CBSE Class 12 Accountancy Retirement or Death of a Partner MCQs Set D

Question: Revaluation account is prepared at the time of :
a) Admission of partner
b) Retirement of a partner
c) Death of a partner
d) Reconstitution of the firm
Answer: d

Question: Gaining ratio is calculated at the time of
a) Admission of a partner
b) Retirement of a Partner
c) Dissolution of a partnership firm
d) Both (a) and (c)
Answer: b

Question: Gain of Revaluation at the time of retirement is transferred to:
a) All Partners
b) Outgoing partner
c) Remaining Partner
d) Retiring Partner
Answer: a

Question: Share of goodwill of the retiring partner is debited to remaining partners in their
a) Old ratio
b) New ratio
c) Gaining ratio
d) Sacrificing ratio
Answer: c

Question: A, B, C are partners sharing profit and losses in the ratio of 4:3:1. B retires and gives his share of profit to A ₹3,600 and C ₹4,500. What is the gaining ratio of A and C?
a) 4:5
b) 2:1
c) 68:48
d) 4:1
Answer: a

Question: Amount due to outgoing partner is shown on the balance sheet as his
a) Liability
b) Asset
c) Capital
d) Loan
Answer: d

Question: In which ratio retiring partner is compensated by the continuing partners for his share of goodwill?
a) Gaining ratio
b) Sacrificing ratio
c) Old ratio
d) New ratio
Answer: a

Question: An account prepared to ascertain the gain or loss at the time of death of a partner is called
a) Realisation Account
b) Executors Account
c) Revaluation Account
d) Deceased Partner Account
Answer: c

Question: P, Q and R share profits in the ratio of 8:5:3. Q retires from the firm. P gives 3/16 to Q and R gives 5/16 to Q. New profit-sharing ratio between P and R will be
a) 1:1
b) 10:6
c) 9:7
d) 5:3
Answer: a

Question: If Goodwill is appearing in the balance sheet, it will be credited to
a) Gaining partner
b) Retiring partners
c) All partners
d) Remaining Partners
Answer: c

Question: Revaluation account is prepared to calculate gain or loss at the time of
a) Admission of partner
b) Retirement of a partner
c) Death of a partner
d) All of the above
Answer: d

Question: Outgoing partner gives his share of profit to remaining partners. In what ratio do the remaining partners contribute this compensation amount?
a) Gaining ratio
b) Capital ratio
c) Sacrificing ratio
d) Old profit-sharing ratio
Answer: a

Question: A, B and C are partners in a firm sharing profits and losses in 3:4:2. B retires. The profit on revaluation is ₹72,000. New ratio between A and C is 5:3. Profit on revaluation will be distributed as:
a) A ₹32,000, B ₹24,000, C ₹16,000
b) A ₹24,000, B ₹32,000, C ₹16,000
c) A ₹45,000, C ₹27,000
d) A ₹47,250, C ₹24,750
Answer: b

Question: In the event of death of a partner, Employees’ Provident Fund appearing in the balance sheet will be shown in
a) Capital A/c (Cr.)
b) Capital A/c (Dr.)
c) Liability side [Balance Sheet]
d) Asset side [Balance Sheet]
Answer: c

Question: A, B, C are partners sharing profit as 5:3:2. A dies. B and C will compensate A’s executor for goodwill. Goodwill is 2 years’ purchase of the last 3 years’ average profit. Profits were ₹3,28,000, ₹3,46,000, and ₹4,00,000. How much will B and C pay?
a) ₹3,16,000 and ₹1,42,000
b) ₹2,44,000 and ₹2,16,000
c) ₹4,29,600 and ₹2,86,400
d) ₹2,16,000 and ₹1,44,000
Answer: c

Question: A, B and C are partners with profit and losses in the ratio of 4:3:2. B retires. If A and C share B’s profit in 5:3, then the new profit-sharing ratio will be
a) 47:25
b) 17:11
c) 31:11
d) 14:21
Answer: a

Question: If the retiring partner is not paid full amount due to him immediately on retirement, his balance is transferred to his
a) Loan A/c
b) Capital A/c
c) Bank A/c
d) Suspense A/c
Answer: a

Question: A, B and C were partners sharing profit and losses in the ratio of 3:2:1. Books close on 31st March every year. C dies on 30th November 2018. Last year’s profit was ₹2,40,000. C’s share of profit till death will be
a) ₹26,667
b) ₹40,000
c) ₹30,000
d) ₹53,333
Answer: a

Question: A, B & C are partners sharing profits in ratio 3:2:1. C retires. Total capital of new firm is fixed at ₹60,000. What will be the new capitals of A and B?
a) ₹30,000 and ₹30,000
b) ₹24,000 and ₹36,000
c) ₹36,000 and ₹24,000
d) ₹40,000 and ₹20,000
Answer: c

Question: Claim of the retiring partner is payable in the following form
a) Fully in cash
b) Fully transferred to loan A/c to be paid later with some interest on it
c) Partly in cash and partly as loan repayable later with agreed interest
d) Any of the above method
Answer: d

Question: A, B and C are partners sharing profits in the ratio 2:2:1. B retires from the firm. The capital account of A, B and C are Rs. 60,000, Rs. 70,000 and Rs. 50,000 respectively after adjustment of goodwill, reserve and revaluation. B was to be paid in cash brought in by A and C in such a way that their capitals are in proportion of new ratio. How much amount A and C must bring to pay B?
a) Rs. 50,000 by A & Rs. 20,000 by C
b) Rs. 60,000 by A & Rs. 10,000 by C
c) Rs. 35,000 by A & Rs. 35,000 by C
d) Rs. 40,000 by A & Rs. 30,000 by C
Answer: B

Question: A, B and C sharing profit in ratio 3:2:1, C retires from the firm. Goodwill is to be valued at Rs. 60,000. Find the amount payable to retiring partner on account of goodwill.
a) Rs. 30,000
b) Rs. 20,000
c) Rs. 10,000
d) Rs. 60,000
Answer: B

Question: At the time of death of a partner, general reserve appearing in the balance sheet should be credited to:
a) All partners including deceased partner in their old profit sharing ratio
b) Remaining partners in the new profit sharing ratio
c) Neither the deceased nor the remaining partners
d) Remaining partners in gaining ratio
Answer: A

Question: Retiring or outgoing partner:
a) Is liable for firm liabilities
b) Not liable for any liabilities of the firm
c) Is liable for obligations incurred before his retirement
d) Is liable for obligations incurred before and after his retirement
Answer: C

Question: P, Q and R are partners sharing profits in the ratio of 8:5:3. P retires. Q takes 3/16th share from P and R takes 5/16th share from P. What will be the new profit sharing ratio?
a) 1:1
b) 10:6
c) 9:7
d) 5:3
Answer: A

Question: X, Y and Z are partners sharing profits and losses in the ratio of 4:3:2. Y retires and surrenders 1/9th of his share in favour of X and the remaining in favour of Z. The new profit sharing ratio will be:
a) 1:8
b) 13:14
c) 8:1
d) 14:13
Answer: B

Question: At the time of retirement of a partner, share of retiring partner’s goodwill will be credited to —————- Capital Account(s).
a) Remaining Partner(s)
b) Retiring Partner’s
c) Both Sacrificing and Gaining Partner(s)
d) Gaining Partner(s)
Answer: B

Question: On retirement of a partner, debtors of Rs. 34,000 were shown in the Balance sheet. Out of this Rs. 4,000 became bad. One debtor became insolvent. 70% were recovered from him out of Rs. 10,000. Full amount is expected from the balance debtors. On account of this item loss in revaluation account will be:
a) Rs. 10,200
b) Rs. 3,000
c) Rs. 7,000
d) Rs. 4,000
Answer: C

Question: As per Section 37 of the Indian Partnership Act, 1932, interest @ ———– is payable to the retiring partner if full or part of his dues remain unpaid.
a) 9% p.m.
b) 12% p.m.
c) 6% p.m.
d) None of the above
Answer: D

Question: A, B and C were partners. Their partnership deed provided that they were to share profits as: A 26%, B 34%, C 40%; and that if a partner retires, his capital should remain in the business for a stated period at a fixed rate of interest, but that the retiring partner’s share should be credited with an amount for goodwill, based upon one and a half year’s average profits, for the five years prior to his retirement, subject to deduction of 5% from the book debts. C retired, and the profits of the firm for five years were agreed at Rs. 20,000; Rs. 30,000; Rs. 15,000 (loss); Rs. 5,000 (loss); and Rs. 45,000 respectively. Book debts stood at Rs. 90,000. The share of goodwill to be credited to C’s Account will be:
a) Rs. 2,700
b) Rs. 6,300
c) Rs. 7,200
d) Rs. 3,600
Answer: C

Question: If goodwill is already appearing in the books of accounts at the time of retirement, then it should be written off in ————-.
a) New Ratio
b) Gaining Ratio
c) Sacrificing Ratio
d) Old Ratio
Answer: D

Question: If at the time of retirement, there is some unrecorded asset, it will be ————- to ————- Account.
a) Debited, Revaluation
b) Credited, Revaluation
c) Debited, Goodwill
d) Credited, Partners’ Capital
Answer: B

Question: When the balance sheet is prepared after retirement (subsequent to preparation of Revaluation Account), ————- values are shown in it.
a) Historical
b) Realisable
c) Market
d) Revalued
Answer: D

Question: X,Y and Z were partners in a firm sharing profits in ratio of 3:4:1 X retired and new profit sharing ratio between Y and Z will be 5 :4 .On X’s retirement the goodwill of the firm was valued at ₹̈́ 54,000 .journal entry will be:
(A) Y’s capital Dr. 24,000
Z’s capital Dr. 30,000
X’s capital 54,000
(B) Y’s capital Dr. 15,000
Z’s capital Dr. 12,,000
X’s capital 27000
(C) Y’s capital Dr. 12,000
Z’s capital Dr. 15,000
X’s capital 27,000
(D) X’s capitals a/c Dr. 27,000
To Y’s capitals 12,000
To Z’s capitals 15,000
Answer: C

Question: 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:
a) Gaining Ratio
b) Sacrificing Ratio
c) Capital Ratio
d) Profit Sharing Ratio
Answer: a

Question: P, Q and R were partners in a firm in the ratio of 5:4:3. They admit S for 1/7 share. It is agreed that Q would retain his original share. ———– will be the sacrificing ratio between P and R.
a) 5:4
b) 1:1
c) 5:3
d) 4:3
Answer: c

Question: Anil, Bimal and Chetan are partners sharing their profits and losses in the ratio of 4:3:2. On 1.7.2013, Chetan retired and on that date the capitals of Anil, Bimal and Chetan after all necessary adjustments stood at Rs. 75,000, Rs. 65,000 and Rs. 45,000 respectively. Anil and Bimal continued to carry the business for 6 months without settling Chetan’s account. During the period of six months ending 31st December, 2013, a profit of Rs. 50,000 is earned by the firm. Keeping Chetan’s interest in mind, the amount payable to Chetan will be:
a) Rs. 1,350
b) Rs. 13,362
c) Rs. 12,162
d) Rs. 1,362
Answer: c

Question: As per section ———— of the Indian Partnership Act, a retiring partner becomes entitled to profits after retirement if his dues remain unpaid.
a) Section 73
b) Section 26
c) Section 4
d) Section 37
Answer: d

Question: At the time of retirement, amount remaining in Investment Fluctuation Reserve after meeting the fall in value of Investment is:
a) Credited in Sacrificing Ratio
b) Credited in New Profit Sharing Ratio
c) Credited in Old Profit Sharing Ratio
d) Credited in Gaining Ratio
Answer: c

Question: The balance in the capital account of the deceased partner is transferred to his ______ account.
Answer: Executor’s

Question: The balance in the capital account of the deceased partner is transferred to his _________ account.
Answer: Executor

Question: Share of goodwill of the decease partner is ________ to his capital account.
Answer: Credited

Question: The death of a partner, deceased partner share in the goodwill is divides equally among continuing partners.
Answer: False

Question: Market value of the business – net worth of the business = ________.
Answer: Goodwill

Question: The amount paid to the retiring partners is excess of his capital after adjusting accumulated profits/losses revaluation profits/losses, share of goodwill etc is taken as his share of hidden goodwill of the firm.
Answer: True

Question: Goodwill will be debited with the agrees value less already shown in the Balance sheet.
Answer: False

Question: The gaining partners should compensate the sacrificing partners to the extent of their gain for the respective share of goodwill.
Answer: True

Question: Share of goodwill of the deceased partner is _______ to his capital account.
Answer: Credited

Question: Goodwill may be written off in all the partners are in old profit sharing ratio.
Answer: True

Question: In case of death of a partner the profit may be estimated on the basis of ______ and_______.
Answer: Time, Sales

Question: In Death of a partner the share of profit of deceased partner is calculated either on time basis or on turnover basic.
Answer: True

Question: Goodwill is recorded in the books only when it is purchased.
Answer: True

Question: Goodwill will be debited with the agreed value_________ goodwill already shown in the book.
Answer: Less

Question: Death of a partner is like a compulsory retirement.
Answer: True

Question: The executor of the deceased partner is entitled to all the right of __________.
Answer: Deceased Partner

Question: Retiring partners’ share of goodwill is debited to his his/her capital account at the time of retirement.
Answer: False

Question: The executer is entitles to all the right of a __________.
Answer: Deceased Partner

Question: Interest on drawings due from deceased partner till the date of the death is _______ to his capital account.
Answer: Debit