0% found this document useful (0 votes)
64 views28 pages

KP PUC (3)

The document is a revision test paper for accountancy, specifically focused on partnership concepts. It includes multiple choice questions, fill-in-the-blank questions, matching questions, and short answer questions related to partnership agreements, capital methods, and profit sharing. Additionally, it contains problem-solving sections for practical application of the concepts discussed.

Uploaded by

vikkyu2008
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
64 views28 pages

KP PUC (3)

The document is a revision test paper for accountancy, specifically focused on partnership concepts. It includes multiple choice questions, fill-in-the-blank questions, matching questions, and short answer questions related to partnership agreements, capital methods, and profit sharing. Additionally, it contains problem-solving sections for practical application of the concepts discussed.

Uploaded by

vikkyu2008
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 28

KRUPANIDHI PRE UNIVERSITY COLLEGE

ACCOUNTANCY
REVISION TEST PAPERS

PART - A
One Mark Questions:
I] Multiple Choice Questions:
1] The agreement between partner may be in
a] Oral
b] Written
c] Oral or Written
d] Duplicate
2] Partnership deed may not contains:
a] Name of the firm
b] Name and address of the partners
c] Profit and loss sharing ratio
d] Ownership of property.
3] If any partner has advanced some money to the firm beyond the amount of his
capital, he shall be entitled to get interest on the amount at the rate of:
a] 5% p.a.
b] 6% p.a.
c] 8% p.a.
d] 7% p.a.
4] Interest on capital is generally provided for, when:
a] The partners contribute unequal amounts of capital but share profits equally.
b] The partners contribute equal amounts of capital but share profit unequally
c] Both (a) & (b) situation
d] The partners contribute equal amounts of capital but withdrawn unequally.
5] When fixed amount is withdrawn on the first day of every month, interest
on total amount for the year ending will be calculated for:
a] 5 & 1/2 months
b] 4 &1/2 months
c] 6 &1/2 months
d] 6 months

II - PUC 1|Page
6] When varying amounts are withdrawn at different intervals, the interest is
calculated by using:
a] Simple Method
b] Average Method
c] Product Method
d] Weighted method
7] Adjustment for correction of omission and commission can be made in
a] Profit and loss adjustment account
b] Directly in the Capital Accounts of concerned partners
c] Revaluation account
d] Both (a) & (b) situations.
8] In order to form a Partnership there should be at least,
a] One person
b] Two people
c] Seven people
d] Fifty people
9] The business of a partnership concern may be carried on by
a] Two partners
b] All the partners
c] Any of them acting for all
d] All Partners or any of them acting for all.
10] The agreement between Partners must be to share:
a] Profits
b] Losses
c] Profits and losses
d] Duties and responsibilities
11] The liability of a Partner for acts of the firm is
a] Limited
b] Unlimited
c] Minimum
d] Maximum
12] The partnership Deed should be properly drafted and prepared as per the
provisions of the
a] Partnership Act.
b] Stamp Act
c] Companies Act
d] Registration Act

II - PUC 2|Page
13] The clauses of Partnership Deed can be altered with the consent of,
a] Two Partners
b] Ten Partners
c] Twenty Partners
d] All the Partners
14] In absence of partnership deed profits or losses must be shared in
a] Capital proportion
b] Equal
c] Agreed proportion
d] Any other proportion
15] When the dates of withdrawal are not specified, interest on drawings is to be
calculated for the average period of
a] 5 months
b] 6 months
c] 7 months
d] 8 months

II. Fill in the blank questions:


1] Section of the Indian Partnership Act, 1932 defines Partnership.
2] A partnership firm has no separate entity.
3] In order to form a partnership, there should be at least persons of a
common goal.
4] Partnership is the result of between two or more persons to do business
and share its profits and losses.
5] It is preferred that the partners have an agreement in .
6] The agreement between partners should be to carry on some .
7] Each partner carrying on the business is the principal as well as the
for all other partners.
8] The liability of a partner for his acts is
9] In the absence of Partnership deed interest on advance from Partner will be
charged @ ------------ percentage per annum.
10] Under method, the capitals of the partners shall remain fixed.
11] Under fluctuating capital method, the partners’ capital account balances
from time to time.
12] Profit and Loss appropriation account is merely an extension of
account of firm.

II - PUC 3|Page
13] Profit and Loss appropriation account Dr. To
account.
(Transferring interest on capital to P/L appropriation account).
14] Account Dr.
To Salary to partners account
(Transferring partners salary to P/L Appropriation A/c)
15] P/L Appropriation A/c Dr.
To Partners Capital /Current A/c.
(

III. Match the followings


A B
a] The partnership Act i] Alteration of partnership deed
b] Consent of all partner ii] Guarantee of profit
c] Interest on drawings in absence of deed iii]1932
d] Each partner has only one account iv] No partner is charged
e] Assurance to minimum v] Fluctuating capital method
amount of profit
vi] 6%
IV. Short Answer Questions :
1] What is a Partnership Firm?
2] Write any one feature of Partnership.
3] State any one content of the Partnership Deed.
4] Mention any one method of maintaining Partners capital.
5] Why is the Profit and Loss Appropriation account prepared?
6] What is the rate of Interest on advances by Partners as per Partnership Act?
7] When do you prepare partners’ Current Accounts in partnership firms?
8] State any one feature of fluctuating capital method.
9] Find out Interest at 5 % p.a. on capital of ◻2,50,000 for 6 months.
10] Give one example for past adjustment.
11] In absence of partnership deeds, the profit or loss of the firm is to be shared
equal. (state true or false)
12] Under Fixed Capital Method the Partners’ Capital Accounts will always show a
debit balance. (state true or false)
13] When a fixed amount is withdrawn during the middle of every month, interest on
the total amount is calculated for 6 months. (state true or false)
14] Profit and Loss appropriation account is merely an extension of the Profit and
Loss Account of a firm. (state true or false)
15] Interest on partners’ capital is debited to Partners’ Capital Accounts. (state true
or false)

II - PUC 4|Page
PART - B
Two Marks questions:
1] What is partnership?
2] Define Partnership.
3] What is a partnership deed?
4] What is the fixed capital method?
5] What is the fluctuating capital method?
6] State any two differences between fixed and fluctuating capital methods.
7] What is the guarantee of profit to a partner?
8] What do you mean by past adjustments?
9] Name any two methods for calculation of Interest on drawings.
10] When do the Interest on drawings be generally provided to partners?
11] How do you close a profit and loss appropriation account in partnership?
12] State any two special aspects of partnership accounts.

PART - C
Six Marks questions:
Problems on Preparation of P & L Appropriation A/c
1] Shreshtha and Jyeshtha commenced business in partnership on 01.04.2023 with
a capital of `4,00,000 and `3,00,000 respectively agreeing to share profits and
losses in the ratio of 3:2. For the year ending 31.03.2024, they earned the profits
of `66,000 before allowing:
i] Interest on capital at 5% p.a.
ii] Interest on drawings: Shrestha `2,000 and Jyeshtha `1,500
iii] Yearly salary of Shreshtha `6,000 and commission to Jyeshtha `4000.
iv] Their drawings during the year: Shreshtha `40,000 and Jyeshtha
`30,000.
Prepare Profit and Loss Appropriation Account.

2] Shivam and Swayam are partners sharing profits in the ratio of 2:1 with capitals
of `2,50,000 and `1,50,000 respectively. Interest on capital is agreed @ 5 % p.a.
Swayam is to be allowed an annual salary of `8,000. During the year 2023-24,
they earned a profits of `30,000. A provision of `2000 is to be made in respect of
commission to the manager. Interest on drawings being; Shivam `2000 and
Swayam `1000.
Prepare Profit and Loss Appropriation Account.

II - PUC 5|Page
3] Salim & Khadar are Partners commenced Partnership business on 1.4.2023
sharing profits & losses in the ratio of 3:2 with capitals of ` 1,00,000 and `80,000
respectively. They earned profits of `25,000 for the year before allowing:
a] Interest on Capitals @ 10% p.a.
b] Interest on drawings: Salim `1,000 & Kadar `800
c] Commission payable to Salim `2000 p.a.
d] Salary payable to Khadar `3000 p.a.
Prepare P & L Appropriation A/c for the year ending 31.03.2024

Problems on Calculation of Interest on Drawings


1] Yashasvi and Tapashvi are partners in a firm. During the year ended 31st March
2024 Yashasvi makes the drawings as under Date of Drawings
Amount (`)
01.08.2023 `5,000
31.12.2023 `10,000
31.03.2024 `15,000
Partnership Deed provided that partners are to be charged interest on drawings
@ 12% p.a. Calculate the interest on drawings of Yashasvi under Product Method.

2] Sahana and Saniya are partners in the firm. Sahana’s drawings for the year 2023-
24 are given as under:

`4,000 on 01.06.2023
`6,000 on 30.09.2023
`2,000 on 30.11.2023
‘3000 On 01.01.2024

Calculate interest on Sahana’s drawings at 8% p.a. for the year ending 31.03.2024,
under product method

3] Murthy and Patil are partners in a firm sharing profits and losses in the ratio of
3:2. Murthy withdraws `4,000 quarterly.
i] At the beginning of each quarter
ii] At the end of each quarter
Calculate the interest on drawings at 9% p.a. for the year ending
31.03.2024, under product method.

II - PUC 6|Page
4] Calculate interest on drawings of Mr. Kamalakar @10% p.a if he withdrew ` 1,000
per month by the short cut method:
i] At the beginning of each month
ii] At the end of each month.

5] Calculate interest on drawings of Purohit @10%p.a. if he withdrew `48,000 in a


year evenly.
i] At the beginning of each quarter.
ii] At the end of each quarter

Problems on Guarantee of a Profit to a partner


1] Sachin and Rahul were partners in a firm sharing profits and losses in the ratio of
3:2. They admit Dhoni for 1/6th share in profits and guaranteed that his share of
profits will not be less than `25,000. Total profits of the firm were `90,000.
Calculate share of profits for each partner when the Guarantee is given by a firm.
Prepare Profit and Loss Appropriation Account.

2] Roja and Usha were partners in a firm sharing profits and losses in the ratio of 3:2.
They admit Sahana for 1/6th share in profits and guaranteed that his share of
profits will not be less than `25,000. Total profits of the firm was `90,000.
Calculate share of profits for each partner when the Guarantee is given by Roja.
Prepare Profit and Loss Appropriation Account.

II - PUC 7|Page
PART - A
One Mark Questions:
I] Multiple Choice Questions:
1] At the time of admission of a new partner, general reserve appearing in the old
balance sheet is transferred to:
a] All Partners Capital Account
b] New Partner’s Capital Account
c] Old Partners Capital Account
d] Not to be transferred

2] A, B and C are partners in a firm. If D is admitted as a new partner:


a] Old firm is dissolved
b] Old firm and old partnership are dissolved
c] Old partnership is reconstituted
d] Old partnership dissolved

3] On the admission of a new partner, increase in the value of asset is credited to:
a] Profit and Loss Adjustment(Revaluation) Account
b] Asset account
c] Old Partners Capital account
d] New partner’s capital account

4] At the time of admission of a partner, undistributed profits appeared in the


balance sheet of the old firm is transferred to the capital accounts 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] All partners capital account equally

5] A and B are partners with capitals of `45,000 each. C is admitted for 1/3rd share
and he brings in `60,000 as his capital. Hidden goodwill is,
a] `60,000
b] `30,000
c] `90,000
d] `45,000

II - PUC 8|Page
6] Which of the following are treated as reconstitution of a Partnership Firm?
a] Admission of a partner
b] Change in profit sharing ratio
c] Retirement of a partner
d] All of the above

7] Profit or Loss on revaluation is shared among the partners in the:


a] Old profit sharing ratio
b] New profit sharing ratio
c] Capital ratio
d] Equal ratio

8] Assets and Liabilities are recorded in Balance Sheet after the admission of a
partner at:
a] Original value
b] Revalued value
c] Realisable value
d] Book value as appeared in old balance sheet

9] Old Profit Sharing Ratio - New Profit Sharing Ratio is =


a] Sacrificing ratio
b] Gaining ratio
c] Both the above
d] None of the above

10] In the absence of an agreement to the contrary, it is implied that old partners will
contribute to new partner’s share of profit in the ratio of:
a] Capital
b] Old profit sharing ratio
c] Sacrificing ratio
d] Equally

11] The balance of reserves and other accumulated profits at the time of admission of
a new partner are transferred to:
a] All partners in the new ratio
b] Old partners in the new ratio
c] Old partners in the old ratio
d] Old partners in the sacrificing ratio

12] Revaluation Account is debited for the:


a] increase in provision for doubtful debts
b] increase in the value of building
c] decrease in the amount of creditors
d] transfer of loss on revaluation

II - PUC 9|Page
13] A and B are partners sharing profits in the ratio of 3:1. C is admitted into
partnership for 1/4th share. The sacrificing ratio of A and B will be:
a] Equal
b] 3:1
c] 2:1
d] 3:2

14] On the admission of new partner, increase in the value of assets is debited to:
a] Profit and Loss adjustment account
b] Assets account
c] Old partners capital account
d] New partner’s capital account

15] A and B are partners sharing profits in the ratio of 3:1. They admit C for
¼th share in the future profits. The new profit sharing ratio will be:
a] A 9 ,B 3 ,C 4
16 16 16
b] A 8 ,B 4 ,C4
16 16 16
c] A 10 , B 2 , C4
16 16 16
10
d] A 8 ,B 9
, C
16 16 16

16] X and Y share profits in the ratio of 3:2. Z was admitted as a partner who gets
1/5th 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

17] 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 `40,000.
How much of the goodwill will be credited to the old partners capital account?
a] `2,500 each
b] `5,000 each
c] `20,000 each
d] ` 25,000 each.

18] If average profit is `15,000, Capital employed is `1,00,000 and Normal rate of
return is 10%, then the value of goodwill under capitalization method is;
a] `25,000
b] ` 50,000
c] ` 75,000
d] ` 10,000

II - PUC 10 | P a g e
II. Fill in The Blanks:

1] ratio is used to distribute accumulated profits and losses at the time of


admission of a new partner.
2] Profit or loss on revaluation is shared among the old partners in ratio
3] Old ratio – New ratio =
4] Accumulated losses are transferred to the capital accounts of the old partners at
the time of admission in their ratio.
5] General reserve is to be transferred to accounts at the time of admission of
a new partner.
6] Goodwill brought in by new partner in cash is to be distributed among old partners
in ratio.
7] If the amount brought by new partner is more than his share in capital, the excess
is known as .
8] Account is debited for the increase in the value of an asset.
9] Unrecorded asset is to be credited to account.
10] Due to change in profit sharing ratio, some partners will gain in future profits while
others will .
11] Goodwill is an asset.
12] account is credited for cash brought in by new partner for his share of
goodwill.
13] ratio is required for sharing future profits and also for adjustment of capitals.

III. Match the following type questions:


A B
a Sacrifice ratio i Old share – share sacrificed
b Goodwill ii Share in future profits
c New share iii Old share – New share
d Average profit method iv AS-26
e Right of new partner v Intangible asset
f Shortage of funds vi Valuation of Goodwill
g Accounting for Intangible asset vii Reason for admission

IV. Very short answer questions:


1] What is Partnership?
2] What do you mean by reconstitution of a Partnership Firm?
3] State any one reason for admission of a new partner.
4] State any one right acquired by a newly admitted partner.

II - PUC 11 | P a g e
5] Why the NPSR is required at the time of admission of a partner?
6] What is Goodwill?
7] State any one factor affecting the value of goodwill.
8] What is normal profit?
9] State any one method of valuation of goodwill.
10] Give the formula for sacrifice ratio.
11] Which account is to be debited to record the increase in the value of an asset?
12] What is Revaluation Account?
13] Which account will be credited when there is a loss on revaluation?
14] Which account will be debited when the cash is brought by a new partner for his
share of goodwill?
15] What is hidden goodwill?

State True or False in following cases:


16] Goodwill brought in cash by new partner is distributed among old partner in their
Sacrificing ratio.
17] In case of admission of a partner, profit or loss on revaluation is transferred to
Old Partners’ Capital Accounts.
18] Accumulated profit is transferred to all partners’ capital Accounts including new
partner.
19] The debit balance of Profit and Loss Account shown in the assets side of the
Balance Sheet will be debited to Old Partners Capital Accounts.
20] Increase in the value of an asset is credited to Revaluation Account

21] The traditional name of Revaluation A/c is ‘Profit and Loss Adjustment A/c’.
22] Goodwill is an intangible asset.
23] Decrease in the value of liability is debited to Revaluation Account.

24] Sacrifice ratio is required to distribute the cash brought by new partner among
old partners for his share of goodwill.
25] Share sacrificed = Old share – New share.

II - PUC 12 | P a g e
Six Marks Problems on sacrifice ratio

1] Anil and Sunil are partners sharing profits and losses in the ratio of 4:3. They admit
Akash into partnership. The new profit sharing ratio is agreed at 7:4:3 respectively.
Find out the sacrifice ratio of old partners.

2] Sharat and Bharat are partners sharing profits and losses in the ratio of 3:2. They
admit Kamat into partnership and the new ratio was agreed to be 5:4:3. Calculate
the sacrifice ratio.

3] Avinash and Bhima are partners in a firm sharing profits in the ratio of 5:3. They
admit Chandru as a new partner for 1/7th share in the future profit. The new profit
sharing ratio will be 4:2:1. Calculate the sacrifice ratio of Avinash and Bhima.

II - PUC 13 | P a g e
PART - D
12 Marks Problems :
I] When new partner brings cash for his share of goodwill
1] Maya and Chhaya are partners sharing profits and losses in the ratio of 2:1. Their
Balance Sheet as on 31.3.2024 was as follows:
Balance Sheet as on 31.03.2024
Liabilities ` Assets `
Creditors 20,000 Cash in Hand 8,000
Bills Payable 7,000 Stock 15,000
Reserve Fund 18,000 Debtors 20,000
Capitals: Machinery 30,000
Maya 60,000 Buildings 60,000
Chhaya 40,000 Investments 12,000
Total 145,000 Total 145,000

On 01.04.2024, Shreya is admitted into partnership on the following conditions:


a] Shreya should bring in cash `25,000 as her capital and `15,000 as goodwill
for 1/5th share in future profits. (as per AS-26)
b] Appreciate Buildings at 20% and Stock is revalued at `12,000.
c] Maintain Provision for doubtful debts at 5% on Debtors.
d] Outstanding salary `2,000.
Prepare :
i] Revaluation Account.
ii] Partners’ Capital Accounts &
iii] New Balance Sheet of the firm.

2] Rekha and Surekha are partners in a firm sharing profits and losses in the ratio
of 3:2. Their balance sheet is given below:
Balance Sheet as on 31.03.2024
Liabilities ` Assets `
Creditors 18,000 Cash at Bank 20,000
O/s Salary 12,000 Sundry debtors 25,000
Reserve Fund 10,000 Less: PDD 2,000 23,000
Capitals: Stock 7,000
Rekha 60,000 Furniture 25,000
Surekha 40,000 100,000 Buildings 50,000
P & L Account 15,000
Total 1,40,000 Total 1,40,000

II - PUC 14 | P a g e
On 01.04.2024, they admit Chandrika as new partner into partnership on the
following terms:
a] She brings in `40,000 as capital and `20,000 towards goodwill for 1/4th
share in future profits. (as per AS26)
b] Depreciate Furniture by 10% and buildings are revalued at `45,000.
c] PDD is increased to `3,500.
d] Prepaid insurance `2,000.
Prepare:
i] Revaluation Account.
ii] Partners’ Capital Accounts &
iii] New Balance sheet as on 01.04.2024.

II. When goodwill of the firm is valued


3] Sharavati and Netravati are partners in a firm sharing profits and losses in the
ratio of 3:2. Their Balance Sheet as on 31.03.2024 stood as follows:
Balance Sheet as on 31.03.2024
Liabilities ` Assets `
Bills Payable 14,000 Cash 15,000
Creditors 16,000 Buildings 25,000
General Reserve 5,000 Patents 6,000
Capitals: Machinery 35,000
Sharavati 50,000 Debtors 20,000
Netravati 20,000 Less: Provisions 1000 19,000
Stock 5,000
Total 105,000 Total 105,000

On 01.04.2024, Kaveri is admitted into the partnership for 1/6th share in future
profits on the following terms:
a] Kaveri pays `20,000 as capital. The Goodwill of the firm is valued at `24,000
(as per AS 26)
b] Buildings are appreciated by `5,000
c] Machinery is depreciated by 20%.
d] Provision for doubtful debts is increased by `1,000.
Prepare :
i] Revaluation Account
ii] Partners’ Capital Accounts &
iii] Balance Sheet of the firm after admission.

II - PUC 15 | P a g e
4] Malaprabha, Ghataprabha and Hiranyakeshi are partners in a firm sharing
profits and losses in the ratio of 2:1:1. Their Balance Sheet as on 31.03.2024 was
as follows:
Balance Sheet as on 31.03.2024
Liabilities ` Assets `
Creditors 1,00,000 Cash at Bank 17,000
Reserve fund 32,000 Bills Receivable 19,000
Bank OD 8,000 Debtors 1,20,000
Capitals: Less: PDD 6,000 1,14,000
Malaprabha 40,000 Stock 80,000
Ghataprabha 50,000 Buildings 60,000
Hiranyakeshi 60,000
Total 2,90,000 Total 2,90,000

On 01.04.2024, they admit Krishna into the partnership for 1/5th share in future
profits on the following terms:
a] Krishna brings `50,000 as her capital.
b] Goodwill of the firm is valued at `60,000 (as per AS-26)
c] Reduce Stock by 10% and appreciate Buildings to `70,000.
d] Provision for doubtful debts decreased by `2,000.
Prepare :
i] Revaluation Account
ii] Partners’ Capital Accounts &.
iii] New Balance Sheet of the new firm.

II - PUC 16 | P a g e
II. Capitals Adjustments Problems:
5] Mahesh and Suresh are equal partners in a firm. Their Balance Sheet as on
31.03.2024 stood as follows:
Balance Sheet as on 31.03.2024
Liabilities ` Assets `
Creditors 40,000 Stock 39,000
Bank Loan 8,000 Debtors 32,000
Less: PDD 2,000 30,000
Capitals: Land & Buildings 40,000
Mahesh 80,000 Machinery 36,000
Suresh 40,000 1,20,000 Motor Car 8,000
Cash at Bank 15,000
Total 1,68,000 Total 1,68,000
On 01.04.2024, Rakesh is admitted into partnership for 1/5th share in profits on
the following terms:
a] Rakesh should bring `26,000 as capital.
b] Goodwill of the firm is valued at `10,000 (as per AS 26)
c] Motor car and Machinery are to be depreciated by 20% and `3,800
respectively.
d] Prepaid rent `600.
e] Provision for doubtful debts is to be maintained at 10%.
f] The Capital Accounts of all the partners are to be adjusted in their new profit
sharing ratio 2:2:1, based on Chandra’s Capital after adjusting goodwill
(Adjustments are to be made in cash)
g] Sacrifice ratio of old partners is 1:1
Prepare :
i] Revaluation Account
ii] Partners’ Capital Account &
iii] New Balance Sheet of the firm

II - PUC 17 | P a g e
PART - A
One Mark Questions:
I] Multiple Choice Questions:
1] Abhishek, Rajat and Vivek are partners sharing profits in the ratio of 5:3:2. If
Vivek retires, the New Profit Sharing Ratio between Abhishek and Rajat will be–
a] 3:2
h] 5:3
i] 5:2
j] 1:1
2] The old profit sharing ratio among Rajendra, Satish and Tejpal were 2:2:1. The
New Profit Sharing Ratio after Satish’s retirement is 3:2. The gaining ratio is;
a] 3:2
b] 2:1
b] 1:1
c] 2:2
3] Anand, Bahadur and Chander are partners sharing profits equally. On Chander’s
retirement, his share is acquired by Anand and Bahadur in the ratio of 3:2. The
New Profit Sharing Ratio between Anand and Bahadur will be:
a] 8:7
b] 4:5
c] 3:2
d] 2:3
4] In the absence of any information regarding the acquisition of share in the profit
of the retiring/deceased partner by the remaining partners, it is assumed that
they will acquire his/her share in:
a] Old Profit Sharing Ratio
b] New Profit Sharing Ratio
c] Equal Ratio
d] gain ratio

II - PUC 18 | P a g e
5] On retirement/death of a partner, the remaining partner(s) who have gained due
to change in profit sharing ratio should compensate the
a] retiring partners only.
b] remaining partners (who have sacrificed) as well as retiring partners.
c] remaining partners only (who have sacrificed).
d] Remaining partners who have gained

6] Amount due to deceased partner is settled in the following manner;


a] Immediate full payment
b] Transferred to Loan Account
c] Partly paid in cash and the balance transferred to Loan A/c
d] All of the above.

7] Deceased partner’s share of profit in the accrued profit may be calculated on the
basis of
a] Last year’s profit
b] average profit of past few years
c] Sales
d] All the above

8] Items to be considered while calculating the amount payable to the deceased


partner is:
a] His share of capital
b] His share of reserve
c] His share of accrued profit
d] All the above

9] Accrued profit is ascertained on the following ways


a] Average profit
b] Previous year’s profit
c] On sales
d] All of the above.

10] Amount payable to the Executors of the deceased partner is transferred to:
a] Executors loan account.
b] Executors account.
c] Remaining partners’ capital accounts.
d] deceased partner’s capital account.

II - PUC 19 | P a g e
II. Fill in the blanks:
1] ratio is used to distribute accumulated profits and losses at the time
of retirement of a partner.
2] Profit or loss on revaluation is shared among the partners in ratio on
retirement of a partner.
3] New ratio – Old ratio =
4] Accumulated losses are transferred to the Capital Accounts of the partners at
the time of retirement in their ratio.
5] General reserve is to be transferred to accounts at the time of
retirement of a partner.
6] In the absence of any instruction, Retiring Partner’s Capital A/c is closed by
transferring its balance to A/c
7] ratio is used for adjustment of continuing partner’s capitals.
8] X, Y and Z are the partners sharing profits and losses in the ratio of 3:2:1.
If Y retires, the new ratio of X and Z will be .
9] Share gained is calculated by deducting share from the New Share.
10] The ratio in which the remaining partners share future profits after retirement is
called ratio.
11] The balance in the retiring partner’s loan A/c is shown on the side of
the B/S till the last installment is paid.
12] The amount paid to the Retiring Partner in excess of what is due to him is called
goodwill.
13] In the absence of any agreement as the disposal of amount due to retiring
partner, Sec. of the Indian Partnership Act, 1932 is applicable.
14] Executors account is generally prepared at the time of of a partner.
15] Accounting treatment at the time of retirement and death is .
16] The period from date of the last B/S and the date of the partner’s death is
called period.
17] account is debited for the transfer of share of accrued profit
of a deceased partner.
18] Amount payable to the Executors of the deceased partner is transferred to
account.

II - PUC 20 | P a g e
III. Match the following type questions:
A B
a Gaining ratio i Outgoing partner receive 6%
interest
b Gained share ii Old share + acquired share
c New share iii Death of a partner
d Executor’s account iv New share – Old share
e Section 37 of partnership v Transfer to Executor’s account
act
f Amount due to deceased vi Required for contribution to
partner retiring partner share of goodwill

IV. One Marks Questions.


1] What do you mean by retirement of a partner?
2] Give the formula for calculating Gain Ratio.
3] Why the Gain Ratio is required on retirement of a partner?
4] Why the New Ratio is required on retirement of a partner?
5] Give the formula for calculation of new profit sharing ratio on retirement of a
partner.
6] What do you mean by hidden goodwill?
7] When do you prepare executors account?
8] How do you close the executors account?
9] Who is an ‘Executor’?
10] Which account is credited for the share of accrued profit of a deceased partner?
11] What is intervening period?

State true or false in the following cases:


12] Profit or loss on revaluation is transferred to All Partners’ Capital Accounts in
case of retirement of a partner.
13] Accumulated profit is transferred to Continuing Partners Capital Accounts.
14] Adjustment of partners’ capitals of the remaining partners is to be made in the
New Ratio.
15] New Share = Old share + share sacrificed.
16] Share gained is computed by deducting Old share from the New Share.
17] Increase in the value of asset is debited to Revaluation Account.

II - PUC 21 | P a g e
18] Sec 37 of the Indian Partnership Act, 1932 states that the outgoing partner has
an option to receive either interest @ 6% p.a. till the date of payment or such
share of profits which has been earned with his money.
19] Deceased partner’s claim is transferred to his Executor’s Account
20] Deceased partners’ share of profit for the intervening period may be calculated on
the basis of last year’s profit/ average profit of past few years or on the basis of
sales.
21] Deceased partner may be paid in one lump sum or installments with interest.
22] Retirement normally takes place at the end of an accounting period, where as
death of a partner may occur at any time.
23] Amount payable to the Executors of the deceased partner is transferred to
executor’s loan account.

PART- B
TWO MARKS QUESTIONS:
1] Mention any two circumstances for retirement of a partner.
2] What is Gain Ratio?
3] State any two differences between sacrificing ratio and gaining ratio.
4] State any two purposes of calculating new profit sharing ratio.
5] How do you close the Revaluation Account on retirement of a partner?
6] Mention any two modes of disposal of amount due to Retiring Partner.
7] Pass the journal entry to close Retiring Partner’s Capital Account when the
payment is made immediately.
8] Give the journal entry to close Retiring partner capital Account when it is
transferred to Loan A/c.
9] Give the journal entry to close Revaluation Account when there is a profit.
10] Give the journal entry to close Revaluation Account when there is a loss.
11] Why do firms revalue the assets and liabilities on retirement?
12] Why retiring partner is entitled to a share of goodwill of the firm?
13] Pass the journal entry for Deceased Partner’s Share of profits for the intervening
period:
14] Give the meaning of accrued profit.
15] State any two differences between retirement and death of a partner.
16] Write any two ways of settlement of claims of the deceased partner.
17] Write the journal entry to close the deceased partner’s Capital Account.
18] Pass Journal entry for transfer of accrued profit of the deceased partner.
19] Write the journal entry for cash paid immediately to the executors of the deceased
partner.

II - PUC 22 | P a g e
20] How do you close the executors account when the payment is not made
immediately?
21] A, B, C were partners in a firm sharing profits in the ratio of 5:4:1. The profit of
the firm for the year ending on 31-3-2024 was `12,000. B dies on 30-6-2024.
Calculate B’s share of profit from 1-4-2024 to 30-6-2024.
22] Give the Journal entry when retiring partner’s whole amount is treated as loan.
23] Pass the Journal entry when retiring partner is partly paid in cash and the
remaining amount is treated as loan
24] P, Q and R are partners in a firm sharing profits in the ratio of 3:2:1. R retires
and the balance in his Capital Account after making necessary adjustments
workout to be `60,000. P and Q agreed to pay him `75,000 in full settlement of
his claim. Find out the hidden goodwill.

PART - C
Six marks problems on calculation of Gain Ratio.

1] Ajay, Vijay and Sanjay are partners in a firm sharing profits and losses in the ratio
of 4:3:2. Ajay retires from the firm. Vijay and Sanjay agreed to share future profits
in the ratio of 5:3. Calculate gain ratio of Vijay and Sanjay.

2] Kishan, Ratan and Nayan are partners in a firm sharing profits and losses in the
ratio of 4:3:2. Nayan retires from the firm. Kishan and Ratan agreed to share
equally in future. Calculate gain ratio of Kishan and Ratan

3] Sharat, Bharat and Kamat are Partner’s sharing Profits and Losses in the ratio of
1:1:1. Bharat retires from the Firm. Sharat and Kamat decided to share the profit
in future in the ratio of 4:3. Calculate the Gain ratio.

II - PUC 23 | P a g e
PART-C

SIX MARKS PROBLEMS: ON DEATH OF PARTNER

1] Rajesh, Rakesh and Ramesh are the partners sharing profits and losses in the ratio
of 3:2:1, Their capitals as on 01.04.2024 were `1,00,000, `90,000 and `60,000
respectively. Rajesh died on 01-10-2024 and the Partnership Deed provided the
following:

a] Interest on Rajesh’s Capital at 10% p.a.


b] Rajesh’s salary `2,000 p.m.
c] His share of accrued profit up to the date of death based on previous year’s
profit. Firms profit for 2023-24 `24,000
d] His share of Goodwill `12,000 (as per AS26)
Ascertain the amount payable to Rajesh’s Executor by preparing Rajesh’s Capital
A/c

2] Ram, Rahim and Rakshit are partner’s sharing profits and losses in the ratio of
2:2:1. Their capital balances on 01.04.2024 stood at `90,000, `60,000 and
`40,000 respectively. Mr. Rahim died on 01.07.2024 and partnership deed
provides the following:
a] Interest on capital at 10% p.a.
b] Salary to Rahim `2,000 per month.
c] Rahim’s share of Goodwill(as per AS26)
d] His share of profit up to the date of death on the basis of previous year’s
profit.
i) Total good will of the firm is `60,000
ii) Profit of the firm for the year 2023-24 is `40,000
You are required to ascertain the amount payable to Executors of Rahim by
preparing Rahim’s Capital Account.

II - PUC 24 | P a g e
3] Dinesh, Mahesh and Ramesh are partners sharing profit and losses in the ratio of
4:3:3. Their capital balances on 01.04.2023 stood `1,00,000, `80,000 and
`50,000 respectively. Dinesh died on 31.12.2023. The partnerships deed provides
the followings:
a] Interest on capital at 12% p.a.
b] He had withdrawn `5,000 up to the date of death.
c] Dinesh’s share of goodwill `5,000 (as per AS26)
d] His share of profit up to the date of death on the basis of previous year
profits.
Previous year’s profits `20,000.
Prepare Dinesh’s Executors Account.

II - PUC 25 | P a g e
PART-D
12 Marks Problems
1] Amar, Akbar and Anthoni were partners in a firm sharing profits in the ratio of
2 : 2 : 1. Their Balance Sheet as on March 31, 2024 was as follows:
Balance Sheet as on 31-03-2024
Amount Amount
Liabilities Assets
(`) (`)
Creditors 50,000 Cash 15,000
Reserves 20,000 Debtors 20,000
Amar’s Capital 80,000 Stock 40,000
Akbar’s Capital 60,000 Buildings 1,50,000
Anthoni’s Capital 75,000 Machinery 50,000
Patents 10,000

2,85,000 2,85,000

Akbar retired on March 31, 2024 on the following terms:


a] Goodwill of the firm was valued at `60,000. (as per AS26)
b] Bad debts amounting to `2,000 were to be written off.
c] Patents were considered as valueless.
d] Appreciate Building by 10%.
Prepare :
i] Revaluation Account
ii] Partners’ Capital Accounts and
iii] New Balance Sheet after Akbar’s retirement.

II - PUC 26 | P a g e
2] Pradeep, Sudeep and Sundar were in partnership sharing profits and losses in
the proportion of 3:2:1. Their Balance Sheet was as follows:
Balance Sheet as on 31-03-2024

Amount Amount
Liabilities Assets
(`) (`)
Trade Creditors 10,000 Cash at Bank 12,500
Bills Payable 3,000 Debtors 15,000
O/S Expenses 5,000 Stock 12,000
General Reserve 12,000 Factory Premises 22,500
Capitals : Machinery 8,000
Pradeep 20,000 Loose Tools 5,000
Sudeep 15,000
Sundar 10,000 45,000
75,000 75,000
On April 1, 2024, Sudeep retires from the firm. The terms were:
a] Goodwill of the firm was valued at `6,000. (as per AS26)
b] O/s Expenses to be brought down to `3,750.
c] Machinery and Loose Tools are to be valued at 10% less than their
book value.
d] Factory premises are to be revalued at `25,550.
Prepare :
i] Revaluation Account
ii] Partners’ Capital Accounts and
iii] Balance Sheet of the firm after retirement of Sudeep.

II - PUC 27 | P a g e
3] Mahesh, Suresh and Sandesh were partners sharing profits in the ratio of
3:2:1 respectively. Their Balance sheet as on 31st March, 2024 was as
f
o Liabilities ` Assets `
Sundry Creditors 23,000 Building 45,000
l
Bills Payable 15,000 Machinery 25,000
l
Profit and Loss A/c 12,000 Stock 15,000
oCapitals Debtors 20,000
w Mahesh 40,000 Bills Receivable 10,000
s Suresh 30,000 Cash 25,000
: Sandesh 20,000
Total 1,40,000 Total 1,40,000

Suresh retired on 1st April,2024 due to illness on the following terms;


a] Depreciate Machinery by 10%
b] Building is revalued at `46,500
c] Provision for doubtful debts is to be made at 10% on debtors. d]
Goodwill of the firm is valued at `48,000 (As per AS26)
e] The capital of the new firm be fixed at `80,000. The continuing partners have decided
to adjust their capitals in their new profit sharing ratio after retirement of Suresh.
Surplus/deficit, if any, in their Capital Accounts will be adjusted through cash. And
retiring partner’s claim is settled immediately.

i] Revaluation Account.
ii] All Partners Capital A/c.
iii} New Balance Sheet after retirement of Suresh

II - PUC 28 | P a g e

You might also like