CBSE Class 12 Accountancy Reconstitution of a Partnership Firm – Admission of a Partner VBQ Set 02

Reconstitution of a Partnership Firm : Admission of a Partner

Question. On admission of a partner, which of the following items the Balance Sheet is transferred to the credit of Capital Accounts of old partners in the old profit sharing ratio, if Capital Accounts are maintained following Fluctuating Capital Accounts Method.
(a) Deferred Revenue Expenditure
(b) Profit and Loss Account (Debit Balance)
(c) Profit and Loss Account (Credit Balance)
(d) Balance in Drawings Account of Partners
Answer: (c) Profit and Loss Account (Credit Balance)

Question. When the new partner brings cash for goodwill, the amount is credited to:
(a) Realisation Account
(b) Cash Account
(c) Premium for Goodwill Account
(d) Revaluation Account
Answer: (c) Premium for Goodwill Account

Question. A and B are partners in a firm having a capital of Rs. 54,000 and Rs. 36,000 respectively. They admitted C for 1/3rd share in the profits C brought proportionate amount of capital. The Capital brought in by C would be:
(a) Rs. 90,000
(b) Rs. 45,000
(c) Rs. 5,400
(d) Rs. 36,000
Answer: (b) Rs. 45,000

Question. Ramesh and Suresh are partners sharing profits in the ratio of 2 : 1 respectively, Ramesh capital Rs. 1,02,000 and Suresh capital are Rs. 73,000. They admit Mahesh and agree to give him 1/5th share in future profit. Mahesh brings Rs. 14,000 as his share of goodwill. He agrees to contribute capital in the new profit-sharing ratio. How much capital will be brought by Mahesh?
(a) Rs. 43,750
(b) Rs. 45,000
(c) Rs. 47,250
(d) Rs. 48,000
Answer: (c) Rs. 47,250

Question. In case of Admission of a Partner, the entry for Unrecorded Investments is:
(a) Debit Partners’ Capital A/cs and Credit Investments A/c.
(b) Debit Revaluation A/c and Credit Investments A/c.
(c) Debit Investments A/c and Credit Revaluation A/c.
(d) None of the options.
Answer: (c) Debit Investments A/c and Credit Revaluation A/c.

Question. If at the time of Admission there is an Unrecorded Liability, it is:
(a) Debited to Revaluation Account.
(b) Credited to Revaluation Account.
(c) Debited to Goodwill Account.
(d) Credited to Partners’ Capital Accounts.
Answer: (a) Debited to Revaluation Account.

Question. 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:
(a) Old partners in old profit sharing ratio
(b) Old partners in new profit sharing ratio
(c) All the partners in new profit sharing ratio
(d) None of the options.
Answer: (a) Old partners in old profit sharing ratio

Question. Kartik and Rana are partners sharing profits in the ratio of 4: 1. Their capitals were Rs. 90,000 and Rs. 70,000 respectively. They admitted Kuldeep for 1/3rd share in the future profits. Kuldeep brought Rs. 1,00,000 as his capital. Firm’s Goodwill is:
(a) Rs. 40,000
(b) Rs. 1,40,000
(c) Rs. 3,00,000
(d) Rs. 2,60,000
Answer: (a) Rs. 40,000

Question. A new partner may be admitted to a partnership:
(a) With the consent of all partners
(b) With the consent of two third of old partners
(c) With the consent of any one of the partners
(d) Without consent of old partners
Answer: (a) With the consent of all partners

Question. Which account should be debited when capital is introduced by a partner:
(a) Current Account
(b) Owner’s Equity Account
(c) Cash Account
(d) Current Account
Answer: (c) Cash Account

Question. At the time of Admission of a new partner, General Reserve is:
(a) Debited to capital of old partners
(b) Credited to capital of old partners.
(c) Allowed to remain in balance sheet
(d) Debited to current account
Answer: (b) Credited to capital of old partners.

Question. On Admission time building appreciated by Rs. 2,00,000 journal entry will be:
(a) Building A/c Dr. 2,00,000
To Old Partner’s A/c 2,00,000
(b) Revaluation A/c Dr. 2,00,000
To Building A/c 2,00,000
(c) Building A/c Dr. 2,00,000
To Revaluation A/c 2,00,000
(d) Old Partner’s A/c Dr. 2,00,000
To Building A/c 2,00,000
Answer: (c) Building A/c Dr. 2,00,000 To Revaluation A/c 2,00,000

Question. A and B are partners sharing profits and losses as 2 : 1. C is admitted and profit sharing ratio becomes 4 : 3 : 2. Goodwill is valued at Rs. 94,500. C brings required goodwill in cash. Goodwill amount will be credited to:
(a) A Rs. 14,000 and B Rs. 7,000
(b) A Rs. 12,000 and B Rs. 9,000
(c) A Rs. 21,000
(d) A Rs. 94,500
Answer: (c) A Rs. 21,000

Question. Partners A, B and C share the profits of a business in the ratio of 3 : 2 : 1 respectively. They admit D who brings in Rs. 60,000 for his share of goodwill. A, B, C and D decide to share the profits respectively in the ratio of 5: 3 : 2 : 2. Credit will be given to:
(a) A Rs. 6,000; B Rs. 6,000
(b) A Rs. 30,000; B Rs. 18,000; C Rs. 12,000
(c) A Rs. 30,000; B Rs. 20,000; C Rs. 10,000
(d) A Rs. 30,000; B Rs. 30,000
Answer: (d) A Rs. 30,000; B Rs. 30,000

Question. Capitals of Sumit and Raj, after all adjustments, were Rs. 2,00,000 and Rs. 1,50,000 respectively. They decided to admit Kamal as a new partner for 1/5th share. Kamal brought Rs. 1,00,000 as capital. He has to bring appropriate amount of goodwill share. How much he will bring as his share of goodwill:
(a) Rs. 50,000
(b) Rs. 40,000
(c) Rs. 20,000
(d) Rs. 10,000
Answer: (d) Rs. 10,000

Question. At the time of Admission of a new partner, General Reserve given in the old balance sheet is distributed to the partners due to:
(a) It belongs to first partner
(b) It belongs to all the partners including new partner
(c) It belongs to only sacrificing partners
(d) It belongs to all old partners
Answer: (d) It belongs to all old partners

Question. AK and BK are partners in a firm. They admit CK as a partner for 1/4th share in the profits of the firm. CK brings Rs. 2,00,000 as his share of capital. The value of total assets of the firm is Rs. 5,40,000 and outside liabilities are valued at Rs. 1,00,000 on that date. CK’s premium share for goodwill:
(a) Rs. 30,000
(b) Rs. 40,000
(c) Rs. 50,000
(d) Rs. 60,000
Answer: (b) Rs. 40,000

Question. At the time of Admission of a new partner, the following adjustment related to asset was found: “Stock is overvalued by 10%, Rs. 66,000 Book value”. Actual value of stock is:
(a) Rs. 66,000
(b) Rs. 59,400
(c) Rs. 60,000
(d) Rs. 72,600
Answer: (c) Rs. 60,000

Question. What is the Treatment of Profit & Loss Account (Cr. Balance) given in Balance Sheet, at the time of admission of a new partner?
(a) Transfer to Revaluation Account.
(b) Transfer to Balance Sheet of reconstituted firm.
(c) Transfer to Incoming partner.
(d) Transfer to Old Partners’ Capital Accounts.
Answer: (d) Transfer to Old Partners’ Capital Accounts.

Question. Reserve or general reserve appearing in the balance sheet will be divided among old partners during admission in _______ ratio.
(a) gaining
(b) new
(c) sacrificing
(d) old
Answer: (d) old

Question. ‘A’, ‘B’ and ‘C’ share profits and losses in the ratio of 3 : 2 : 1. ‘D’ is admitted with 1/6th share which he gets entirely from ‘A’. New ratio will be:
(a) 2 : 2 : 1 : 1
(b) 3 : 1 : 1 : 1
(c) 2 : 2 : 2 : 1
(d) None of the options.
Answer: (a) 2 : 2 : 1 : 1

Question. ‘X’ and ‘Y’ are partners sharing profits equally. ‘Z’ was admitted for 1/5 share. Calculate new profit sharing ratio.
(a) 2 : 3 : 1
(b) 3 : 3 : 1
(c) 6 : 5 : 2
(d) 2 : 2 : 1
Answer: (d) 2 : 2 : 1

Question. ‘A’ and ‘B’ are partners sharing profits and losses in the ratio of 5 : 3. On admission, ‘C’ brings Rs. 70,000 cash and Rs. 48,000 against goodwill. New profit sharing ratio between ‘A’, ‘B’ and ‘C’ is 7 : 5 : 4. The sacrificing ratio among ‘A’ and ‘B’ is:
(a) 4 : 1
(b) 4 : 7
(c) 5 : 4
(d) 3 : 1
Answer: (d) 3 : 1

Question. A firm has an unrecorded investment of Rs. 5,000. Entry in the firm’s journal on admission of a partners will:
(a) Unrecorded Investment A/c Dr. 5,000
To Revaluation A/c 5,000
(b) Partners’ Capital A/c Dr. 5,000
To Unrecorded Investment A/c 5,000
(c) Revaluation A/c Dr. 5,000
To Unrecorded Investment A/c 5,000
(d) None of the options.
Answer: (a) Unrecorded Investment A/c Dr. 5,000 To Revaluation A/c 5,000

Question. ‘A’ and ‘B’ share profits in the ratio of 3 : 2. ‘A’s’ capital is Rs. 40,000, ‘B’s’ capital is Rs. 30,000. ‘C’ is admitted for 1/5th share in profits. What is the amount of capital which ‘C’ should bring?
(a) Rs. 17,500
(b) Rs. 16,000
(c) Rs. 1,00,000
(d) Rs. 64,000
Answer: (a) Rs. 17,500

Question. ‘A’ and ‘B’ carry on business and share profits and losses in the ratio of 3 : 2. Their respective capitals are Rs. 1,20,000 and Rs. 4,000. ‘C’ is admitted for 1/5th share in profit and brings Rs. 1,20,000 as his share of capital. Capitals of ‘A’ and ‘B’ to be adjusted according to ‘C’s’ share. Calculate the amount required to bring by ‘A’.
(a) Rs. 30,000
(b) Rs. 1,68,000
(c) Rs. 60,000
(d) Rs. 28,000
Answer: (b) Rs. 1,68,000

Question. ‘A’ and ‘B’ are partners in a firm sharing profits in 3 : 2 ratio. They admitted ‘C’ as a new partner and the new profit sharing ratio will be 2 : 1 : 1. ‘C’ brought in Rs. 40,000 as premium for goodwill for it’s share. What will be the journal entry for the premium of goodwill shared by old partners as per sacrificing ratio?
(a) Premium for goodwill A/c Dr. 40,000
To A’s Capital A/c 16,000
To B’s Capital A/c 24,000
(b) A’s Capital A/c Dr. 16,000
B’s Capital A/c Dr. 24,000
To Premium for Goodwill A/c 40,000
(c) Premium for Goodwill A/c Dr. 40,000
To Bank A/c 40,000
(d) Bank A/c Dr. 40,000
To Premium for Goodwill A/c 40,000
Answer: (a) Premium for goodwill A/c Dr. 40,000 To A’s Capital A/c 16,000 To B’s Capital A/c 24,000

Question. A and B are partners sharing profits in the ratio of 3 : 1. They admit C for 1/4th share in the future profits. The new profit sharing ratio will be :
(a) A \( \frac{9}{16} \), B \( \frac{3}{16} \), C \( \frac{4}{16} \)
(b) A \( \frac{8}{16} \), B \( \frac{4}{16} \), C \( \frac{4}{16} \)
(c) A \( \frac{10}{16} \), B \( \frac{2}{16} \), C \( \frac{4}{16} \)
(d) A \( \frac{8}{16} \), B \( \frac{9}{16} \), C \( \frac{10}{16} \)
Answer: (a) A \( \frac{9}{16} \), B \( \frac{3}{16} \), C \( \frac{4}{16} \)

Question. X and Y share profits in the ratio of 3 : 2. Z was admitted as a partner who gets 1/5 share. New profit sharing ratio, if Z acquires 3/20 from X and 1/20 from Y would be:
(a) 9 : 7 : 4
(b) 8 : 8 : 4
(c) 6 : 10 : 4
(d) 10 : 6 : 4
Answer: (a) 9 : 7 : 4

Question. Asha and Nisha are partners’ sharing profit in the ratio of 2 : 1. Asha’s son Ashish was admitted for 1/4 share of which 1/8 was gifted by Asha to her son. The remaining was contributed by Nisha. Goodwill of the firm is valued at Rs. 40,000. How much of the goodwill be credited to the old partners’ capital account.
(a) Rs. 2,500 each
(b) Rs. 5,000 each
(c) Rs. 20,000 each
(d) None of the options.
Answer: (b) Rs. 5,000 each

Question. On the Admission of a new partner, increase in the value of assets is debited to:
(a) Profit and Loss Adjustment Account
(b) Assets Account
(c) Old Partners’ Capital Accounts
(d) None of the options.
Answer: (b) Assets Account

Question. When the incoming partner brings his share of premium for goodwill in cash, it is adjusted by crediting to:
(a) His Capital Account
(b) Premium for Goodwill Account
(c) Sacrificing Partners’ Capital Accounts
(d) None of the options.
Answer: (c) Sacrificing Partners’ Capital Accounts

Question. A, B and C were Partners in a firm sharing profits in 3 : 2 : 1 ratio. They admitted D for 10% profits. Calculate new Profit-Sharing Ratio.
(a) 15 : 9 : 8 : 7
(b) 31 : 14 : 10 : 15
(c) 9 : 6 : 3 : 2
(d) 13 : 10 : 7 : 5
Answer: (c) 9 : 6 : 3 : 2

Question. X and Y are partners sharing profits in the ratio of 3 : 2. Z is admitted for 1/4th share in profits which he acquires equally from X and Y. The new ratio will be:
(a) 9 : 6 : 5
(b) 19 : 11 : 10.
(c) 3 : 3 : 2
(d) None of the options.
Answer: (b) 19 : 11 : 10.

Question. For which of the following situations, the old profit sharing ratio of partners is used at the time of admission of a new partner?
(a) When new partner brings only a part of his share of goodwill.
(b) When new partner is not able to bring his share of goodwill.
(c) When at the time of admission, goodwill already appears in the balance sheet.
(d) When new partner brings his share of goodwill in cash.
Answer: (c) When at the time of admission, goodwill already appears in the balance sheet.

Question. A and B share profits and losses in the ratio of 3 : 1. C is admitted into partnership for 1/4th share. The sacrificing ratio of A and B is:
(a) Equal
(b) 3 : l
(c) 2 : l
(d) 3 : 2
Answer: (b) 3 : l

Question. Where there is no partnership agreement exists between partners, what will be the profit sharing ratio between the partners?
(a) Equal
(b) Unequal
(c) It will depend on a partner’s capital
(d) It will depend on the experience of a partner
Answer: (a) Equal

Question. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. A new partner C is admitted. A surrenders 1/15th share of his profit in favour of C and B surrenders 2/15th share of his share in favour of C. The new ratio will be:
(a) 8 : 4 : 3
(b) 42 : 26 : 7
(c) 4 : 8 : 3
(d) 26 : 42 : 7
Answer: (b) 42 : 26 : 7

Question. An incoming partner pays his share of goodwill in cash, and profit sharing ratio of old partner is changed, Goodwill be distributed among old partners:
(a) As their old profit ratio
(b) According to new ratio
(c) According to sacrifice ratio
(d) None of the options.
Answer: (c) According to sacrifice ratio

Question. Ram and Sita are partners sharing profits in the ratio of 5 : 4. They admit Lakshman as a partner for a 1/10th share of profits which he acquires in equal proportion from Ram and Sita. The new ratio of the partners will be:
(a) 5 : 4 : 1
(b) 31 : 30 : 8
(c) 91 : 18 : 71
(d) 91 : 71 : 18
Answer: (d) 91 : 71 : 18

Question. A and B are partners sharing profits and losses in the ratio of 4 : 3. They admit C with 3/7th share, which he gets 2/7th from A and 1/7th from B. The new ratio of partners would be:
(a) 1 : 1 : 1
(b) 2 : 3 : 2
(c) 3 : 2 : 2
(d) 2 : 2 : 3
Answer: (d) 2 : 2 : 3