1. 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 2. 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 3. Gaining ratio may be applied when: a partner is admitted a partner retires a business is sold out a partner is insolvent 4. 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: 22,400 22,300 22,200 22,100 5. On retirement/death of a partner, revaluation profit is distributed among: All partners in old ratio remaining partners in new ratio remaining partners in old ratio All partners equally 6. 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). 7. 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 capital A/c Dr 12000 To P capital A/c 8000 To Q capital A/c 4000 P capital A/c Dr 9600 Q capital A/c Dr 2400 To R capital A/c 12000 R capital A/c Dr 12000 To P capital A/c 6000 to Q capital A/c 6000 P capital A/c Dr 6000 Q capital A/c Dr 6000 to R capital A/c 12000 8. 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. 9. 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. 10. 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 11. According to Section 37 of Indian Partnership Act, 1932, the interest payable on the amount due to the representative of the deceased partner at: 6 % p.a 10 % p.a Bank rate Market rate 12. 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 Capital A/c Dr 6000 D Capital A/c Dr- 3000 To B Capital A/c 9000 A capital A/c Dr 3000 C capital A/c Dr 3000 D capital A/c Dr 3000 To B capital A/c 9000 C capital A/c Dr 5000 D capital A/c Dr 5000 To B capital A/c 10000 A capital A/c Dr 3334 C capital A/c Dr 3333 D capital A/c Dr 3333 To B capital A/c 10000 13. 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 14. 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 15. 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. 16. 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). 17. 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). 18. 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). Loading … Question 1 of 18
