Partnership Questions

Which of the following events takes place in the case of the dissolution of a partnership firm?

Which of the following will lead to the Reconstitution of a partnership Firm?(A) Admission of a new partner(B) Change in the profit sharing ratio among the existing partners(C) Retirement of an existing partner(D) Death of a partnerChoose the correct answer from the options given below:

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

Which among the following is Not the method of valuation of goodwill:

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 the partnership deed @10% p.a. was omitted. Select the correct option to perform the rectification adjustment:

The profits of the firm for the five years are as follows: YearProfit (Rs.)2012-1320,0002013-1424,0002014-1530,0002015-1625,0002016-1718,000Calculate the value of goodwill on the basis of three years' purchase of weighted average profits based on weights of the last five years as 1, 2, 3, 4 and 5 respectively.

In the absence of a partnership deed which of the following are correct.(A) Profit sharing ratio will be on the basis of capital contributed by the partners(B) No interest on capital will be provided(C) No interest on Drawing will be charged(D) $6\%$ p.a. interest on partner's loan will be provided(E) Partner will get salary for extra time devoted for the firmChoose the correct answer from the options given below:

When a partnership firm is being dissolved, the private property of any partner shall be applied first, in payment of __________ and the surplus, if any, may be utilised for payment of __________, in case the firm's liabilities exceed the firm's assets.

In which of the following cases can a court order the dissolution of a partnership firm?

The journal entries recorded for revaluation of assets and reassessment of liabilities are given here, find the correct :(A) For increase in the value of an assetAsset A/c Dr.To Revaluation A/c(B) For reduction in the value of an assetRevaluation A/c Dr.Asset A/c(C) For increase in the amount of a liabilityLiability A/c Dr.To Revaluation A/c(D) For recording in the amount of a unrecorded liabilityRevaluation A/c Dr.To Liability A/cChoose the correct answer from the options given below:

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:

Steps involved in accounting treatment at the time of death/retirement of a partner -(A) Adjustment of capital, if required(B) Preparation of revaluation account, if required(C) Ascertainment of new profit sharing ratio and gaining ratio(D) Settlement of the amounts due to retired / deceased partnerChoose the correct answer from the options given below:

A and B are partners, they admit C into partnership. C was asked to pay Rs 2,50,000 though his share of capital was estimated Rs 2,00,000 only. For what was the extra Rs 50,000 asked from C?

Match List-I with List-IIList–I (Events)List–II (Result)(A) Termination of business.(I) Not possible in 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 partnership.Choose the correct answer from the options given below:

Which of the following facts are related to modes of reconstitution of a partnership firm.(A) Admission of a new partner(B) Dissolution of a partnership firm(C) Death of a partner(D) Change in the profit sharing ratio among the existing partners(E) Retirement of a partnerChoose the correct answer from the options given below:

A firm is dissolved compulsorily in the following cases: (A) when all the partners or all but one partner, become insolvent, rendering them incompetent to sign a contract(B) when the business of the firm becomes illegal(C) when the business of the firm is earning a large amount of profit.(D) when some event has taken place which makes it unlawful for the partners to carry on the business of the firm in partnership Choose the correct answer from the options given below:

Which of the following will lead to the dissolution of a partnership firm?

The journal entries are as under:
$$\text{Incoming partner’s current A/c}\text{Dr.}$$
$$\text{To Sacrificing partners capital A/c}$$
What statement among the following is TRUE for the above entry?

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:

Rajinder and Surinder are partners in a firm sharing profits in the ratio of $4:1$. On April 15, 2017, they admitted Narender as a new partner. On that date, there was a balance of $\text{Rs. }20,000$ in general reserve and a debit balance of $\text{Rs. }10,000$ in the profit and loss account of the firm. Which among the following statements is correct for transferring profit and loss account?

The net total amount (Principal + Interest) payable to Kabir at the end of the 2nd year is:

On dissolution of a partnership firm, the bills payable is transferred to :

Select the way by which provisions appearing in the Balance Sheet of a partnership firm are closed at the time of firm's dissolution.

Partner's current accounts are transferred to respective Partners' _____________________.

What is the gaining ratio between the remaining partners, Preeti and Shershah, upon Kabir's retirement?

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

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:

On the death of a partner, the deceased partner's capital account will NOT be credited with:

The Central Government, via the Companies (Miscellaneous) Rules, 2014, has prescribed the maximum permissible limit of partners in a single partnership firm to be:

Ranjan and Anjan were partners in a firm sharing profits and losses in $3:2$. They admitted Sanjan for $\frac{1}{4}$ share of profit on 1 Jan 2024. Goodwill of the firm will be valued at 3 years' purchase of the average profit of the last 4 years, which were:2024: $\text{Rs. }80,000$ 2023: $\text{Rs. }1,40,000$ 2022: $\text{Rs. }2,00,000$ 2021: $\text{Rs. }1,60,000$ The goodwill of the reconstituted firm will be:

__________ is/are not true with regard to Limited liability partnership.(A) Separate Legal entity(B) Unlimited liability for one partner(C) Indian Partnership Act, 1932 is applicable(D) Perpetual Succession(E) Unlimited liability of partnersChoose the correct answer from the options given below:

At the time of dissolution, if an asset is taken over by a partner, what journal entry will be recorded in the books of the firm?

Comprehension:Read the following financial details carefully and answer the questions that follow.Following is the Balance Sheet of Ashwani and Bharat on March 31, 2024.Balance Sheet of Ashwani and Bharat as on March 31, 2024LiabilitiesAmount (₹)AssetsAmount (₹)Creditors$76,000$ Cash at bank$17,000$ Mrs. Ashwani's loan$10,000$ Stock$10,000$ Mrs. Bharat's loan$20,000$ Investments$20,000$ Investment Fluctuation Reserve$2,000$ Debtors $40,000$ Less: Provision for Doubtful Debts $4,000$$36,000$ General Reserve$20,000$ Buildings$70,000$ Capitals:Ashwani: $20,000$ Bharat: $20,000$$40,000$ Goodwill$15,000$ Total$1,68,000$ Total$1,68,000$ The firm was dissolved on that date under the following terms:Ashwani promised to pay Mrs. Ashwani’s loan and took away the stock for ₹ $8,000$.Bharat took away half of the investments at $10\%$ less than book value.Debtors realized ₹ $38,000$. Creditors were paid off at a discount of ₹ $380$.Buildings realized ₹ $1,30,000$. Goodwill realized ₹ $12,000$, and the remaining investments were sold for ₹ $9,000$.An old unrecorded typewriter was taken over by Bharat for ₹ $600$.Realization expenses amounted to ₹ $2,000$.If the net realization profit is ₹ $55,980$, how will it be distributed between the partners?

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 $\text{Rs. }50,000$. The net profit of the firm for the year ending March 31, 2015, was $\text{Rs. }1,60,000$. Calculate the amount of profit Vijay will get.

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:

The following are the features of the Dissolution of Partnership:(A) Assets and liabilities are revalued, and a new balance sheet is drawn.(B) Economic relationships between partners continue, though in a changed form.(C) The business is not terminated.(D) The books of account are closed.Choose the correct answer from the options given below:

There is a practical need for the valuation of a firm's goodwill under which of the following cases?(A) Admission of a new partner(B) Retirement of an existing partner(C) Dissolution of a firm involving the sale of the business as a going concern(D) Amalgamation of partnership firmsChoose the correct answer from the options given below:

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

Match List - I with List - II.
$$\begin{array}{ll}\text{List - I}& \text{List - II}\\ \text{(A) Increase in Furniture Value}& \text{(I) Credit side of Partner’s Capital A/c}\\ \text{(B) Depreciation on Machinery}& \text{(II) Debit side of Partner’s Capital A/c}\\ \text{(C) General Reserve}& \text{(III) Credit side of Revaluation A/c}\\ \text{(D) Goodwill appearing in Books}& \text{(IV) Debit side of Revaluation A/c}\end{array}$$
Choose the correct answer from the options given below:

At the time of admission of a new partner, in case there is no workmen's compensation claim, the total amount of workmen's compensation fund will be:

If a uniform amount of capital is systematically withdrawn by a partner at the end of each quarter, interest on the total aggregate yearly drawings is computed across an average timeline of:

Neha contributed $\text{Rs. }30,000$ and Saloni $\text{Rs. }90,000$ as capital. What will be Saloni's share in profits if the partnership agreement is silent regarding the profit-sharing ratio?

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.

Which of the following accounts/statements is prepared to distribute the profit or loss among partners?

Ram, one of the partners, has withdrawn ₹ $1,00,000$ from the business for personal use. If the rate of interest charged on drawings is $12\%\text{p.a.}$, find the total amount of interest on drawings to be charged from Ram:

Which among the following is NOT true for the New Profit Sharing Ratio?

Profits made on the Revaluation of Assets and Reassessment of Liabilities are distributed among whom?

At the time of admission of a new partner, under the fixed capital method, if the sacrificing partners withdraw their amounts of goodwill (in full or in part), which of the following journal entries will be recorded?

At the time of a firm's reconstitution, any existing asset balance of Goodwill already appearing in the books of accounts must be immediately written off among partners in their:

At the time of the Dissolution of a Partnership Firm, which statement is not false (i.e., true)?

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:

Which statement is NOT false (i.e., true), in respect of the dissolution of a partnership firm?

Identify which of the following expenses/allocations are classified as "Appropriations out of Profits" rather than charges against profits:(A) Rent paid to partners(B) Interest on capital(C) Salary paid to partners(D) Commission allowed to partnersChoose the correct answer from the options given below:

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:

Select the category of partner(s) who will compensate the deceased partner for their share of goodwill at the time of death.

Arrange the following in the correct chronological/legal order in which assets of the firm must be utilized during the settlement of accounts upon dissolution (Section 48 of Indian Partnership Act):(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:

Comprehension:Read the financial details from the preceding text carefully.For taking over half of the investments, Bharat's Capital Account will be:

Match List-I with List-II:List-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:

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:

Match List-I with List-II:List-IList-II(A) Meaning of Dissolution(I) Section 49 of the Partnership Act, 1932(B) Application of Assets(II) Section 39 of the Partnership Act, 1932(C) Private Debts Vs Firm's Debts(III) Section 4 of the Partnership Act, 1932(D) Nature of Partnership(IV) Section 48 of the Partnership Act, 1932Choose the correct answer from the options given below:

$\text{Y}$ starts a business with an investment of $\text{Rs. }8,000$. Four months later, $\text{Z}$ joins by investing $\text{Rs. }3,500$. They partner for an entire year. What is the ratio of $\text{Y}$ 's profit to $\text{Z}$ 's profit at the end of the year?

When an unrecorded asset is taken over by a partner during the dissolution of a firm, it is recorded on which side of which account?

U, V and W invest $\text{₹}18,000$, $\text{₹}24,000$ and $\text{₹}30,000$ respectively in a business. If the profit at the end of the year is $\text{₹}14,400$, how much less is V's share of the profit than that of W?

Match List-I with List-II:List-IList-II(A) Accumulated Profits/Losses(I) New Ratio(B) Share of goodwill at the time of admission of a partner(II) Gaining Ratio(C) Division of profits after admission of a partner(III) Old Ratio(D) Share of goodwill at the time of retirement/death of a partner(IV) Sacrificing RatioChoose the correct answer from the options given below:

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:

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?

$J$ and $K$ invest $\text{Rs. }20,000$ and $\text{Rs. }30,000$ respectively in a business. They agree to share profits in the ratio of their investments. If the business earns a profit of $\text{Rs. }15,000$ at the end of $8$ months, what is $K$ 's share of the profit?

The calculation of the "Gaining Ratio" is NOT required or carried out during which of the following events?

P, Q and R enter into a partnership by investing their capitals in the ratio of $\frac{5}{2}:\frac{4}{3}:\frac{8}{5}$. After 4 months, P increased his capital by $50\%$, but Q decreased his capital by $20\%$. What is the share of Q in the total profit of $₹28,210$ at the end of a year?

Arrange the following financial steps in the correct chronological sequence when winding up and dissolving a partnership firm.A. Payment of loans advanced by PartnersB. Settlement of secured outsider liabilitiesC. Realization of assets into cashD. Final settlement of partner capital accountsE. Payment of unsecured outsider liabilitiesChoose the correct answer from the options given below:

A, B and C started a business. A invested $33\%$ of the total capital, B invested $33\frac{1}{3}\%$ of the remaining capital and C, the remaining. If the total profit at the end of the year was \ 4,050$, then find the amount by which the profit of C exceeds the profit of B.

The Central Government has prescribed the maximum number of partners in a firm to be _______

In a partnership business, A invests $\frac{1}{6}\text{th}$ of the capital for $\frac{1}{6}$ of the total time, B invests $\frac{1}{4}\text{th}$ of the capital for $\frac{1}{4}$ of the total time and C invests the rest of the capital for the whole time. Find the share of B out of a total profit of $\text{Rs. }1940$.

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. $25,00,000$.

For distributing profits made during a financial year among partners, which account is debited?

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?

R, S and K are partners sharing profits in the ratio $8:6:4$. On the retirement of R, the new profit sharing ratio between S and K was decided to be $5:3$. The Gaining ratio is:

In a partnership, X invests $\frac{1}{6}\text{th}$ of the capital for $\frac{1}{6}\text{th}$ of the time, Y invests $\frac{1}{3}\text{rd}$ of the capital for $\frac{1}{3}\text{rd}$ time and Z invests the remaining capital for the whole time. If at the end of the year the profit earned is ₹23,000, then what will be Y's share?

Identify the required condition under which the clauses of a partnership deed can be modified or altered.

A loss of $\text{Rs. }1,152$ has to be divided among A, B and C in the ratio $7:8:9$, then what is the share of A?

All adjustments in respect of partner's salary, partner's commission, interest on capital, interest on drawings, etc. are made through:

Three partners, A, B and C shared profits in the ratio $4:5:6$. If C's share of the profit was $\text{Rs. }200$ more than that of A, find the total profit generated by them.

Soni, Moni, and Toni are partners sharing profits in the ratio of $5:3:2$. If Moni's share of profit at the end of the year amounted to ₹1,50,000, what will be Soni's share of profits?

$A$, $B$, and $C$ entered into a partnership business by investing $\text{Rs. }64000$, $\text{Rs. }52000$, and $\text{Rs. }36000$ respectively for a certain period of time. If $A$ receives $\text{Rs. }35584$ as annual profit, what amount will $C$ receive as his share in the profit?

Which of the following statement is incorrect?

Barun invests $\text{Rs. }5000$ for a year and Tarun joins him with $\text{Rs. }8000$ after six months. After the year they receive a return of $\text{Rs. }4500$, then Tarun's share is:

Arrange the following actions in the correct chronological sequence in the context of the admission of a new partner.A. Finalizing terms for admission of a new partnerB. Calculation of sacrificing/gaining ratioC. Finalizing balance in partner's capital A/cD. Calculation of new profit-sharing ratioE. Valuation and adjustment of goodwillChoose the correct answer from the options given below:

P starts a business with a capital of $\text{Rs. }5000$. After $3\text{ months}$, Q joins with a capital of $\text{Rs. }6000$ and $5\text{ months}$ from the start, R invests $\text{Rs. }8000$. If the total profit at the end of the year is $\text{Rs. }3400$, calculate the amount that each will receive.

The assets of the firm, including any sum contributed by the partners to make up deficiencies of capital, shall be utilized in which sequence? Arrange the following in proper sequence:(A) In paying the debts of the firm to the third parties
(B) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner's loan)
(C) In paying to each partner proportionately what is due to him on account of capital
(D) The residue, if any, shall be divided among the partners in their profit sharing ratioChoose the correct answer from the options given below:

$X$ and $Y$ are partners in a firm sharing profits in the ratio of $3:2$. They admit $R$ as a new partner. $X$ gives $\frac{1}{3}\text{rd}$ of his share while $Y$ gives $\frac{1}{10}\text{th}$ from his share. Calculate the sacrificing ratio.

M and R are partners sharing profits and losses in the ratio of $3:2$. Their capital A/c's showed the balance of Rs. $4,00,000$ and Rs. $3,00,000$ respectively on 1 April, 2021. M introduced additional capital on 1 August, 2021. Interest on capital is allowed @ $6\%$ p.a. Total interest on capital of both the partners is Rs. $50,000$.Calculate additional capital introduced by M on 1 August, 2021 and interest on capital earned on additional capital. Books are closed on 31 March.

When realisation expenses are paid by the firm on behalf of a partner, which among the following will be debited:

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

If a partner retires in the middle of the year his/her share of profit from the date of last balance sheet till the date of retirement will be 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. $10,000$.Due to the ill health of B, they decided to dissolve the firm. It comes under ____ form of dissolution.

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.Calculate the total amount brought in by new partner D including Goodwill share :

In case of retirement or death of a partner, all accumulated profit and losses are transferred in capital account of partners in the:

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.

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

Match List-I with List-II:List-IList-II(A) Compulsory Dissolution(I) A partner persistently commits breach of partnership agreement.(B) Happening of contingencies(II) Death of a partner(C) Dissolution by Court(III) According to contract between the partners.(D) Dissolution by agreement(IV) Business becomes illegalChoose the correct answer from the options given below: