Partnership Questions

Calculate the interest on drawings if Ram withdrew $\text{Rs. }3,000$ per month at the beginning of each month for the whole year, with interest charged @ $9\%$ per annum.

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:

Arrange the steps in the correct accounting sequence at the time of admission of a partner:(A) Adjustments of capital accounts.(B) Valuation of goodwill(C) Calculation of new profit sharing ratio and sacrificing ratio.Choose the correct answer from the options given below:

Based on Case Study 2, what is the specific value of the Super Profit?

In which of the following situations can the compulsory dissolution of a partnership firm take place?

Which of the following is NOT a method of valuation of goodwill?

If partnership deed is silent on the profit sharing ratio and other provisions: interest @_____ per annum is allowed on loans advanced by partners:

The profit for the five years of a firm are as follows:YearProfit (Rs.)20134,00,00020143,98,00020154,50,00020164,45,00020175,00,000Calculate the goodwill of the firm on the basis of 4 years purchase of 5 years average profits.

When a new partner is admitted, the undistributed profits that appear in the balance sheet of the old firm are transferred to the capital account of:

Which of the following combination of statements are true about dissolution-(A) A firm is compulsorily dissolved when a partner decide to retire.(B) Dissolution of a partnership is different from dissolution of a firm.(C) A partnership is dissolved when there is a death of a partner.(D) Dissolution of a firm necessarily involves dissolution of partnership.Choose the correct answer from the options given below:

Identify the right combination of type of Account in making Final Accounts of Partnership Firm.(a) Profit and Loss A/C(b) Profit and Loss Suspense A/C(c) Profit and Loss Appropriation A/C(d) Profit and Loss Adjustment A/C(e) Partners' Capital A/CsChoose the correct answer from the options given below:

At the time of admission of a new partner, for getting a right to share the assets of the partnership firm, the new partner at least will bring:

At the time of admission of a partner, undistributed profits appearing in the balance sheet of the old firm is transferred to the capital account of:

Which Journal Entry will be recorded for realization of an unrecorded asset at the time of dissolution of a Partnership Firm?

In the case of dissolution of a partnership firm, unrecorded liabilities when paid are shown in:

In case of dissolution of a firm, Losses including deficiencies of capital, shall be paid first out of ....

The central government has prescribed the maximum number of partners in a firm to be _________ under Rule 10 of the companies (Miscellaneous) Rules, 2014.

Das and Sinha are partners in a firm sharing profits in a $4:1$ ratio. They admitted Pal as a new partner for $\frac{1}{4}\text{th}$ share in the profits, which he acquired wholly from Das. The new profit sharing ratio of the partners is:

Identify the true statement in respect of a partnership firm:

Dissolution of a firm cannot take place in which of the situation:

Which of the following statements relates to the Fixed Capital Method?(A) The capitals of the partners shall remain fixed unless additional capital is introduced or capital is withdrawn.(B) All items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in Partner's Current Account.(C) The partners' capital accounts will always show a debit balance.(D) The partners' current account may show a debit or a credit balance.Choose the correct answer from the options given below:

Based on Case Study 2 data, if the normal profit were instead given as $\text{Rs. }60,000$, what would be the revised calculated Normal Rate of Return?

Which of the following is NOT a feature of the fluctuating capital method in a partnership?

Identify the steps involved in the accounting treatment in the case of dissolution of a firm:(A) Capital accounts of partners are prepared and their final settlement is done.(B) The balance of realisation account (profit or loss on realization) is transferred to partners' capital accounts in the profit sharing ratio.(C) All assets and all external liabilities are transferred to the realisation account.(D) Realisation account is prepared.(E) Bank account is prepared.Choose the correct answer from the options given below:

A, B and C are partners in a firm sharing profits in the ratio of $3:2:1$. D is admitted into the firm for $1/4$ th share in profits, which he gets as $1/8$ th from A and $1/8$ th from B. The total capital of the firm is agreed upon as $\text{Rs. }1,20,000$ and D is to bring in cash equivalent to $1/4$ th of this amount as his capital. The capitals of other partners are also to be adjusted in the ratio of their respective shares in profits. The capitals of A, B and C after all adjustments are $\text{Rs. }40,000$, $\text{Rs. }35,000$ and $\text{Rs. } 30,000 respectively.Required capitals of all partners is:

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 happening of certain contingencies, subject to contract between the partners, a firm is dissolved: (A) If constituted for a fixed term, by the expiry of that term.(B) If constituted to carry out one or more ventures, by the completion thereof.(C) By the death of a partner.(D) By the adjudication of a partner as an insolvent. Choose the correct answer from the options given below:

A, B and C are partners in a firm sharing profits in the ratio of $3:2:1$. D is admitted into the firm for $1/4$ th share in profits, which he gets as $1/8$ th from A and $1/8$ th from B. The total capital of the firm is agreed upon as $\text{Rs. }1,20,000$ and D is to bring in cash equivalent to $1/4$ th of this amount as his capital. The capitals of other partners are also to be adjusted in the ratio of their respective shares in profits. The capitals of A, B and C after all adjustments are $\text{Rs. }40,000$, $\text{Rs. }35,000$ and $\text{Rs. }30,000$ respectively.C will withdraw the capital amount after capital are adjusted in the ratio of their respective shares in profits. The amount is:

At the time of dissolution of a firm, the Loan from a Partner Account should be:

Under which Section and Act is the Central Government empowered to prescribe a maximum number of partners in a firm, up to a limit of $100$?

Which Factor does not Affect the Value of Goodwill:

Gaining share of Continuing Partner =

________ is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits.

A, B and C are partners in a firm sharing profits in the ratio of $3:2:1$. D is admitted into the firm for $1/4$ th share in profits, which he gets as $1/8$ th from A and $1/8$ th from B. The total capital of the firm is agreed upon as $\text{Rs. }1,20,000$ and D is to bring in cash equivalent to $1/4$ th of this amount as his capital. The capitals of other partners are also to be adjusted in the ratio of their respective shares in profits. The capitals of A, B and C after all adjustments are $\text{Rs. }40,000$, $\text{Rs. }35,000$ and $\text{Rs. }30,000$ respectively.The capitals of other partners are also to be adjusted in the ratio of their respective shares in profits. A will bring in cash as capital after adjustment amount:

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 the retirement of an existing partner, an increase in the value of a liability will be credited to :-

According to section _________ of the Indian Partnership Act, 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm.

In the case of retirement of a partner, the item to be deducted from partner's capital account is:

Executor account is prepared on

Determine the value of a firm's goodwill by the capitalization of super profit method if the average profits are $\text{Rs. }1,00,000$, super profits are $\text{Rs. }18,000$, and the normal rate of return is $10\%$.

Match List - I with List - II.

Choose the correct answer from the options given below:

Which of the following statements are correct in respect of goodwill?(A) The present value of a firm's anticipated excess earnings.(B) The capitalised value attached to the differential profit capacity of a business.(C) Goodwill exists only when the firm earns super profits.(D) Any firm that earns normal profits or is incurring losses also has goodwill.Choose the correct answer from the options given below:

The maximum limit for the number of partner is decided by:

A partnership comes into existence as a result of an agreement among the partners. This written agreement is legally called the:

Himanshu withdrew Rs. 2,500 at the end of each month. The partnership deed provides for charging of interest on drawings @ 12% p.a. Calculate interest on Himanshu's drawings for the year ended March 31, 2017.

Keshav, Nirmal and Pankaj are partners sharing profits and losses in the ratio of $4:3:2$. Nirmal retires and the goodwill is valued at $\text{Rs. }72,000$. Keshav and Pankaj decided to share future profits and losses in the ratio of $5:3$. Gaining Ratio of Keshav and Pankaj is:

K, N and P are partners sharing profits and losses in the ratio of $4:3:2$. N retires and the goodwill is valued at Rs. $72,000$. K and P decided to share future profits and losses in the ratio of $5:3$. Identify the correct journal entry in this scenario.

Identify which statement is FALSE-

On the ultimate dissolution of a partnership firm, partners' capital accounts are closed finally through which account?

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

A and B are partners, sharing profits equally. Their fixed capitals were Rs 2,00,000 and Rs 3,00,000 respectively. Interest on capital as provided under partnership deed @10% p.a was omitted. Select the correct option from the following:

The books of a business showed that the firm's capital employed on December 31, 2015, is $\text{Rs. }5,00,000$. The profits for the last five years were:2011: $\text{Rs. }40,000$ 2012: $\text{Rs. }50,000$ 2013: $\text{Rs. }55,000$ 2014: $\text{Rs. }70,000$ 2015: $\text{Rs. }85,000$ Find out the normal profits of the business, given that the normal rate of return is $10\%$.

Match List-I with List-IIList-I (Items to be adjusted on admission)List-II (side of account)(A) Existing goodwill(i) Debit of capital account(B) Increase in value of assets(iii) Credit of revaluation account(C) Decrease in value of assets(ii) Debit of revaluation account(D) New partner capital(iv) Credit of capital accountChoose the correct answer from the options given below:

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:
$$\begin{array}{lrr}\text{Particulars}& \text{Book Value (Rs.)}& \text{Revalued Figure (Rs.)}\\ \text{Machinery}& 25,00,000& 27,00,000\\ \text{Land}& 10,00,000& 50,00,000\\ \text{Computers}& 2,50,000& 50,000\\ \text{Workmen Compensation Fund}& 5,00,000& -\end{array}$$
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?

The new partner acquired the rights on admission into the firm. He acquires :(A) Rights in past profits of firm before admission.(B) Right to share in the future profits of the firm.(C) Right to share assets of the firm.(D) The right to carry on competing business.Choose the correct answer from the options given below:

Ramesh and Suresh are partners in a firm sharing profits in the ratio of $4:3$. They admitted Mohan as a new partner. The new profit sharing ratio of Ramesh, Suresh, and Mohan is determined to be $2:3:1$. Choose the correct option indicating the sacrifice or gain of the old partners:

A, B, and C were in partnership, sharing profits in the ratio of $3:2:1$ respectively. B retires and the new profit sharing ratio between A and C is $3:2$. The gaining ratio is:

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:

At the time of dissolution, a firm transferred Rs.100,000 Assets to the realization account and 50% of the assets were taken over by Kiran at 20% discount. How much net assets were taken over by Kiran?

Which of the following statement configurations is NOT true regarding Capital Accounts of partners?

In case of dissolution of a partnership firm, losses, including deficiencies of capital, shall be paid first out of ...............

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:
$$\begin{array}{lrr}\text{Particulars}& \text{Book Value (Rs.)}& \text{Revalued Figure (Rs.)}\\ \text{Machinery}& 25,00,000& 27,00,000\\ \text{Land}& 10,00,000& 50,00,000\\ \text{Computers}& 2,50,000& 50,000\\ \text{Workmen Compensation Fund}& 5,00,000& -\end{array}$$
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?

Which is not usually included / mentioned in the contents of the Partnership Deed :-

Match List-I with List-II regarding the core accounting metrics and concepts across various partnership events:List-I (Accounting Metrics)List-II (Partnership Event)(A) Sacrificing ratio(I) Dissolution of Partnership(B) Gaining Ratio(II) Admission of a New Partner(C) Executors Account(III) Retirement of a Partner(D) Realisation Account(IV) Death of a PartnerChoose the correct answer from the choices given below:

By virtue of which Section of the Companies Act 2013, the Central Government is empowered to prescribe the maximum number of partners in a firm, but the number of partners can not be more than 100?

Rani, Sandhya and Kangana are partners sharing profits in the ratio of $4:3:2$. Rani retires. Sandhya and Kangana decided to share profits in future in the ratio of $5:3$. Gaining ratio of Sandhya and Kangana will be

Pinki, Deepti and Kaku are partners sharing profits in the ratio of $5:4:1$. Kaku is given a guarantee that his share of profits in any given year would not be less than $\text{Rs. }5000$. Deficiency, if any, would be borne by Pinki and Deepti equally. Calculate the deficiency assumed by Pinki and Deepti for each case separately if profits for the year were:Case I - $\text{Rs. }40,000$ Case II - $\text{Rs. }60,000$

Arrange the following accounting procedures involved in handling the retirement or death of a partner in the correct logical sequence:(A) Settlement of the amounts due to the retired/deceased partner(B) Ascertainment of the new profit-sharing ratio and gaining ratio(C) Adjustment of capitals, if required(D) Revaluation of assets and liabilitiesChoose the correct answer from the options given below:

Ranjana, Sadhna and Kamana are partners, sharing profits in the ratio $4:3:2$. Ranjana retires; Sadhna and Kamana decide to share profits in the future at the ratio of $5:3$. Calculate the Gaining Ratio:

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

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

Arrange the steps for valuing goodwill via the Capitalisation of Super Profits Method in the correct logical sequence:(A) Calculate the average profit for the past years, as specified.(B) Calculate the capital employed of the firm.(C) Calculate normal profits on the capital employed.(D) Multiply the super profits with the required rate of return multiplier $(\text{i.e., }\frac{100}{\text{Normal Rate of Return}})$.(E) Calculate super profits by deducting normal profits from average profits.Choose the correct answer from the options given below:

On dissolution of the firm, partner's capital accounts are closed through:

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

Identify the correct sequence for finding out divisible Profit & Loss for a Partnership Firm manufacturing Steel pipes:(A) Transfer amount to general reserve, as per requirement.(B) Allow interest on capital and charge interest on drawing.(C) Transfer of the balance of profit and loss account to profit and loss appropriation A/c(D) Find out the balance amount to be distributed among partners.Choose the correct answer from the options given below:

$A$ and $B$ are partners in a firm sharing profits in the ratio $2:1$. $C$ is admitted into the firm with a $\frac{1}{4}\text{th}$ share in profits and brings $\text{Rs. }30,000$ as his capital. If the capitals of the old partners $A$ and $B$ are to be adjusted on the basis of $C$ 's capital contribution in their profit-sharing ratio, then what will be the adjusted capital of $A$?

The following are features of the fluctuating capital method by which capital accounts of partners are maintained:(A) Under the fluctuating capital method, only one account, i.e. capital account is maintained for each partner.(B) All adjustments such as share of profit and loss, interest on capital, drawings, interest on drawings, etc. are recorded directly in the capital accounts of the partners.(C) The capital of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement between the partners.(D) The capital account may sometimes show a debit balance.Choose the correct answer from the options given below:

Which of the following will be shown on the credit side of Deceased Partner A/C?A. Revaluation Gain ShareB. Goodwill written offC. Share of profit till date of deathD. Drawings till date of deathE. Interest on capital till date of death Choose the correct answer from the options given below:

Unrecorded liabilities when paid are recorded in:

Arrange the following regarding admission procedure in the correct sequence.(A) Giving share to the new partner.(B) Treatment of Goodwill(C) Calculating new profit sharing ratio & sacrificing ratio(D) Preparation of Revaluation A/c(E) Preparing Partner's Capital A/c and Balance SheetChoose the correct answer from the options given below:

Rohit and Mohit are partners in a firm sharing profits in the ratio $5:3$. They admitted Bijoy as a new partner for $\frac{1}{7}$ share in the profit. The new profit sharing ratio will be $4:2:1$. Calculate the sacrificing ratio of Rohit and Mohit:

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:

In the Proforma of Partner's Capital Account under the Fluctuating Capital Method, the Credit side includes which of the following items?(A) Balance b/d (in case of credit opening balance)(B) Salaries(C) Interest on drawings(D) Profit and Loss Appropriation (for share of profit)Choose the correct answer from the options given below:

Rana, Sana and Kamana are partners, sharing profits in the ratio 4:3:2. Rana retires; Sana and Kamana decided to share profits in the future in the ratio of 5:3. The Gaining Ratio of Sana and Kamana will be

When a firm is dissolved, Provision for Bad and Doubtful Debt Account :-

Out of the following, when will the need for valuation of goodwill does not arise?

All assets (except cash/bank and fictitious assets) are transferred to the__________ side of __________Account.

Which of the following is not the main factors affecting the value of Goodwill?

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

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:

A business has earned average profits of Rs. 1,00,000 during the last few years and the normal rate of return in a similar business is 25%. Ascertain the value of goodwill by capitalisation of average profits method, given that the value of net assets of the business is Rs. 3,20,000.

Match List I with List II in context of not having partnership deed.LIST IA. Interest on loanB. Interest on drawingsC. SalaryD. Profit sharing ratioLIST III. EqualII. Will not be chargedIII. @ $6\%$ p.a.IV. Will not be allowed/providedChoose the correct answer from the options given below:

As per Receipts and Payments Account for the year ended on March 31, 2020, subscriptions received were Rs. $2,50,000$, subscriptions outstanding on 1-04-2019 Rs. $50,000$, Subscriptions received in advance as on 31-3-2020 are Rs. $30,000$. Subscriptions for the year 2019-20 will be:

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

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 amount recovered from the debtors is:

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.From the above calculate amount of Goodwill :

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:

Identify the true statement in respect of the Fixed Capital Method for a Partnership Firm:

Arrange the following steps for calculating Goodwill under Capitalisation of Average Profits Method in correct sequence-(A) Ascertain the actual firm's capital (net assets) by deducting outside liabilities from the total assets.(B) Compute the value of goodwill by deducting net assets from the capitalised value of average profits.(C) Ascertain the average profits based on the past few years' performance.(D) Capitalize the average profits on the basis of the normal rate of return to ascertain the capitalised value of average profits.Choose the correct answer from the options given below:

Match List-I with List-IIList-I (Events)List-II (Result)(A) Termination of business(I) Not possible in the dissolution of partnership(B) Continuation of business(II) Not possible in the dissolution of a firm(C) Intervention of court(III) Dissolution of firm(D) Continuation of books of accounts(IV) Dissolution of partnershipChoose the correct answer from the options given below: