Partnership Questions

Lisa, Monika and Nisha are partners in a firm sharing profits and losses in the ratio of $2:2:1$. Their capital accounts stood at $\text{Rs. }50,000$, $\text{Rs. }50,000$ and $\text{Rs. }25,000$ respectively. Monika died and the balance in the general reserve on that date was $\text{Rs. }15,000$. If the goodwill of the firm is valued at $\text{Rs. }30,000$ and the profit on revaluation is $\text{Rs. }7,050$, what amount will be transferred to Monika's Executors Account?

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:

The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.How will the premium for goodwill brought in by Suraj be distributed between Amrita and Kalyani?

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:

The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.What is Amrita's share in the unallocated balance of the Workmen Compensation Fund?

On the dissolution of a partnership firm, the total book value of debtors stood at $\text{Rs. }2,50,000$. Out of these, $\text{Rs. }10,000$ became completely bad and unrecoverable, while the remaining balance realized $70\%$. In this scenario, by what amount will the Bank Account be debited?

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:

The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.What journal entry must be passed to write off the existing goodwill appearing in the books?

A Partnership Deed must be systematically structured, drafted, and prepared in absolute accordance with the legal provisions of:

Identify the correct sequence of steps to be followed when accounting for the retirement of a partner:(A) New Balance Sheet after Retirement(B) Transferring the balance to the Retiring Partner's Loan Account(C) Calculation of the Gaining/Sacrificing Ratio(D) Partners' Capital Account adjustments(E) Preparation of the Revaluation AccountChoose the correct answer from the options given below:

Shweta, Shreya, and Shaniya were partners sharing profits in the ratio of $3:2:1$. Shaniya retired from the firm. After making all necessary adjustments for accumulated reserves and revaluation gains, her capital balance amounted to $\text{Rs. }4,50,000$. Shaniya took over $25\%$ of the firm's furniture and accepted a bill of exchange for $\text{Rs. }52,000$. The remaining balance of $\text{Rs. }2,75,000$ was transferred to her loan account. Calculate the total value of the firm's furniture.

Pursuant to Section 48 of the Indian Partnership Act, 1932, when a firm undergoes dissolution, cash assets realized from the disposal of firm assets are applied sequentially in the following order:(A) Paying to each partner proportionately what is due to him/her on account of capital(B) In paying the secured debts of the firm to the third parties(C) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital(D) The residue, if any shall be divided among the partners in their profit sharing ratio(E) In paying unsecured debts of the firm to third parties Choose the correct answer from the options given below:

During the dissolution of a partnership firm, Rohit (a partner) paid the realization expenses of $\text{Rs. }10,000$. Under their agreement, Rohit was to receive a fixed remuneration of $\text{Rs. }12,000$ for completing the dissolution process, and he was to bear all realization expenses. What net amount will be credited to Rohit's Capital Account for this transaction?

Arrange the steps in the correct chronological sequence for calculating goodwill using the Super Profit Method:(A) Calculation of Super Profit(B) Calculation of Capital Employed(C) Calculation of Normal Profit(D) Calculation of Average Profit(E) Calculation of GoodwillChoose the correct answer from the options given below:

If the Average Capital Employed in a firm is $\text{Rs. }9,00,000$, the Average Profit is $\text{Rs. }2,80,000$, and the Normal Rate of Return is $20\%$, calculate the value of goodwill using the Capitalisation of Super Profit Method.

Upon the dissolution of a partnership firm, the existing Goodwill Account appearing in the ledger books is transferred directly to:

Upon the retirement of an existing partner from a firm, the retiring partner's Capital Account will be credited with which of the following elements?(A) His/Her Capital Balance(B) His/Her share of premium for goodwill(C) Share of goodwill of remaining partners(D) His/Her share of accumulated reserves(E) His/Her drawingsChoose the correct answer from the options given below:

Arrange the steps for preparing a Profit and Loss Appropriation Account in the correct sequential order:(A) Transfer the net profit to the credit side of the P&L Appropriation A/c.(B) Divide the remaining divisible profit among partners in their Profit Sharing Ratio.(C) Ascertain the net profit after providing for all charges against profit.(D) Debit the P&L Appropriation A/c with all appropriations (e.g., partner's salary, interest on capital).(E) Credit the P&L Appropriation A/c with interest on drawings and any deficiency on account of a partner's guarantee of earnings to the firm.Choose the correct answer from the options given below:

A, B, and C share profits and losses in the ratio of $3:2:1$. They decide to share profits and losses equally in the future. On that date, a General Reserve of $\text{Rs. }60,000$ appears in their books, and Goodwill is valued at $\text{Rs. }1,20,000$. If the partners prefer not to disturb the General Reserve figure in the books, what adjustment entry must be passed?

Amrita and Kalyani are partners sharing profits in the ratio of $3:2$. They decide to expand the business by admitting Suraj as a new partner for a $\frac{1}{4}\text{th}$ share. Suraj's share of premium for goodwill is valued at $\text{Rs. }90,000$, which he pays to compensate Amrita and Kalyani in an agreed ratio of $1:4$.The firm's books provide the following information on that date:

The claim against the Workmen Compensation Fund is determined to be $\text{Rs. }2,00,000$, and an existing goodwill balance appears in the books at $\text{Rs. }60,000$.Calculate the respective shares of Amrita and Kalyani in the revaluation profit.

On the retirement or death of a partner, the remaining partners who gain due to the change in profit-sharing ratio must compensate:

According to Section 31 of the Indian Partnership Act, 1932, a new partner can be admitted into an existing partnership firm:

All assets (except Cash/Bank and fictitious assets) are transferred to the _______ side of _______ account.

Identify the correct sequence or order of application of assets including any sum contributed by the partners, in case of dissolution of partnership firm to make up deficiencies of capital. A. In paying each partner proportionately what is due to him from the firm for advances distinguished from capitalB. In paying to each partner proportionately what is due to him on account of capitalC. In paying the debts of the firm to the third partiesD. The residue, if any, shall be divided among the partners in their profit sharing ratio Choose the correct answer from the options given below:

A, B and C are partners in a firm sharing profits in the ratio $7:4:4$. B retires and on the day of his retirement Goodwill existed in the books at $30,000$. B's Capital A/c will be debited by:

Identify the treatment of Government Grant received from the government from the following:

A firm is dissolved at the time of:

When a fixed amount is withdrawn at the end of each quarter, interest on drawings will be calculated for _______

P, Q & R were partners sharing profit in the ratio $4:3:3$. W was admitted to the partnership, bringing $\text{Rs. }1,00,000$ capital and $\text{Rs. }24,000$ as his share of Goodwill. Choose the correct entry for retaining of Goodwill brought in by W. W's share in profit was $\frac{1}{4}\text{th}$.

A, B and C are partners sharing profits in the ratio of $2:3:1$. If B retires, then the new profit sharing ratio between A and C will be:

Locker Rent Received during the year by a club is $\text{Rs. }17,050$. Locker rent $\text{Rs. }3,050$ outstanding for the previous year and $\text{Rs. }1,500$ outstanding for the current year.The amount to be shown in Income and Expenditure is:

Show the following information in financial statements of a Non-Profit Organisation:

How will you show Bank overdraft while preparing the Income and Expenditure Account and Balance sheet of a club?

Calculate the amount of subscription to be shown in the Income and Expenditure A/C for the year ending 31st March 2022:Subscription received during the year 2021-22: $\text{Rs. }1,00,000$ Outstanding subscription for the year 2020-21: $\text{Rs. }10,000$ Outstanding subscription for the year 2021-22: $\text{Rs. }20,000$ Subscription received in advance in 2020-21: $\text{Rs. }5,000$ Subscription received in advance in 2021-22: $\text{Rs. }4,000$

A Court may not order for the dissolution of a partnership firm out of which of the following grounds:

Ram, Mohan and Roy are partners in the ratio of $8:6:4$. Ram retires, and Mohan and Roy decided to share profits in the ratio of $10:6$. Calculate the gaining ratio.

Identify the item credited to Realisation Account in the event of dissolution of a partnership firm.

X and Y are partners in a firm sharing profits in the ratio of $4:1$. Z is admitted in the firm for $\frac{1}{5}\text{th}$ share. On the admission of Z there was a balance of $\text{Rs. }20,000$ in general reserve. What would be the journal entry for distributing the reserve?

Identify a characteristic not applicable in partnership:

Outstanding Salaries for the current year is shown:A. In the Opening Balance Sheet, as an assetB. In the Closing Balance Sheet, as an assetC. In the Income and Expenditure A/c by adding to the expense 'salary'D. In the Closing Balance Sheet, as a liabilityChoose the correct answer from the options given below:

P, Q and R are partners sharing profits in the ratio of $3:1:1$. S is admitted into the firm for a $\frac{2}{10}\text{th}$ share in the future. The sacrificing ratio would be:

Calculate manager's commission at $10\%$ on Net profit, if the Divisible profit of a firm is $\text{Rs. }10,000$, salary to partners is $\text{Rs. }3,000$ and Interest on drawings is $\text{Rs. }2,000$.

Ram and Balram are partners in a firm sharing profit and losses in the ratio of $2:1$.An extract of Balance Sheet as of 31st March 2022:

If the value of the above furniture is overvalued by $33\frac{1}{3}\%$, choose the value of furniture to be shown in the new Balance Sheet out of the following:

Match List - I with List - II.

Choose the correct answer from the options given below:

A, B and C were partner's in a firm sharing profit and losses in the Ratio of $5:3:2$. They admitted D into partnership for $1/5$ share of profit which he takes equally from A and B. D brought sufficient amount of goodwill in cash. Capital brought in by is Rs. $50,000$. On the date of admission the Balance Sheet of A, B and C was as follows :

Goodwill is to be valued at $3$ years purchase of average profit of last $4$ years which were Rs. $60,000$ (2017-18), Rs. $60,000$ (18-19), Rs. $30,000$ (19-20). On revaluation it was found that all debtors are good.Goodwill brought in by new partners would be _________.

A and B are partners sharing profits in the ratio of $5:4$. C is admitted as a partner and he acquires 25% of his share from A. B surrenders $\frac{1}{4}$ th from his share in favour of C. Calculate C's share in profit.

At the time of admission of a partner, if nothing is specified then new partner acquires his share from old partners.

Case studyA and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm. The position of Assets and Liabilities on the date of dissolution was:

It was agreed that following transactions will take place :A. A wanted to start the business in sole proprietorship So he took Building and Furniture at $10\%$ less than book value.B. All the debtors proved good except a person C who did not pay Rs. $10,000$.The treatment of Goodwill appearing in the balance sheet will be:

In the absence of any information regarding the acquisition of share in the profit of retiring/deceased partner by the remaining partners, it is assumed that they will acquire his/her share in the:

At the time of retirement of a Partner if retiring Partner's whole amount is treated as loan, then the total amount is Debited in:

On the death of a partner, his share in the loss of the firm till the date of his death is transferred to:

________ is the amount received as per the will of a deceased person.

A firm may not be dissolved by court in the following condition:

A and B are two partners sharing profits in the ratio of $2:1$. C will bring in Rs. 1,00,000 as capital and Rs. 60,000 as his share of goodwill for $\frac{1}{4}$ share in profit.Stock in the balance sheet is given as Rs. 40,000.Stock is found overvalued by Rs. 4,000.Value of stock to be shown in Balance sheet after admission will be:

Aman and Mohan, partners of a firm decided to dissolve the business on 31-03-22. The firm decided to pay realisation expenses of Rs. $1,000$ on behalf of Mohan. Rs. $1,000$ will be debited to

On dissolution of a firm, bank overdraft is transferred to :

From the following information, calculate interest on Capital of C, a partner for the year ended 31st March, 2022.C's Capital on 31/3/2022: Rs. $12,00,000$ Profit credited to C for the year ended 31/3/2022: Rs. $3,00,000$ Drawings made during the year: Rs. $1,00,000$ Additional Capital introduced on 1/10/21: Rs. $5,00,000$ Rate of Interest = $12\%$ p.a.

C brings in Rs. 60,000 as his share of goodwill for $\frac{1}{4}$ share in profit. A and B share profits in ratio $2:1$. A's share of goodwill brought in by C will be:

Sundry Creditors in the balance sheet are Rs. 58,000. Creditors were unrecorded to the extent of Rs. 1,000. Creditors to be shown in Balance sheet after admission of partner will be:

If X's share of profit was to be calculated on the basis of Average Profit of the last three years, which were Rs. $1,36,000$ for 2018-19, Rs. $1,54,000$ for 2019-20 and Rs. $1,00,000$ for 2020-21. X's share of profit for the period from April 01, 2020 to June 30, 2020 shall be calculated on the basis of Average Profit. The profit sharing ratio is $4:5:1$ between X, Y and Z.His share of profit will be:

Amit, Dinesh, and Gagan are partners sharing profits in the ratio of $5:3:2$. Dinesh retires. Amit and Gagan decide to share the profits of the new firm in the ratio of $3:2$. The gaining ratio between Amit and Gagan will be:

Interest on drawings of a partner has been calculated Rs. 3,000 @ 8% p.a. who has drawn equal amount in each quarter; commencing from end of the first quarter throughout the year. The amount of drawing of partner per quarter would be:

A, B and C were partner's in a firm sharing profit and losses in the Ratio of $5:3:2$. They admitted D into partnership for $1/5$ share of profit which he takes equally from A and B. D brought sufficient amount of goodwill in cash. Capital brought in by is Rs. $50,000$. On the date of admission the Balance Sheet of A, B and C was as follows :Balance Sheet as on 31st March, 2021

Goodwill is to be valued at $3$ years purchase of average profit of last $4$ years which were Rs. $60,000$ (2017-18), Rs. $60,000$ (18-19), Rs. $30,000$ (19-20). On revaluation it was found that all debtors are good.What would be the effect of the line "All Debtors are good".

If average capital employed in a firm is Rs. 15,00,000 and fair rate of return in the same industry was 10% (Wait, source implies calculation gives specific normal profit, let's use 8%). Fair rate of return was 8%. Goodwill was valued at Rs. 90,000 on the basis of three times of super profit. The Average Profit of the firm is?

Case studyA and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm. The position of Assets and Liabilities on the date of dissolution was:

It was agreed that following transactions will take place :A. A wanted to start the business in sole proprietorship So he took Building and Furniture at $10\%$ less than book value.B. All the debtors proved good except a person C who did not pay Rs. $10,000$.Following items appear on the Debit side of Realisation A/C except :A. Transfer of AssetsB. Payment of liabilitiesC. ProvisionsD. Realisation expensesE. Asset taken over by partnerChoose the correct answer from the options given below:

From the following information, identify when goodwill is required to be calculated.(a) Admission of a Partner(b) Amalgamation of partnership firms(c) Dissolution of partnership firm(d) Retirement and Death of any partner(e) Preparation of Balance sheetChoose the correct answer from the options given below:

Which among the following are the modes of dissolution?A. Dissolution by NatureB. Compulsory DissolutionC. Dissolution by AgreementD. Dissolution by NoticeChoose the correct answer from the options given below:

A, B and C were partners sharing profits and losses in the ratio of $3:2:1$. C died on 1st August, 2022 and his share of profit from the beginning of the accounting year upto the date of death amounted to Rs. 70,000. C's share of profit will be debited to:

The capital accounts of partners will always show a ____ balance under fixed capital account method

Monu, Sonu and Golu are partners in a firm sharing profits in the ratio of $2:2:1$. Golu died on 5th November 2021. Under the partnership deed, the executors of the deceased partner are entitled to his share of profit to the date of death, calculated on the basis of last year's profit. Profit for the year ended 31st March 2022 was Rs. 3,00,000. (Assuming this means profit for the previous year or estimated profit basis). Golu's share of profit will be:

Extract of Receipt and Payment Account for the year ended on March 31, 2021 is given.Calculate the amount of Stationery to be shown in Income and Expenditure A/c.Payments for Stationery: Rs. $23,000$
Additional Information:

In the balance sheet Total Debtors appear at Rs. 1,50,000 and provision for doubtful debts appear at Rs. 1,500. How much amount will be realised from debtors, if bad debts amounted to Rs. 20,000 and remaining debtors realised at a discount of 15%?

Case study: A and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm. The position of Assets and Liabilities on the date of dissolution was:

It was agreed that following transactions will take place :A. A wanted to start the business in sole proprietorship So he took Building and Furniture at $10\%$ less than book value.B. All the debtors proved good except a person C who did not pay Rs. $10,000$.The accumulated profits and reserve are transferred to:

On the dissolution of the partnership firm the amount realised from sale of assets shall be applied in following order:(a) Distributing the amount left among the partners in their profit sharing ratio(b) Paying amount due to partner on account of loan advanced by him(c) Paying amount due to the creditors(d) Paying partners' capital account balancesChoose the correct answer from the options given below:

On 1/4/22, X and Y decided to dissolve their firm. On that date of dissolution, Goodwill appeared at Rs. $5,00,000$ in the Balance Sheet. Goodwill will be:

A provision for doubtful debts is to be created at 5% of debtors. Debtors in the balance sheet are Rs. 60,000. Provision for Doubtful debts to be shown in Revaluation Account:

Journal entry to be passed for unrecorded assets for preparing Revaluation A/C at the time of Retirement of a partner will be ____

Plant and Machinery in the balance sheet is Rs. 1,00,000. Plant is to be appreciated to Rs. 1,20,000. Amount to be shown in Revaluation Account:

If the total income earned by Saket Club, a Not-for-Profit organisation is Rs. $2,60,000$ and surplus earned is Rs. $85,000$, then total expenditure incurred will be:

Arrange the following steps to calculate the value of Goodwill by the capitalization method of super profit in a proper sequence:A. Calculate normal profit on capital employedB. Actual Profits - Normal Profits = Super ProfitC. $\text{Value of Goodwill}=\frac{\text{Super Profit}\times 100}{\text{Normal Rate of Return}}$ D. Calculate actual profits on capital employedChoose the correct answer from the given options:

A, B and C are partner's sharing profits and losses in the ratio of $\frac{3}{8}:\frac{1}{2}:\frac{1}{8}$.If A dies, then the new ratio of B and C will be :

Revaluation Account is a/an:

For computing Goodwill by capitalisation of Average Profit method, the following sequence would be followed:A. Capitalise the average profit on the basis of Normal Rate of ReturnB. Ascertain the firm's Capital - Total Assets - Outside LiabilitiesC. Ascertain the average profits based on past years' performanceD. Compute the volume of GoodwillChoose the correct answer from the options given below:

In the absence of a Partnership deed, partners share profits and losses in:

At the time of dissolution of their firm, Ahmed and Subhash, who are partners of that firm, agreed that Ahmed will pay realization expenses for a fixed remuneration of ₹12,000. The actual expenses were ₹16,000. The Journal entry to be passed is:

It is the amount-paid to the person who is not the regular employee of the institution.

On 1st April 2022, A, B and C decided to dissolve their firm. On the date of dissolution, Sundry debtors appeared in Balance Sheet at Rs. $6,00,000$ and Provision for doubtful debt at Rs. $30,000$. Debtors to extent of Rs. $60,000$ were bad. In journal entry for realisation of debtors:

Raman and Naman were in partnership sharing profit and losses as $3:2$. Their partnership firm was dissolved on 31 March 2022. On the date of dissolution, Naman's loan was Rs. $20,000$. Naman agreed to take stock (already transferred to Realisation A/c) of Rs. $15,000$ at Rs. $18,000$ and balance in cash for the settlement of loan. Journal Entry for above transaction is:

A, B and C are partners with a profit-sharing ratio of $2:1:1$ respectively. C died on 1st October 2021. The journal entry to be passed to give C his share of profit immediately will be:

Sunil and Ravi are partners in a firm sharing profits in the ratio of $3:1$. Amar is admitted for $\frac{1}{4}$ share. The sacrificing ratio of Sunil and Ravi is:

Calculate the amount of adjusted profit for the year ended 31 March 2021 for the purpose of valuation of Goodwill from the following information:Profit for the year ended 31 March 2021: Rs. $80,000$ On 1 July, 2020, a major plant repair was undertaken for Rs. $10,000$ which was charged to Revenue. The said sum is to be capitalised for Goodwill valuation subject to adjustment of depreciation @ $10\%$ p.a. on reducing balance method.

Match the concepts in List I with the events in List II:List IList IIA. When a new partner joins the partnershipI. Compulsory dissolutionB. When an existing partner leaves the partnershipII. Admission of a partnerC. When the business of a firm becomes illegalIII. Prepared in the case of death of a partnerD. Executor's AccountIV. Retirement of a PartnerChoose the correct answer from the options given below:

Match List I with List II:List IList IIA. Mutual AgencyI. It can be oral or writtenB. AgreementII. Written agreementC. Liability of partnersIII. Partnership concern carried by all or any of them acting for all.D. Partnership deedIV. Joint and unlimitedChoose the correct answer from the options given below:

Calculate net profit as per P & L A/c for the year ending 31 March, 2022 from the following information :share of profit transferred to Capital A/c's of partners :Ram Rs. $7,000$ Shyam Rs. $3,500$ Interest on capital :Ram Rs. $1,500$ Shyam Rs. $500$ Interest on Drawings :Ram Rs. $300$ Shyam Rs. $200$ Ram's salary Rs. $1,000$

Match List I with List II

Choose the correct answer from the options given below:

Sometimes the value of Goodwill is not given directly at the time of admission/retirement of a partner. In such a situation, it has to be inferred from the total capital structure and profit-sharing ratio. Such Goodwill is called:

A firm which maintains fixed capital accounts had two partners, Vimla and Kamla, sharing profits in the ratio $1:1$. The firm credited the partners with profit without allowing interest on Capital, which is allowed in the deed. Choose the correct option to pass a journal entry for the past adjustment if the Interest on capital is ₹2,000 for Vimla and ₹3,000 for Kamla.

How will you deal with the following items while preparing for the Bombay Women Cricket Club, its Income and Expenditure Account for the year ending 31st March 2021, and its Balance Sheet, on the same date : Donation for the Pavilion construction Rs. $12,25,000$, Expenditure incurred Rs. $10,80,000$, Total estimate Rs. $25,00,000$.

Choose the correct sequence of financial statements prepared for a partnership firm at the end of a financial year:A. Capital AccountsB. Profit and Loss A/cC. Profit and Loss Appropriation A/c (Adjustment A/c)D. Balance SheetChoose the correct answer from the options given below:

Which amongst the following is not a ground for dissolution of a partnership firm on the happening of certain contingencies?

At the time of admission of a new partner general reserve appearing in the old balance sheet is transferred to _______

At the time of retirement of a Partner the remaining gaining partners should compensate the ______

When the total amount withdrawn is given but the date of withdrawal is not given then interest on drawings is charged for a period of: