revaluation A/c (c) All Partner's Capital A/c's (d) Realisation A/c Answer Question 19. Which of the following assets is compulsorily revalued at the time of admission of a new partner : (a) stock (b) Fixed Assets (c) Investment (d) Goodwill Answer Question 20. A and B are partners. C is admitted with 1/5 share. C brings 7 120,000 as his share towards capital. The total net worth of the firm is : Answer Question 21. A and B share profits and losses in the ratio of 3:4. C was admitted for 1/5 th share. New profit
  7. sharing ratio will be: (b) 12:16: 7 (c) 16: 12: 7 (d) None of these Answer Question 22. The opening balance of Partner's Capital Account is credited with: (a) Interest on Capital (b) Interest on Drawings (c) Drawings (d) Share in loss Answer Question 23. Share of goodwill brought in cash by the new partner is called: (b) Profit (c) Premium (d) None of these Answer Question 24. If the incoming partner brings the amount of goodwill in cash and also a balance exists in Goodwill A/c, then the Goodwill A/c is written off among the old partners: (a) In new profit-sharing ratio (b) In old profit-sharing ratio (c) In sacrificing ratio (d) In gaining ratio Answer
  8. Question 25. A and B share profits and losses in the ratio of 3 : 1 .C is admitted into partnership for 1/4 share. The sacrificing ratio of A and B is : (a) Equal Answer Question 26. A and B are partners sharing profites in the ratio of 3 : 1. They admit C for 1/4 share in future profits. The new profit sharing ratio will be: (a) A916, 8316, C416 (b) A816, 8416, C416 (c) AIOIO, 8216, C416 (d) A816, 8916, C1016 Answer Question 27. Formula of Sacrificing ratio is: (a) New Ratio - Old Ratio (b) Old Ratio - New Ratio (c) Gain Ratio - Sacrificing Ratio (d) New Ratio - Sacrificing Ratio . Answer Question 28. The accumulated profits and reserves are transferred to: (a) Realisation A/c (b) Partner's Capital A/cs
  9. (c) Bank A/c (d) Savings A/c Answer Question 29. A, B and C are equal partners. D is admitted to the firm for non-ourth share. D brings 20,000 as capital and 5,000 being half of the premium for goodwill. The value of goodwill of the firm is : (a) 10,000 (b) 40,000 (c) 30,000 (d) None of these Answer Question 30. On the admission of a new partner, increase in the value of assets is debited to which account ? (a) Revaluation Account (b) Assets Account (c) Old Partners' Capital Accounts (d) None of these Answer Question 31. Z is admitted in a firm for a 1/4 share in the profit for which he brings 7 30,000 for goodwill. It will be taken away by the old partners X and Y in : (a) Old profit-sharing ratio (b) New profit-sharing ratio (c) Sacrificing ratio (d) Capital ratio Answer
  10. Question 32. On the admission of a new partner, the decrease in the value of assets is debited to: (a) Revaluation Account (b) Assets Account (c) Old Partners' Capital Accounts (d) None of these Answer Question 33. When the new partner pays for goodwill in cash, the amount should be debited in the firm's book to: (a) Goodwill Account (b) Cash Account (c) Capital Account of new partner (d) None of these Answer Question 34. The balance of Revaluation Account or Profit & Loss Adjustment Account is transferred to Old Partners' Capital Accounts in their : (a) Old profit-sharing ratio (b) New profit-sharing ratio (c) Equal ratio (d) Capital ratio Answer Question 35. X and Y share profits in the ratio of 3 : 2 Z was admitted as a partner who gets 1/5 share. Z acquires 3/20 from X and 1/20 from Y. The new profit sharing ratio will be . (c) 6: 10:4
  11. Answer Question 36. The opening balance of Partner's Capital Account is credited with: (a) Interest on Capital (b) Interest on Drawings (c) Drawings (d) Share in loss Answer Question 37. At the time of admission of a new partner, Undistributed Profits appearing in the Balance Sheet of the old firm is transferred to the Capital Account of: (a) Old partners is old profit-sharing ratio (b) Old partners in new profit-sharing ratio (c) All the partners in the new profit-sharing ratio (d) None of these Answer Question 38. Z is admitted in a firm for al/4 share in the profit for which he brings 7 30,000 for goodwill. It will be taken away by the old partners X and Y in : (a) Old profit-sharing ratio (b) New profit-sharing ratio (c) Sacrificing ratio (d) Capital ratio Answer Question 39. General Reserval at the time of admission of a new partner is transferred to :
  12. (a) Revaluation Account (b) Old Partner's Capital Account (c) Profit and Loss Adjustment Account (d) Realisation Account Answer Question 40. Change in profit-sharing ratio of existing partners results in: (a) Revaluation of Firm (b) Reconstitutions of Firm (c) Dissolution of Firm (d) None of these Answer Question 41. X, Y and Z are partners in a firm, they divided profit and loss in the ratio of They decided to share profit In the ratio 5:4:3. X's and Y's sacrifices are : (a) 224:124 (b) 124:324 (c) 224:324 (d) None of these Answer Question 42. On reconstitution of a partnership firm, recording of an unrecorded liability wil result in: (a) Gain to the existing partners (b) Loss to the existing partners (c) Neither gain nor loss to the existing partners (d) None of these Answer
  13. Question 43. Increase In the value of assets on reconstitution of the partnership firm results into : (a) Gain to the existing partners (b) Loss to the existing partners (c) Neither gain nor loss to the existing partners (d) None of these Answer Question 44. The balance of Revaluation Account is transferred to old Partner's Capital Accounts in their: (a) Old Profit-sharing Ratio (b) New Profit-sharing Ratio (c) Equal Ratio (d) None of these Answer Question 45. X and Y share profits in the ratio 2:3. In future they have decided to share profits in equal ratio. Which partner will sacrifice in which ratio ? (a) X sacrifice 1/10 (b) Y sacrifice 1/5 (c) Y sacrifice 1/10 (d) None of these Answer Question 46. Change in the partnership agreement results in: (a) Reconstitution of Firm (b) Dissolution of Firm (c) Amalgamation of Firm (d) None of these Answer
  14. Question 47. Change in the partnership agreement: (a) Changes the relationship among the partners (b) Results in end of partnership business (c) Dissolves the partnership firm (d) None of these Answer Question 48. Excess of credit side over the debit side in Revalution Account is: (a) Profit (b) Loss (c) Receipt (d) Expense Answer Question 49. A, B and C are partners in a firm, if D is admitted as a new partner: (a) Old firm is dissolved (b) Old firm and old partnership are dissolved (c) Old partnership is reconstituted (d) None of these Answer Question 50. Recording of an unrecorded asset on the reconstltutlam of a partnership firm will be: (a) A gain to the existing partners (b) A loss to the existing partners (c) Neither a gain nor a loss to the existing partners (d) None of these
  15. Answer Question 51. Revaluation Account or Profit & Loss Adjustment Account is a: (a) Personal Account (b) Real Account (c) Nominal Account (d) None of these Answer Question 52. A, B, C and D are partners sharing their profits and losses equally. They change their profit sharing ratio to : 1 . How much will C sacrifice ? (a) 1/6 (b) 1/12 (c) 1/24 (d) None of these Answer Question 53. Sacrificing Ratio: (a) New Ratio — Old Ratio (b) Old Ratio - New Ratio (c) Gaining Ratio — Old Ratio (d) Old Ratio - Gaining Ratio Answer Question 54. Gaining Ratio: (a) New Ratio — Old Ratio
  16. (b) Old Ratio - Sacrificing Ratio (c) New Ratio — Sacrificing Ratio (d) Old Ratio - New Ratio Answer Question 55. X and Y share profit and loss in 3:2. From 1 st January, 2017 they agreed to share profit equally. Their sacrifice or gain will be : (a) Sacrifice by X: 1/10 (b) Sacrifices by Y : 1/10 (c) Both (a) and (b) (d) Non of these Answer Question 56. At the time of admission of a new partner, General Reserve a appearing in the old Balances Sheet is transferred to: (a) All Partner's Capital Accounts . (b) New Partners' Capital Accounts (c) Old Partner's Capital Accounts (d) None of these Answer Question 57. Change in profit-sharing ratio of existing partners results in: (a) Revaluation of Firm (b) Reconstitution of Firm (c) Dissolution of Firm (d) None of these Answer
  17. Question 58. Generally the interest on capital is considered as : (a) An appropriation of profit (b) An Asset (c) An Expense (d) None of these Answer Question 59. Increase in the value of assets on reconstitution of the partnership firm results into: (a) Gain to the existing partners (b) Loss to the existing partners (c) Neither a gain nor a loss to the existing partners (d) None of these Answer Question 60. Following are the factors affecting goodwill except: (a) Nature of business (b) Efficiency of Management (c) Technical Knowledge (d) Location of the Customers Answer Question 61. The profit of the last three years are 42,000, 39,000 and 45,000. Value of goodwill at two years purchases of the average profits will be : (a) 42,000 (b) 84,000 (d) 36,000 Answer
  18. Question 62. Under average profit basis goodwill is calculated by : (a) No. of years' purchased x Average profit (b) No. of years' purchased x Super profit (c) Super Profit -r Expected Rate of Return (d) None of these Answer Question 63. Goodwill is: (a) Tangible Asset (b) Intangible Asset (c) Current Asset (d) None of these Answer Question 64. An asset which is not ficitious but intangible in nature, having realisable value is : (a) Machinery (b) Building (c) Furniture (d) Goodwill Answer Question 65. Which of the following is not a method of valuation of Goodwill: (a) Revaluation Method (b) Average Profit Method (c) Super Profit Method (d) Capitalisation Method
  19. Answer Question 66. The excess of average profits over the normal profits are called : (a) Super Profits (b) Fixed Profits (c) Abnormal Profits (d) Normal Profits Answer Question 67. Goodwill is (b) Tangible (c) Worthless (d) Valuable Answer Question 68. Under super profit basis goodwill is calculated by : (a) No. of years' purchased x Average Profit (b) No. of years' purchased x Super profit (c) Super profit -r Expected rate of return (d) None of these Answer Question 69. Profits of the last three years were 6,000, 13,000 and 8,000 respectively. Goodwill at two years purchase of the average net profit will be : (a) 81,000
  20. (b) 27,0000 (c) 9,000 (d) 18,000 Answer Question 70. What do you mean by Super Profit ? (a) Total Profit/No. of Years (b) Average Profit — Normal Profit (c) Weighted Profit/No. of Years' Purchase (d) None of these Answer Question 71. Capital employed in a business is Profits are 50,000 and the normal rate of profit is 20%. The amount of goodwill as per capitalisation method will be: Answer Question 72. Weighted average method of calculating goodwill is used when: (a) Profits are equal (b) Profit has increasing trend (c) Profit has decreasing trend (d) Either (b) or (c) Answer
  21. Question 73. The monetary value of reputation of the business is called: (a) Goodwill (b) Super Profit (c) Surplus (d) Abnormal Profit Answer Question 74. A firm has an average profit of? 60,000 Rate of return on capital employed is 12.5% p.a. Total capital employed in the firm was Goodwill on the basis of two years purchase of super profit is : (a) 20,000 (b) 15,000 (c) 10,000 (d) None of these Answer Question 75. Under capitalisation method, goodwill is calculated by : (a) Average Profit x No. of Years' Purchase (b) Super Profit x No. of Years' Purchase (c) Total of the discounted value of expected future benefits (d) Super Profit -r Expected Rate of Return Answer Question 76. "Goodwill is nothing more than probability that the old customer will resort to the old place." This definition of goodwill was given by : (a) Spicer and Pegler (b) ICAI (c) Lord Eldon (d) AICPA
  22. Answer Question 77. What will be the value of goodwill at twice the average of last three years profit if the profits of the last three years were 4,000, 5,000 and 6,000 ? (a) 5,000 (b) 10,000 (c) 8,000 (d) None of these Answer Question 78. The Valuation of Goodwill is not necessary in Sole Trading: (a) On selling the Firm (b) On making a partner (c) On estimation of Assets (d) On Closing the Firm Answer
  23. N/A

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