Partnership Questions

Sindhu, Neha, and Priya are partners sharing profits in the ratio of $5:3:2$. If Neha retires from the firm, calculate the new profit-sharing ratio and the gaining ratio between Sindhu and Priya, assuming no other modifications are specified.

Upon the admission of a new partner, any upward revaluation adjustment (increase in the value of assets) is directly debited to:

Comprehension:A partner withdrew money during the financial year ending March 31, 2020 from his capital account for personal use.The individual amounts withdrawn were:Rs. $12,000$ on June 01, 2019Rs. $8,000$ on August 31, 2019Rs. $3,000$ on September 30, 2019Rs. $7,000$ on November 30, 2019Rs. $6,000$ on January 31, 2020The rate of interest on drawings is $9\%$ per annum.Question: Calculate the interest on drawings specifically for the amount of Rs. $3,000$ drawn on September 30, 2019.

The Profit and Loss Appropriation Account is an extension of the Profit and Loss Account of the firm. Which of the following items is NOT shown in the Profit and Loss Appropriation Account?

If the partnership deed is silent on interest on capital, then:

P, Q and R share profits equally. At the time of P's retirement, goodwill appears in the books at $\text{Rs. }3000$. P will be debited with what amount for his share of existing Goodwill?

Murli, Naveen and Omprakash are partners sharing profits in the ratio of $\frac{3}{8}$, $\frac{1}{2}$ and $\frac{1}{8}$. Murli retires and surrenders $\frac{2}{3}\text{rd}$ of his share in favour of Naveen and the remaining share in favour of Omprakash. The gaining ratio of the remaining partners is:

Partner's current accounts are transferred to respective ________ partner's accounts.

The value of goodwill calculated based on the capitalization of average profit method is $\text{Rs. }1,80,000$. If the Net Assets of the firm are valued at $\text{Rs. }8,20,000$, find the capitalized value of average profits.

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:

Excess value of net assets over purchase consideration at the time of purchase of business is credited to:

Match List-I with List-II:List-IList-II(A) Gaining Ratio(I) An advantage of good name, reputation and wide business connections.(B) New Profit Sharing Ratio(II) The ratio in which the continuing partners have acquired the share from the retiring/deceased partner.(C) Sacrificing Ratio(III) The ratio in which the remaining partners will share future profits after the retirement or death of any partner.(D) Goodwill(IV) The ratio in which the old partners agree to sacrifice their share of profit in favour of the incoming partner.Choose the correct answer from the options given below:

Gobind, Hari and Pratap are partners. On the retirement of Gobind, goodwill already appears in the Balance Sheet at $\text{Rs. }24,000$. This existing goodwill will be written-off by:

A and B are partners in a firm sharing profits in the ratio of $3:2$. They admit M as a new partner for a $\frac{1}{4}$ share. The new profit-sharing ratio between A and B is set to be $2:1$. Calculate their sacrificing ratio.

Unrecorded assets when taken over by a partner are shown on the:

Ravi, one of the partners, provided a loan of $\text{Rs. }1,00,000$ to the firm. In the absence of a partnership deed, interest on this partner's loan is allowed at what rate?

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 :

Comprehension:A partner withdrew money during the financial year ending March 31, 2020 from his capital account for personal use.The individual amounts withdrawn were:Rs. $12,000$ on June 01, 2019Rs. $8,000$ on August 31, 2019Rs. $3,000$ on September 30, 2019Rs. $7,000$ on November 30, 2019Rs. $6,000$ on January 31, 2020The rate of interest on drawings is $9\%$ per annum.Question: The total cumulative amount of interest on drawings charged to the partner for the year will be:

As per Section 48 of the Indian Partnership Act, 1932, which of the following sources will be systematically utilized, and in what sequence, to pay off firm losses, including capital deficiencies?(A) Out of accumulated Profits(B) Out of the Capital of Partners(C) By partners individually in their profit-sharing ratio(D) Out of Creditors' Personal AssetsChoose the correct answer from the options given below:

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

A and B are partners sharing profits equally with capitals of $\text{Rs. }45,000$ each. They admit C as a new partner for a $\frac{1}{3}\text{rd}$ share in profits. C brings in $\text{Rs. }60,000$ as his capital. Find the value of the firm's total Goodwill based on this transaction.

Arrange the steps involved under the super profit method of calculating goodwill in the correct sequence:(A) Calculate the normal profit on the firm's capital on the basis of the normal rate of return(B) Calculate the average profit(C) Calculate goodwill by multiplying the super profits by the given number of years' purchase(D) Calculate the super profits by deducting normal profit from the average profitsChoose the correct answer from the options given below:

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.

Which account is credited if the net assets taken over exceed the agreed purchase consideration at the time of purchasing a business?

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:

Which from the following is not a feature of a partnership firm?

Arrange the following steps in the correct logical sequence to calculate Goodwill using the Super Profits Method:(A) Calculate the normal profit on the firm's capital based on the normal rate of return.(B) Calculate the average historical maintainable profit.(C) Calculate the super profits by deducting normal profit from the average profit.(D) Calculate goodwill by multiplying the super profit by the specified number of years' purchase.Choose the correct answer from the options given below:

Comprehension:A partner withdrew money during the financial year ending March 31, 2020 from his capital account for personal use.The individual amounts withdrawn were:Rs. $12,000$ on June 01, 2019Rs. $8,000$ on August 31, 2019Rs. $3,000$ on September 30, 2019Rs. $7,000$ on November 30, 2019Rs. $6,000$ on January 31, 2020The rate of interest on drawings is $9\%$ per annum.Question: Calculate the interest on drawings specifically for the amount of Rs. $6,000$ drawn on January 31, 2020.

Which of the following is NOT an essential feature of a partnership?

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

"The business of a partnership concern may be carried on by all the partners or any one of them acting for all." Which core feature of partnership does this statement indicate?

Gaining share of Continuing Partner =

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.

Under the fixed capital method of a partnership concern, which two accounts are maintained for each partner?

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:

Under the fixed capital method, 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.Which among the following is NOT a feature of the fixed capital method?

A and B are partners in a firm with fixed capitals of $\text{Rs. }4,00,000$ and $\text{Rs. }5,00,000$ respectively. After preparing the final accounts, it was discovered that interest on capital @ $10\%\text{ p.a.}$ as provided in the partnership deed was omitted. To rectify this error through an adjustment entry, A's Current Account should be:

In case a deceased partner's share of profit is calculated during the intervening period, the following Journal Entry will be passed:

J and K are partners sharing profits and losses in the ratio of $3:1$. Their capitals at the end of the financial year 2024-2025 were Rs. $1,50,000$ and Rs. $75,000$ respectively. During the year 2024-2025, J’s drawings were Rs. $20,000$ and the drawings of K were Rs. $5,000$, which had been duly debited to partner’s capital accounts. Profit before charging interest on capital for the year was Rs. $16,000$. The same had also been credited in their profit sharing ratio. K had brought additional capital of Rs. $16,000$ on October 1, 2024. Calculate interest on capital @ $12\%$ p.a. for the year 2024-2025 for J.

Based on Case Study 2, find the value of Normal Profit.

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:

Which of the following statements regarding partnership rules is NOT true?

A, B and C are partners in a firm. If C retires/dies, his capital account is credited with:

Based on Case Study 2, calculate the final value of Goodwill.

Vijay and Manohar share profits and losses in the ratio of $2:1$. They admit Prakash as a partner with $\frac{1}{4}$ share in profits with a guarantee that his share of profit will be at least Rs. $50,000$. The net profit of the firm for the year ending March 31, 2015, was Rs. $1,60,000$. Calculate the amount of profit Vijay will get.

Comprehension:A partner withdrew money during the financial year ending March 31, 2020 from his capital account for personal use.The individual amounts withdrawn were:Rs. $12,000$ on June 01, 2019Rs. $8,000$ on August 31, 2019Rs. $3,000$ on September 30, 2019Rs. $7,000$ on November 30, 2019Rs. $6,000$ on January 31, 2020The rate of interest on drawings is $9\%$ per annum.Question: Calculate interest on drawings specifically for the amount of Rs. $7,000$ withdrawn on November 30, 2019.

R, S, and K are partners sharing profits in the ratio of $4:3:2$. R retires, and S and K decide to share future profits in the ratio of $5:3$. Calculate their gaining ratio.

Romesh took over Investments at Rs. $8,100$ which is $10\%$ less than its book value. The book value of the investment was:

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?

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-IIList-IList-II(A) Bank (fresh capital introduced)(I) Debit side of Partner's Current Account(B) Interest on drawings(II) Debit side of Partner's Capital Account(C) Bank (permanent withdrawal of capital)(III) Credit side of Partner's Current Account(D) Commission(IV) Credit side of Partner's Capital AccountChoose the correct answer from the options given below:

Unrecorded liabilities when paid are shown in:

Which Act empowers the Central Government to prescribe a maximum number of partners in a partnership firm?

When a partnership firm is dissolved, any accumulated losses (such as a debit balance in the Profit and Loss Account) are transferred directly to the:

Arrange the following in correct order in which assets of the firm can be used in their settlement upon dissolution.(A) Residue shall be divided between the partners in their profit sharing ratio.(B) In paying the partners proportionately what is due to him/her on account of capital.(C) In paying the partners proportionately what is due to him/her from the firm for advances/loans.(D) In paying the debts of the firm to the third parties.Choose the correct answer from the options given below:

Das and Sinha are partners in a firm sharing profits in a $4:1$ ratio. They admit Pal as a new partner for a $\frac{1}{4}$ share in the profits, which he acquires entirely from Das. Calculate the new profit-sharing ratio of all three partners.

Anubha looked after the dissolution work for a remuneration of Rs. $8,500$ and agreed to bear dissolution expenses up to Rs. $6,000$. Actual expenses paid by her were Rs. $7,600$. In this case:(A) Realisation A/c is debited by Rs. $10,100$ (B) Anubha's Capital A/c is credited by Rs. $9,600$.(C) Realisation A/c is debited by Rs. $13,600$.(D) Anubha's Capital is credited by Rs. $10,100$.Choose the correct answer from the options given below:

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 - II.

Choose the correct answer from the options given below:

The ratio in which the continuing partners have acquired the share from the retiring/deceased partner is called:

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

The order to be followed in preparation of a realization account is:(A) Realization of the assets.(B) Transfer assets and liabilities to realization account.(C) Ascertainment of profit or loss on realization.(D) Payment of liabilities.Choose the correct answer from the options given below:

The Profit and Loss Appropriation Account is merely an extension of the Profit and Loss Account of the firm.Which among the following is NOT shown in the Profit and Loss Appropriation Account?

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:

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

Rohan, Bharti, and Leela are partners. Upon Rohan's retirement, it is noted that goodwill already appears in the balance sheet valued at $\text{Rs. }24,000$. This existing goodwill must be written off by:

Match List-I with List-IIList-I (Name of ratios)List-II (used for)(A) old ratio(I) distribution of premium for goodwill(B) new ratio(II) for adjustment of goodwill in death of partner(C) sacrificing ratio(III) sharing revaluation profits(D) gaining ratio(IV) sharing future profitsChoose the correct answer from the options given below:

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:

In which of the following case court can order dissolution of a partnership firm.

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?

Which of the following are shown under capital account in case capital of partner's are fixed?(A) Fresh capital introduced(B) Permanent capital withdrawn(C) Interest on capital(D) Amount of capital brought down from the previous yearChoose the correct answer from the options given below:

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

Kim and Sim are partners in a firm sharing profits in $4:3$ ratio. They admitted Pim as a new partner for $\frac{1}{4}$ share in the profits, which he acquired in the ratio of $3:2$ from Kim and Sim. Determine the new profit sharing ratio of the partners.

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:

Dissolution of a partnership firm may be ordered by the court on the following grounds:(A) when a partner becomes insane.(B) when a partner becomes permanently incapable of performing his duties as partner.(C) when a partner acts in good faith(D) when it is regarded just and equitable by the court.Choose the correct answer from the options given below:

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

When drawings are made at the beginning of every month for the full year, interest on drawings is calculated for:

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?

Stock at the time of dissolution was appearing in books at Rs 50,000. Half of the stock was sold at a discount of 20% and the remaining was taken over by one of the partners at a 10% discount. What amount was received in cash at the time of realization of stock.

Contents of the Partnership Deed does not include

The goodwill based on capitalization of average profit method is valued at Rs 1,80,000. If Net Assets are Rs 8,20,000 then find the capitalized value of average profits.

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

The steps involved in the calculation of goodwill under the super profit method are:(A) Calculate goodwill by multiplying the super profit by number of years purchase.(B) Calculate normal profit.(C) Calculate Average Profit(D) Calculate super profit.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:

When goodwill has to be inferred from the arrangement of capital and profit sharing ratio, it is called:

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

The steps followed for calculating interest on drawing in the product method are:(A) Calculate number of month for which interest is due on each drawing(B) List down amount of drawing in decending order in a table..(C) find the total of product and apply the formula to calculate interest on drawing.(D) Calculate product for each drawing by multiplying amount and number of month.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:

Match List-I with List-IIList-IList-II(A) Compulsory Dissolution(III) Business becomes illegal(B) Dissolution by notice(IV) Partnership at will(C) Dissolution by Court(I) Partner becomes insane(D) Dissolution on certain contingencies(II) Death of a partnerChoose the correct answer from the options given below:

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

In which of the following cases does the economic relationship between the partners come to an end?

Vijay and Manohar share profits and losses in the ratio of $2:1$. They admit Prakash as a partner with a $\frac{1}{4}$ share in profits, guaranteeing that his annual share of profit will be at least $\text{Rs. }50,000$. The net profit of the firm for the financial year ending March 31, 2015, was $\text{Rs. }1,60,000$. Calculate the final amount of profit Vijay will receive.

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:

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:

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:

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

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 new Profit Sharing Ratio :

At the time a new partner is admitted, revaluation of assets and liabilities is made for the:

Match List-I with List-II regarding the modes of dissolution of a partnership firm:List-IList-II(A) Dissolution of firm by agreement(I) When a partner becomes insane(B) Compulsory dissolution of firm(II) With the consent of all partners(C) Dissolution of firm by notice(III) When business of a firm becomes illegal(D) Dissolution of firm by Court(IV) At the request of any one partnerChoose the correct answer from the options given below:

Which of the following factors leads to a higher goodwill for firms?(A) Firms having long term contracts for supply of materials(B) Firms with efficient management(C) Firms which are highly profitable(D) Firms which do not have competitive advantagesChoose the correct answer from the options given below: