Admission of a partner (Question Bank)

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 Admission of a partner



Which of the following is not an example of Reconstitution of a partnership firm?

  1. Purchase of Assets for the business
  2. Admission of a new partner
  3. Change in Existing profit sharing ratio
  4. Retirement/Death of a partner

 

Z is admitted to a firm for 1/4th share in the profits for which he brings in ₹10,000 towards premium for goodwill. It will be taken by the old partners in:

  1. the old profit-sharing ratio
  2. the new profit-sharing ratio
  3. the sacrificing ratio
  4. none of these

 

X and Y are partners sharing profits in the ratio of 3 : 2. Z is admitted for 1414th share in profits which he acquires equally from X and Y. The new ratio will be:

  1. 9 : 6 : 5
  2. 19 : 11 : 10
  3. 3 : 3 : 2
  4. None of these

 

New profit sharing ratio means

  1. All partner(including new) share future profit and losses in this new ratio
  2. All partner (excluding old) share future profit and losses
  3. Two partner (including new) share future profit and losses
  4. Partners will share future profits equally

 

Premium brought by the new partner will be shared by the existing partners in:

  1. Sacrificing Ratio
  2. Old Ratio
  3. New Ratio
  4. Gain Ratio

 

Anu and Babita are partners in a firm sharing profits and losses in the ratio of 3:2. On April 1, 2003, they admit Deepak as a new partner for 313313 share in the profits. Deepak contributed the following assets towards his capital and for his share of goodwill: Land ₹90,000, machinery ₹70,000, stock ₹60,000 and debtors ₹40,000. On the date of admission of Deepak, the goodwill of the firm was valued at ₹5,20,000, which does not appear in the books. Calculate the amount of goodwill brought in by a new partner.

  1. ₹1,20,000
  2. ₹1,10,000
  3. ₹1,00,000
  4. ₹1,15,000

 

Vivek and Vishal are partners with a capital of ₹26000 and ₹22000 respectively. They admit David as a partner for 1414 share in the profits of the firm. David brings ₹30,000 (including 4,000 premium for goodwill) as his share of capital and premium. Journal entry for capital amount brought by a new partner

  1.  

Bank A/c ... Dr.

26,000

 

To David’s Capital A/c

 

26,000
  1.  

Bank A/c ... Dr.

22,000

 

To Goodwill A/c

 

22,000
  1.  

Bank A/c ... Dr.

34,000

 

To Vivek's Capital A/c

 

34,000
  1.  

Bank A/c ... Dr.

30,000

 

To David’s Capital A/c

 

30,000

 

Section ________ of the Indian Partnership Act provides that a new partner shall not be inducted into a firm without the consent of all existing partners.

  1. 31
  2. 30
  3. 32
  4. 33

 

A and B sharing profits and losses in the ratio of 2/3rd and 1/3rd, admit C as a partner giving him 1/4th share. The new profit-sharing ratio will be 

A

A 1/2

B 1/4

C 1/4

B

A 1/3

B 1/3

C 1/4

C

A 3/8

B 3/8

C 2/8
  1. A
  2. B
  3. C
  4. None of these

 

When A and B, sharing profits and losses in the ratio of 3 : 2, admit C as a partner giving him 1/5th share of profits. This will be given by A and B:

  1. equally
  2. in the ratio of their profits
  3. in the ratio of their capitals
  4. none of these

 

If a new partner is unable to bring in his share of goodwill, How will you deal

  1. New Partner’s Capital A/C OR Current A/C ... Dr.
    To Sacrificing Partner’s Capital / current A/c
  2. New Partner’s A/c ... Dr.
    To Gainer Partner’sCapital A/c
  3. New Partner’s A/c ... Dr.
    To Old Partner’s Capital A/c
  4. New Partner’s A/c ... Dr.
    To All Partner’sCapital A/c

 

Deferred revenue expenditure given on the Asset side of the Balance sheet will be:

  1. Debited to old partners
  2. Debited to sacrificing partners
  3. Credited to all partners
  4. None of these

 

 The incoming partner cannot acquire his share of profits:

  1. From the old partners in their new profit sharing ratio
  2. From the old partners in their old profit sharing ratio
  3. From the old partners in some agreed ratio
  4. From one or more partners (not from all partners)

 

When the incoming partner brings in his share of premium for goodwill in cash, it is adjusted by crediting to:

  1. Incoming Partner's Capital Account
  2. Premium for Goodwill Account
  3. Sacrificing Partners' Capital Accounts
  4. None of these

 

Why a new partner is admitted in the firm?

  1. To increase the capital of the firm
  2. To increase the number of partners
  3. To increase the goodwill of the firm
  4. To increase the profit-sharing Ratio

 

Revaluation of assets and liabilities is done with the help of a new account called ________.

  1. Revaluation Account
  2. Profit and Loss
  3. Loss adjustment A/c
  4. None of these

 

A, B and C are partners sharing profits in the ratio of 3:2:1. They admit D for 1616 share. C would retain his old share. Calculate new ratio of all partners.

  1. 12 : 8 : 5 : 5
  2. 10 : 8 : 5 : 5
  3. 9 : 8 : 5 : 5
  4. 9 : 8 : 5 : 6

 

Ashok and Ravi were partners in a firm sharing profits and losses in the ratio of 7:3. They admitted Chander as a new partner. The new profit ratio between Ashok, Ravi and Chander will be 2:2:1. Chander brought Rs.24,000 for his share of his goodwill. Calculate the amount Ravi compensate to the Ashok share in the above transaction

  1. 12,000
  2. 10,000
  3. 36,000
  4. 24,000

 

Which of the following situation is not acceptable for the continuity of the partnership firm?

  1. All partners leave the firm together
  2. Retirement and Admission on the same day
  3. Admission of two partners on the same day
  4. Death and Admission

 

A and B are partners in a firm sharing profits and losses in the ratio of 3:2. They admit C into partnership for 1515 share. C brings ₹30,000 as capital and ₹10,000 as goodwill. At the time of admission of C, goodwill appears in the balance sheet of A and B at ₹3,000. New profit sharing ratio of partners shall be 5:3:2. What will be the entry for existing goodwill written off?

  1.  

A's capital A/c

Dr.

1,800

 

B's capital A/c

Dr.

1,200

 

To Goodwill

 

 

3,000
  1.  

A's capital A/c

Dr.

1,700

 

B's capital A/c

Dr.

1,300

 

To Goodwill

 

 

3,000
  1.  

A's capital A/c

Dr.

1,500

 

B's capital A/c

Dr.

1,500

 

To Goodwill

 

 

3,000
  1.  

A's capital A/c

Dr.

1,500

 

C's capital A/c

Dr.

1,500

 

To Goodwill

 

 

3,000

 

N and S are partners sharing profits and losses in the sates 2:1. They admit G as a partner for 1414 share. G pays ₹50,000 as capital but does not bring any amount for goodwill. The goodwill of the new firm is valued at ₹36,000. Calculate the amount to be credited to N for his sacrifice in the form of premium for goodwill.

  1. ₹6,000
  2. ₹3,000
  3. ₹2,000
  4. ₹5,000

 

X, Y and Z are partners sharing profits in the ratio of 4:3:2. They admit a new partner M in the partnership firm for 1313 share in future profit. What will be the new ratio of all the partners?

  1. 8 : 6 : 4 : 9
  2. 8 : 6 : 2 : 1
  3. 8 : 6 : 5 : 3
  4. 8 : 6 : 4 : 2

 

If partners capitals are fixed, premium for goodwill will be:

  1. Credited to the sacrificing partner's current A/c
  2. Credited to the Partners’ Capital A/cs
  3. Credited to the P/L Adjustment A/c
  4. Credited to the P/L A/c

 

A and B are partners in a firm sharing profits and losses in the ratio 1:2. They admitted C into the partnership and decided to give him 1313 share of the future profits. Find the new ratio of the partners.

  1. 2:4:3
  2. 4:2:3
  3. 3:2:1
  4. 3:4:2

 

Out of the following, which is the main right of a partner?

  1. Right to share the profits of the firm
  2. Right to stop other partners for drawings
  3. Right to say no for goodwill
  4. Right to share the old profits of the firm

 

The balance in the Investments Fluctuation Fund, after meeting the loss on revaluation of investments, at the time of admission of a partner will be transferred to

  1. the Old Partners' Capital Accounts
  2. the Revaluation Account
  3. the General Reserve
  4. none of these

 

Incoming partner may acquire his share from the old partners

  1. In their old profit sharing ratio
  2. In a particular ratio
  3. In particular fraction from some of the partners
  1. All of these
  2. Only A
  3. A and B
  4. A and C

 

Revaluation Account or Profit and Loss Adjustment Account is a:

  1. Real Account
  2. Nominal Account
  3. Personal Account
  4. None of these

 

According to Section 30 of Partnership Act 1932:

  1. A Minor can be admitted as a partner by the consent of all partners for the time being.
  2. A new partner will bring capital and goodwill in cash.
  3. A new partner is allowed to share old profits.
  4. A new partner will inspect the books of accounts.
  1. (A)
  2. (B)
  3. (C)
  4. (D)

 

Kamal and Rahul are the partner’s in a firm sharing profits and losses in the ratio of 7:3. They admit Kaushal as a partner for 1515 share. Kaushal acquires his share from Kamal and Rahul in the ratio of 3:2. The goodwill of the firm has been valued at Rs.25000. Kaushal paid Rs.10000 privately to Kamal and Rahul as his share of goodwill. What should be the journal entry?

  1. No entry will be passed
  2. Rahul A/c ... Dr.
    Kamal A/c ... Dr.
    To Kaushal A/c
  3. Kamal A/c ... Dr.
    Cash A/c ... Dr.
    To Goodwill A/c
  4. Rahul A/c ... Dr.
    Loan A/c ... Dr.
    To Cash A/c

 

 Assertion (A): In certain cases, the premium for goodwill paid by the incoming partner is not recorded in the books of accounts.

Reason (R): Sometimes, the incoming partner pays his share of goodwill privately to the sacrificing partners, outside the business.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): On admission of new partner, Assets and Liabilities are revalued and reassessed.
Reason (R): The Assets and Liabilities are revalued and reassessed to show the proper financial position of the firm and capital held by the partners at the time of admission.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): The balance of memorandum revaluation account (second part) is transferred to partners' capital account in old profit sharing ratio.
Reason (R): Sometimes, partners decide to show the assets and liabilities in the books of the new firm at their existing values.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): At the time of admission of partners if there is any general reserve, reserve fund, or the balance of profit & 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 & loss account are the results of the past profits when the new partner was not admitted.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): If the amount of any liability is understated, then the revaluation account will be debited to restore the liability's amount to its actual value.
Reason (R): Increase in the amount of liability is a profit for the firm.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): New profit sharing ratio is the ratio in which the old partner including the new partner share 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 help of the share agreed to forgo by the old partners.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): At the time of admission of a new partner unrecorded liability is debited to the Revaluation account.
Reason (R): Unrecorded liabilities are the gain for the partnership firm.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): At the time of admission of a new partner he is required to bring premium or goodwill.
Reason (R): Due to the admission of a new partner, the existing partner's sacrifices their share of profits in favour of the new partner. So, he has to compensate the existing partners for the loss of their share in super-profits of the firm.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): The revaluation account is prepared for the purpose of transferring the profit or loss arising out of an increase or decrease in the book value of assets or liabilities of the partnership at the time of admission of a new partner.
Reason (R): At the time of admission of a new partner, it is always desirable to ascertain whether the assets of a firm are shown in books at their current values. In case the assets are overstated or understated, these are revaluated.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): A new partner can be admitted into a partnership firm with the consent of the existing partners.
Reason (R): According to section 31 of the Indian Partnership Act, 1932, the 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 and partnership deed.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

Assertion (A): it is right of the 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 partner.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

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 partners is not to show the amount/transaction relating to Goodwill for any of the reasons.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): The amount of premium brought in by the new partner is shared by the existing partners in their ratio of Sacrifice.
Reason (R): Because the old partners sacrifice their share of profits in favour of new partner.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): It is necessary to ascertain new profit sharing ratio for old partners when a new partner is admitted.
Reason (R): New partner acquires his share from old partners which reduces old partners' share in profits.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): The treatment of revaluation of assets and reassessment of liabilities is done in the same manner as done in case of change in profit sharing ratio.
Reason (R): Revaluation of assets and liabilities is only done when new partner is admitted.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): Whenever a 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 extent of his gain.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): If the 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.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

 

Assertion (A): Unrecorded assets are credited to the revaluation account at the time of admission of a new partner.
Reason (R): Unrecorded assets are gain for the partnership firm because it increases the value of assets.

  1. Both A and R are true and R is the correct explanation of A.
  2. Both A and R are true but R is not the correct explanation of A.
  3. A is true but R is false.
  4. A is false but R is true.

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