MCQ Retirement Accountancy Class 12

In this page MCQs of Retirement for accountancy class 12 are given for your practice. Attempt all the questions and know the correct answers at the end of the test.

1. Assertion (A): It is necessary to revalue assets and liabilities of a firm in case of retirement of a partner.

Reason (R): It is because the outgoing partner has an advantage or disadvantage due to change in value of assets and liabilities.

(A) is correct but (R) is wrong.

Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

Both (A) and (R) are incorrect.

Both (A) and (R) are correct, and (R) is the correct explanation of (A).

2. Gaining ratio may be applied when:

a partner is admitted

a partner retires

a business is sold out

a partner is insolvent

3. A, B and C are partners sharing profits in the ratio 4 : 3 : 2. B retires, selling his share of profit to A and C for 7,200 ( 4,000 paid by A and 3,200 paid by C). The new profit sharing ratio of A and C will be:

17 : 10

15 : 12

19 : 8

None of these

4. On retirement/death of a partner, revaluation profit is distributed among:

All partners in old ratio

remaining partners in new ratio

All partners equally.

5. Ashima, Bhawna and Chirag are partners sharing profits and losses in the ratio of 5 : 4 : 3. Chirag retires and it is decided that Ashima and Bhawna will share profits of Chirag in 4 : 3, new profit sharing ratio will be:

5 : 4

4 : 3

47 : 37

5 : 3

6. Assertion (A): Revaluation account is prepared only at the time of retirement of a partner.

Reason (R): Revaluation account is also prepared at the time of dissolution of firm.

(A) is correct but (R) is wrong.

Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

Both (A) and (R) are incorrect.

Both (A) and (R) are correct, and (R) is the correct explanation of (A).

7. Assertion (A): X,Y and Z were partners in a firm sharing profit in the ratio of 3 : 2 : 1. Y retires and on that date balance sheet of the firm showed a credit balance of ₹ 12,000 in its general reserve account which was credited to capital accounts of all partners.

Reason (R): Any amount which increases the amount payable to partner must be credited to capital/current account.

(A) is correct but (R) is wrong.

Both (A) and (R) are correct, but (R) is not the correct explanation of (A).

Both (A) and (R) are incorrect.

Both (A) and (R) are correct, and (R) is the correct explanation of (A).

8. X, Y and Z are partners with capitals of 4,00,000, 3,00,000 and 1,00,000 respectively. On Z’s retirement, his share is acquired by X and Y in the ratio of 3 : 2 respectively. Gaining ratio will be:

4 : 3

3 : 1

4 : 1

3 : 2

9. The reserves and accumulated profits at the time of retirement of a partner is transferred to:

Retired partner in old ratio

All partners in old ratio

Remaining partners in new ratio

Remaining partners in gaining ratio

10. Assertion (A): When a partner is retired from the firm it is necessary to calculate gaining ratio.

Reason (R): Share of goodwill of retiring partner is compensated by gaining partner in gaining ratio only.

(A) is correct but (R) is wrong.

Both (A) and (R) are correct, but (R) is not the correct explanation of (A)

Both (A) and (R) are incorrect.

Both (A) and (R) are correct, and (R) is the correct explanation of (A).

11. Statement I: If the firm has agreed to pay the amount to retiring partner in excess of his adjusted capital due it shall be treated as his share of reserve.

Statement II: Retiring partner is entitled to interest on partner’s loan @ 6 % p.a. if not mentioned in question.

Both Statements are correct.

Both Statements are incorrect.

Statement I is correct and Statement II is incorrect.

Statement I is incorrect and Statement II is correct.

12. Statement I: Gaining ratio is required because the remaining partners will pay the retiring partner’s share of goodwill in their gaining ratio.

Statement II: Gaining Ratio = New Ratio – Old Ratio

Both Statements are correct.

Both Statements are incorrect.

Statement I is correct and Statement II is incorrect.

Statement I is incorrect and Statement II is correct.

13. Claim of the retiring partner is payable in which of the following form:

Fully paid in cash

Fully transferred to loan a/c with some interest on it

Partly in cash and partly as loan repayment with agreed interest

Any of the above

14. Statement I: A, B and C are partners sharing profits in the ratio of 4 : 3 : 2. C retires and he surrenders his share to A and B in ratio 2 : 1. The new profit sharing ratio of A and B will be 16 : 11.

Statement II: On the retirement of a partner, the old partnership comes to an end but the firm continues.

Both Statements are correct.

Both Statements are incorrect.

Statement I is correct and Statement II is incorrect.

Statement I is incorrect and Statement II is correct.

15. On the retirement of Hari from the firm of Hari, Ram and Sharma, the balance sheet showed a debit balance of 12,000 in the Profit and Loss Account. For calculating the amount payable to Hari this balance will be transferred:

To the credit of the capital accounts of Hari, Ram and Sharma equally.

To the debit of the capital accounts of Hari, Ram and Sharma equally.

To the debit of the capital accounts of Ram and Sharma equally.

To the credit of the capital accounts of Ram and Sharma equally.

16. A, B and C are partners sharing profits and losses in the ratio of 4 : 3 : 2. A retires. B and C decide to share profits and losses in the ratio 3 : 2. Gaining ratio between B and C will be:

4 : 3

3 : 2

2 : 1

None of these

17. On retirement of a partner, the existing goodwill in the Balance Sheet is written off and debited to:

All Partners’ Capital A/c in old ratio

Remaining Partners’ Capital A/c in new ratio

Remaining Partners’ capital A/c in gaining ratio

None of these

18.

P, Q and R are equal partners. R retires and P and Q agree to share future profits in 3 : 2 ratio. The goodwill of the firm is valued at ` 36,000, which will be adjusted through the entry:

R’s Capital A/c Dr. 12,000
To P’s Capital A/c 8,000
To Q’s Capital A/c 4,000

P’s Capital A/c Dr. 9600
Q’s Capital A/c Dr. 2400
To R’s Capital A/c 12,000

R’s Capital A/c Dr. 12,000
To P’s Capital A/c 6,000
To Q’s Capital A/c 6,000

P’s Capital A/c Dr. 6,000
Q’s Capital A/c Dr. 6,000
To R’s Capital A/c 12,000

19. A, B, C and D are partners sharing profits in 2 : 2 : 1 : 1. B retires and remaining partners decided to share future profits equally. If goodwill of the firm is 30,000, the adjustment entry for goodwill will be:

C’s Capital A/c Dr. 6000
D’s Capital A/c Dr. 3000
To B’s Capital A/c 9000

A’s Capital A/c Dr. 3000
C’s Capital A/c Dr. 3000
D’s Capital A/c Dr. 3000
To B’s Capital A/c 9000

C’s Capital A/c Dr. 5000
D’s Capital A/c Dr. 5000
To B’s Capital A/c 10,000

A’s Capital A/c Dr. 3334
C’s Capital A/c Dr. 3333
D’s Capital A/c Dr. 3333
To B’s Capital A/c Dr. 10,000

20. P, Q and R are partners sharing profits in the ratio 4 : 3 : 2. R retires and he surrenders 2/3 of his share in favour of P and 1/3 share in favour of Q. The new profit sharing ratio of P and Q would be:

16 : 11

15 : 12

17 : 10

None of these

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