CBSE Class 12 Accountancy Reconstitution of a Partnership Firm – Admission of a Partner VBQ Set 03

Question. A and B are partners in a firm sharing profits in the ratio of 3 : 2. They admit C into partnership for 1/5th share. C brings Rs. 30,000 as capital and Rs. 10,000 as premium for goodwill. New profit sharing ratio will be 5 : 3 : 2. How much amount of premium is to debited/credited in B’s Capital Account?
(a) Debit Rs. 3,000
(b) Credit Rs. 3,000
(c) Debit Rs. 5,000
(d) Credit Rs. 5,000
Answer: (d) Credit Rs. 5,000

Question. A and B are partners sharing profits and losses in the ratio of 7 : 5. They agree to admit C, their manager, into partnership who is to get 1/6th share in the profits. He acquires this share as 1/24th from A and 1/8th from B, The new profit sharing ratio will be:
(a) 13 : 7 : 4
(b) 7 : 13 : 4
(c) 7 : 5 : 6
(d) 5 : 7 : 6
Answer: (a) 13 : 7 : 4

Question. Assertion : At the time of Admission of a partner, Accumulated profits and losses are transferred to Revaluation Account.
Reason : At the time of Admission of a partner the Accumulated Profits & Losses are transferred to Capital/Current account in old Profit Sharing Ratio.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer: (D) A is false and R is true

Question. Assertion : Pankaj & Shivangi are partners in a firm sharing profits and losses in the ratio of 7 : 5. They admit Pallavi as a partner for 1/5th Share in a firm. The new profit-sharing ratio will be 2 : 2 : 1.
Reason : When Pallavi is admitted as a new partner, the new profit sharing ratio will be 7 : 5 : 3
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer: (D) A is false and R is true

Question. Assertion : Anjali is admitted in a firm for 1/4th share in the profits for which he brings Rs. 60,000 as goodwill. It will be taken by the old partners in the sacrificing ratio.
Reason : The amount of Premium for Goodwill is to be adjusted in the sacrificing ratio of the partners and will be debited to the partner gaining and credited to the partner who is sacrificing.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer: (A) Both A and R true and R is the correct explanation of A.

Question. Assertion : At the time of Admission of a partner the balance of General Reserve shown in the Balance Sheet on Liabilities side will be distributed in New Ratio.
Reason : The General reserve shown in the books is to be distributed in old ratio and will be Credited to Old partner’s Capital / Current account.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer: (D) A is false and R is true

Question. Assertion : Revaluation account is debited to transfer Gain on Revaluation to Old partner’s capital/current account in their old profit sharing ratio.
Reason : The Gain on Revaluation of Assets or Reassessment of the Liabilities is to be transferred to the Partners Capital/Current Account in their old profit sharing ratio.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer: (A) Both A and R true and R is the correct explanation of A.

Question. Assertion : New partner Shivi was admitted to the firm. As she is the new partner she does not have the right on the Assets of the firm till she earns them.
Reason : According to Section 31 of the Indian Partnership Act, 1932, as a person is admitted as a partner he acquires the right to share in the assets of the firm.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer: (D) A is false and R is true

Question. Assertion : Admission of a partner means reconstitution of a firm as existing agreement comes to an end and a new agreement comes into effect because of the admission of a partner.
Reason : At the time of the admission of a partner the existing agreement comes to an end which means the Dissolution of the partnership firm.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer: (C) A is true and R is false

Question. Assertion : Partners Capital account is credited with his share of gain on Revaluation Account if the capitals are Fixed.
Reason : Partners Current account is credited with his share of gain on Revaluation Account if the capitals are Fixed. Partner’s Capital account is credited with his share of gain on Revaluation Account if the capitals are Fluctuating.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer: (D) A is false and R is true

Question. Assertion : At the time of the admission of a partner, Revaluation Account will be debited to record the claim on Workmen Compensation for Rs. 10,000 as the Reserve for the same was only for 8,000.
Reason : The Claim for Workmen Compensation will be debited by Rs. 2,000 as the reserve for the same is already for Rs. 8,000.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer: (D) A is false and R is true

Question. Assertion : The ratio in which all the partners including the new partner share in future profits and losses is known as New Profit Sharing Ratio.
Reason : The ratio in which all the partners including the new partner share in future profits and losses is known as Sacrificing Ratio.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer: (C) A is true and R is false

Question. Arjun and Karan are partners in a firm sharing profits and losses in the ratio of 3 : 2. Atul is admitted for 1/5th share in profits of the firm. Calculate the new profit ratio of partners if Atul gets it equally from Arjun and Karan
(a) 2 : 3 : 5
(b) 5 : 3 : 2
(c) 5 : 2 : 6
(d) None of the options.
Answer: (b) 5 : 3 : 2

Question. Arjun and Karan are partners in a firm sharing profits and losses in the ratio of 3 : 2. Atul is admitted for 1/5th share in profits of the firm. Calculate the new profit ratio of partners if Atul gets it from Arjun and Karan in the ratio of 2 : 1.
(a) 7 : 5 : 3
(b) 2 : 3 : 1
(c) 9 : 6 : 1
(d) 8 : 8 : 9
Answer: (a) 7 : 5 : 3

Question. Arjun and Karan are partners in a firm sharing profits and losses in the ratio of 3 : 2. Atul is admitted for 1/5th share in profits of the firm. Calculate the new profit ratio of partners if Atul gets it wholly from Arjun.
(a) 4 : 5 : 6
(b) 2 : 2 : 1
(c) 2 : 1 : 5
(d) 1 : 2 : 3
Answer: (b) 2 : 2 : 1

Question. Arjun and Karan are partners in a firm sharing profits and losses in the ratio of 3 : 2. Atul is admitted for 1/5th share in profits of the firm. Calculate the new profit ratio of partners if Atul gets it 3/20th from Arjun and 1/20th from Karan.
(a) 9 : 4 : 7
(b) 7 : 2 : 1
(c) 9 : 7 : 4
(d) 2 : 4 : 6
Answer: (c) 9 : 7 : 4

Khyati and Maitreyi of Varanasi were partners in a firm with capitals Rs. 1,20,000 and Rs. 1,60,000 respectively. On 1.4.2019 they admitted Prakriti as a partner for 1/4th share in profits of her payment of Rs. 2,00,000 as her capital and Rs. 90,000 for her 1/4th share of goodwill. On that date the creditors of Khyati and Maitreyi were Rs. 60,000 and bank overdraft was Rs. 15,000. Their assets apart from cash included Stock Rs. 10,000; Debtors Rs. 40,000; Plant and machinery Rs. 80,000; Land and Building Rs. 2,00,000. It was agreed that stock should be depreciated by Rs. 2,00,000; Plant and machinery by 20%, Rs. 5,000 should be written off as bad debts and Land and Building should be appreciated by 25%.

Question. Stock depreciated by Rs. 2,000 it will be shown in:
(a) Debit side of revaluation Account
(b) Credit side of revaluation Account
(c) Credit side of partner’s capital account
(d) None of the options.
Answer: (a) Debit side of revaluation Account

Question. Prakriti brings her share of goodwill in cash, it will be shared by old partners in:
(a) Ratio of sacrifice
(b) Old profit sharing ratio
(c) New profit sharing ratio
(d) In capital ratio
Answer: (a) Ratio of sacrifice

Question. Premium for Goodwill amount will be credited to:
(a) Khyati Rs. 45,000; Maitreyi Rs. 45,000
(b) Khyati Rs. 60,000; Maitreyi Rs. 30,000
(c) Khyati Rs. 40,000; Maitreyi Rs. 50,000
(d) None of the options.
Answer: (a) Khyati Rs. 45,000; Maitreyi Rs. 45,000

Question. What value of land and building will be shown in the balance sheet of firm as at 1.4.2019 if its appreciated by 25%.
(a) Rs. 2,40,000
(b) Rs. 2,70,000
(c) Rs. 2,50,000
(d) None of the options.
Answer: (c) Rs. 2,50,000

Question. Profit on revaluation transferred to Khyati’s Capital A/c will be:
(a) Rs. 13,200
(b) Rs. 13,800
(c) Rs. 13,700
(d) Rs. 13,500
Answer: (d) Rs. 13,500

Nikhil and Pawan were partners in a firm sharing profit and loss in the ratio of 2: 1 with capitals Rs. 60,000 and Rs. 50,000 respectively. Their Balance Sheet as on 31.03.2016 showed creditors Rs. 57,000; WCF Rs. 35,000 and General reserve Rs. 30,000. Their assets included banks Rs. 24,000; profit and loss (Dr.) ; Machinery Rs. 22,000; Investment Rs. 2,000. Debtors valued Rs. 44,000; provision for bad debt Rs. 6,000; Building Rs. 1,35,000 and stock Rs. 6,000. Partners decide to admit ‘Harshit’ for 1/5 share future profit on the following terms: Harshit acquire his share of profit from Nikhil. Goodwill of the firm was valued at Rs. 60,000. Building to be over valuated by Rs. 2,000. Provision on debtors should be maintained 5%. Machinery to be reduced by 5%. Claim for WCF 17000. Market value of investment Rs. 5,000 and taken by Nikhil at this value. Harshit bought Rs. 60,000, as a capital.

Question. What will be new profit sharing ratio of Nikhil, Pawan and Harshit?
(a) 2 : 3 : 1
(b) 5 : 2 : 1
(c) 7 : 8 : 9
(d) None of the options.
Answer: (d) None of the options.

Question. After settlement of WCF claim how much remaining amount will be credited in Nikhil’s And Pawan’s Capital Account?
(a) Nikhil Rs. 17,000; Pawan Rs. 1,000
(b) Nikhil Rs. 10,000; Pawan Rs. 8,000
(c) Nikhil Rs. 12,000; Pawan Rs. 6,000
(d) None of the options.
Answer: (c) Nikhil Rs. 12,000; Pawan Rs. 6,000

Question. Profit and loss (Dr.) appearing in the balance sheet will be distributed in which ratio?
(a) New profit sharing ratio
(b) Sacrificing Ratio
(c) Old ratio
(d) None of the options.
Answer: (c) Old ratio

Question. How much new partner will compensate for his share acquired by Nikhil?
(a) Rs. 12,000
(b) Rs. 18,000
(c) Rs. 16,000
(d) Rs. 10,000
Answer: (a) Rs. 12,000

Kamakshi and Prakriti are partners sharing profits in the ratio of 2 : 1. Ronit is Admitted as a new partner and the new ratio is decided as 5 : 3 : 2. The assets and liabilities are revalued as building was appreciated by 25% (Book value of Building Rs. 4,00,000), the provision for doubtful debts was reduced from Rs. 5,000 to Rs. 3,000. A provision for Rs. 4,000 was to be made for an outstanding bill for repairs, unrecorded investment were worth Rs. 10,000, unrecorded liability towards supplier was Rs. 12,000.

Question. Profit on revaluation will be:
(a) Rs. 96,000
(b) Rs. 86,000
(c) Rs. 89,999
(d) Rs. 95,000
Answer: (a) Rs. 96,000

Question. Unrecorded liability of Rs. 12,000 towards supplier will be:
(a) Debited to Revaluation Account
(b) Credited to Revaluation Account
(c) Debited to Goodwill Account
(d) Credited to Partners’ Capital Account
Answer: (a) Debited to Revaluation Account

Question. Unrecorded investment worth Rs. 10,000 will be:
(a) Debited to Revaluation Account
(b) Credited to Revaluation Account
(c) Debited to Goodwill Account
(d) Credited to Partners’ Capital Account
Answer: (b) Credited to Revaluation Account

Question. Provision for doubtful debts account will be credited to Revaluation Account by:
(a) Rs. 3,000
(b) Rs. 2,000
(c) Rs. 5,000
(d) None of the options.
Answer: (b) Rs. 2,000