Accounting for Partnership Firms – Mock Test 1

1. Any change in the relationship of existing partners, which results in an end of the existing agreement and enforces making of a new agreement is called _____________.

2. The excess amount which the firm can get on selling its assets over and above the saleable value of its assets is called ___________.

3. A and B are partners sharing profits in the ratio of 2 : 1. C is admitted for 1/4 th share of profits which he acquired equally from A and B. C brings  30,000 as goodwill, it will be credited to old partners as:

4. A, B and C are sharing profits in the ratio 2 : 2 : 1. B died on 30th June 2018. Accounts are closed on 31st March each year. Sales and profits for the year ended 31st March 2018 were  28,00,000 and  8,40,000 respectively. The sales of firm amounted to  12,00,000 between the period from 1st April 2018 to 30th June 2018. The amount of profit to be credited to B’s executors A/c will be:

5. Firm has earned exceptionally high profits from a contract which will not be renewed. In such a case, the profit from this contract will not be included in:

6. When realisation expenses are paid by the firm on behalf of a partner, such expenses are debited to:

7. P, Q and R sharing profits in the ratio 5 : 4 : 1. They decided to share future profits equally. Goodwill is valued at ` 60,000, which will be adjusted through the entry:

8. 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.

9. A partner, Kapil, paid an unrecorded liability of ₹ 800. The entry passed on dissolution will be:

10. A, B and C are partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. On June 30, 2018 C died. Accounts are closed on March 31 every year. The sales for the year 2017–18 were  6,00,000 and the profits were  60,000. The sales for the period from April 1, 2018 to June 30, 2018 were  2,00,000. The share of deceased partner in the current year’s profits on the basis of sales is:

11. In the absence of any Partnership Agreement, the profits or losses of the firm are divided:

12. A, B and C are partners in a business sharing profits in the ratio of 2 : 2 : 1. C dies on 31.03.2019. The profits for the financial year 2018–2019 is  1,28,000. The share of deceased partner in the profits for the year will be:

13. In which condition a partnership firm is deemed to be dissolved?

14. A, B and C are partners. A’s capital is ₹ 3,00,000 and B’s capital is ₹ 1,00,000. C has not invested any amount as capital but he alone manages the whole business. C wants 30,000 p.a. as salary, though the deed is silent. Firm earned a profit of ₹ 1,50,000. How much will each partner receives as an appropriation of profits?

15. Assertion (A): Partners distribute profits and losses in their profit-sharing ratio and not in the ratio of their capitals.

Reason (R): If the amount of appropriations, as per Partnership Deed are more than the amount of profit available for distribution, profit is distributed in the ratio of appropriations.

16. A, B & C are partners sharing profits are losses in the ratio of 4 : 3 : 2, decided to share future profit & losses in the ratio of 2 : 3 : 4, w.e.f. 1st April, 2023. Workmen Compensation Reserve appearing in the balance sheet is ₹ 45,000 and a claim on account of Workmen Compensation is estimated at ₹ 54,000. Then

17. Navya and Radhey were partners sharing profits and losses in the ratio of 3 : 1. Shreya was admitted for 1/5th share in the profits. Shreya was unable to bring her share of goodwill premium in cash. The journal entry recorded for goodwill premium is given below:

The new profit-sharing ratio of Navya, Radhey and Shreya will be:

18. 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:

19. Assertion (A): Any gain or loss arising from the revaluation of assets and reassessment of liabilities is credited or debited to partners’ capital accounts in their old profit sharing ratio, when the profit sharing ratio changes.

Reason (R): Any increases or decrease in the value of assets and liabilities upto the date of change in profit sharing ratio is for the period before the change in profit sharing ratio. Therefore, it is shared by the partners in their old profit sharing ratio.

20. Assertion (A): A Partnership firm may be dissolved by mutual agreement of partners.

Reason (R): As a partnership firm is setup by an agreement, so it can be dissolved by an agreement.

21. The interest on Partner’s Capital Accounts is to be credited to ___________.

22. 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.

23. If at the time of admission of a new partner, there is some unrecorded liability, it will be transferred to:

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

25. Weighted average method of calculating goodwill be used:

26. 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 remaining share in favour of Q. The new profit sharing ratio of P and Q would be:

27. When goodwill is not purchased, goodwill account can:

28. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R).

Assertion (A): Goodwill is an intangible asset.

Reason (R): It is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits.

In the context of the above statements which of the following is correct?

29. Goodwill of a firm is not affected by:

30. 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:

31. The balances of partner’s current account are:

32. 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:

33. The profit sharing ratio among A, B and C was 4 : 3 : 2. The new profit sharing ratio of A and C, after B’s death is 5 : 4. The gaining ratio of A and C is:

34. A, B and C are partners in a business. B retired from the business, when his capital a/c, after all necessary adjustments, showed a balance of  1,09,500. It was agreed that he should be paid  49,500 cash on retirement and the balance in three equal yearly instalments with interest at 12% per annum. Amount of last instalment with interest will be:

35. 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.

36. Vihaan and Mann are partners sharing profits and losses in the ratio of 3:2. The firm maintains fluctuating capital accounts and the balance of the same as on 31st March 2022 is ₹ 4,00,000 and ₹ 4,65,000 for Vihaan and Mann respectively. Drawings during the year were ₹ 65,000 each. As per the partnership Deed, Interest on capital @ 10% p.a. on Opening Capital has been allowed to them. Calculate the opening capital of Vihaan given that the divisible profits during the year 2021-22 was ₹ 2,25,000.

37. Leela and Meeta were partners in a firm sharing profits and losses in the ratio of 7 : 3. Geeta was admitted as a new partner for a 3/13 share in the profits of the firm. The new profit sharing ratio will be:

38. On dissolution of partnership firm, spouse loan is transferred to:

39. A partnership firm is compulsory dissolved:

40. Retiring partner is compensated for parting with the firm’s future profits in favour of remaining partners. The remaining partners contribute to such compensation amount in:-

41. The value of Goodwill can be defined as excess of amount paid for business over and above its _________.

42. Net profit before commission has been 1,20,000. Partner’s commission is 20% of net profit before charging such commission. The amount of partner’s commission is:

43.

A partner, Kapil, paid an unrecorded liability of  800. The entry passed on dissolution will be:

44. Gaining ratio may be applied when:

45. A, B and C were partners sharing profits and losses in the ratio of 7 : 3 : 2. From 1st April, 2023 they decided to share profits and losses in the ratio of 8 : 4 : 3. General reserve appear in the books at ₹ 1,20,000 which they decided to continue in books as it is. The Adjustment entry for this will be:

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

47. Assertion (A): Partners distribute profits and losses in their profit-sharing ratio and not in the ratio of their capitals.

Reason (R): If the amount of appropriations, as per Partnership Deed are more than the amount of profit available for distribution, profit is distributed in the ratio of appropriations.

48. Statement I: Goodwill is an intangible asset but not a fictitious asset.

Statement II: Goodwill can be realised just like other assets.

49. At the time of dissolution of a firm, Loans given by partners to the firm is paid out of the amount realised on sale of assets:

50. Total capital employed by a partnership firm is  10,00,000 and its actual average profit is  2,50,000. Normal rate of return is 20% in similar firms working under similar conditions. The firm earns super profit of: