ASSERTION & REASON MCQ FOR ACCOUNTANCY CLASS 12TH FOR CHAPTER 5 – ADMISSION OF A PARTNER

Assertion and reason based MCQ for Accounts Chapter 5 – Admission of a Partner

Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

(i) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
(ii) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(iii) Assertion (A) is true, but Reason (R) is false.
(iv) Assertion (A) is false, but Reason (R) is true.

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1. Assertion (A): A new partner can be admitted into a partnership firm with the consent of all the existing partners.
Reason (R): According to section 31 of the Indian Partnership Act, 1932, a new partner shall not be introduced into a firm without the consent of all the existing partners, unless it is agreed otherwise by the partners in the partnership deed.

 
 
 
 

2. Assertion (A): It is the right of new partner on the firm’s assets and liabilities.
Reason (R): Old partners of the firm sacrifice some profit according to the new profit sharing ratio in favour of incoming partners.

 
 
 
 

3. Assertion (A): New Profit Sharing Ratio is the ratio in which old partners including the new partner, share the profits or losses of the firm.
Reason (R): When a new partner is admitted to the firm it is necessary to calculate the new profit sharing ratio with the help off the share agreed to forgo by the old partners.

 
 
 
 

4. Assertion (A): When the new partner brings his share of goodwill in cash and it is to be paid to the existing partners privately, no entry is passed in the books.
Reason (R): The intention of the partner is not to show any amount/transaction relating to goodwill or any of the reasons.

 
 
 
 

5. Assertion (A): I goodwill is already appearing in the book, old goodwill should always be written o among old partners in the old ratio.
Reason (R): The amount of goodwill should be adjusted through partners’ capital/current accounts.

 
 
 
 

6. Assertion (A): Whenever new partner brings goodwill in cash, he should bring the amount of goodwill, only for his share.
Reason (R): It is a common rule that the gaining partner should compensate the sacrificing partner to the extent of his gain.

 
 
 
 

7. Assertion (A): On admission of a new partner, Assets and liabilities are revalued.
Reason (R): Assets and liabilities are revalued so as to show the proper financial position of the firm and the capital hold by the partners at the time of admission.

 
 
 
 

8. Assertion (A): At the time of admission of a partner if there is any General Reserve, Reserve fund or the balance of Profit and Loss Account appearing in the balance sheet, it should be transferred to old partners’ capital/current accounts in their old profit sharing ratio.

Reason (R): The General reserve, Reserve Fund or the Balance of profit and loss account are the result of the past profits when the new partner was not admitted.

 
 
 
 

9. Assertion (A): At the time of admission the treatment of revaluation of assets and reassessment of liabilities is done in same manner as done in case of change in profit sharing ratio.

Reason (R): Revaluation of assets and liabilities is only done when the new partner is admitted.

 
 
 
 

10. Assertion (A): Profit or loss on revaluation of assets and reassessment of liabilities is transferred to the old partners’ capital/current accounts in old profit sharing ratio.
Reason (R): All the accumulated profit or loss and reserves are transferred to the old partners’ capital/current accounts in old profit sharing ratio.

 
 
 
 

11. Assertion (A): If goodwill is not brought in cash, it can be adjusted only through the new partner’s’ capital account.
Reason (R): The adjustment will reduce the capital of the partner.

 
 
 
 

12. Assertion (A): At the time of admission, if profit sharing ratio among old partner does not change then sacrificing ration will be old profit-sharing ratio.
Reason (R) : Old profit ratio plus new profit sharing ratio is sacrificing ratio: