CBSE Class 12 Accountancy Admission of A Partner Worksheet Set A

Admission of a Partner Reference

MCQ Questions for NCERT CBSE Class 12 Accountancy Admission of A Partner

Question. Goodwill of the firm was valued on the basis of 2 years purchase of last three years average profits. The profits of last three years were: 5
During the year 2018-19, there was a loss of Rs.30,000 due to fire which was not accounted for while calculating the profit.
Calculate the Value of Goodwill.
(a) Rs.2,20,000
(b) Rs.2,40,000
(c) Rs.2,00,000
(d) None of the Above

Answer: A

Question. A and B shared profits in the ratio 2:3. With effect from 1st April,2021, they agreed to share profits equally. Goodwill of the firm was valued at Rs.60,000.The adjustment entry will be:
(a) Dr. B’s Capital A/C and Cr. A’s Capital A’/C by Rs.6,000
(b) Dr. A’s Capital A/C and Cr. B’s Capital A’/C by Rs.600
(c) Dr. A’s Capital A/C and Cr. B’s Capital A’/C by Rs.6,000
(d) Dr. B’s Capital A/C and Cr. A’s Capital A’/C by Rs.600

Answer: C

Question. Under the Capitalisation , the formula for calculating the goodwill is :
(a) Super profits multiplied by the rate of return.
(b) Average profits multiplied by the rate of return.
(c) Super profits divided by the rate of return.
(d) Average profits divided by the rate of return.

Answer : C

Question. Mohan and Sohan were partners in a firm with capitals of Rs.3,00,000 and Rs.2,00,000 respectively. Aditya was admitted as a new partner 1/4 th share in the profits of the firm. Aditya brought Rs.1,20,000 for his share of goodwill premium and Rs. 2,40,000 for his capital. The amount of goodwill premium credited to Mohan will be
(a) Rs.40,000
(b) Rs.30,000
(c) Rs.72,000
(d) Rs.60,000

Answer: D

Question. When Goodwill is not recorded in the books of the firm at all on Admission of a partner:
(a) If paid privately
(b) If brought in cash
(c) If not brought in Cash
(d) If brought in kind

Answer: A

Question. If the new partner brings his share of goodwill in Cash it will be shared by old partners in:
(a) Sacrificing Ratio
(b) Old-Profit-Sharing Ratio
(c)New-Profit-Sharing Ratio
(d)Capital Ratio

Answer: A

Question. Mohan and Shreya are partners in a firm dealing in stationery items. The firm is well managed and enjoys the advantage of being cost effective. The firm’s sales outlet is situated near a school. As a result, the firm has a steady demand of stationery items and is earning good profits.
Two factors affecting the value of Goodwill as highlighted in the above case are:
(a) Nature of Business and Market Situation
(b) Efficiency of Management and Location
(c) Location and Market Situation
(d) Efficiency of Management and Market Situation

Answer: B

Question. A business has earned average profits of Rs.1,00,000 during the last few years and the normal rate of return in a similar business is 10% per annum. Goodwill of the firm based on Capitalization of Average Profits is valued at Rs.1,80,000. The value of total assets of the business is Rs.10,00, 000.Its external liabilities are
(a) Rs.1,00,000
(b) Rs.80,000
(c) Rs.1,80,000
(d) NIL

Answer: C

Question. A and B are partners in a firm. They admit C with 1/5th share in the profits of the firm. C brings Rs.4,00,000 as his share of capital. Find the value of C’s share of Goodwill on the basis of his capital ,given that the combined capital of A and B after all Adjustments is Rs.10,00,000.
(a) Rs.6,00,000
(b) Rs.1,20,000
(c) Rs.1,50,000
(d) Rs.2,80,000

Answer: B

Question. According to which accounting standard goodwill is not recognized in books unless consideration is paid for it.
(a) AS-24
(b) AS-26
(c) AS-31
(d) AS-32

Answer: B

Question. Weighted Average profit method of calculating goodwill is used when
(a) Profit has increasing trend
(b) Profit has decreasing trend
(c) Both
(d) None of the above

Answer : C

Question. When goodwill existing in the books is written off at the time of admission of a partner, it is transferred to Partners ‘ capital Accounts in their
(a) Old profit sharing ratio
(b) New profit sharing ratio
(c) Sacrificing ratio
(d) Gaining ratio

Answer: A

Question. When the new partner brings cash for goodwill , the amount is credited to
(a) Revaluation Account
(b) Cash Account
(c) Premium for Goodwill Account
(d) Realisation Account

Answer : C

Question. X,Y and Z are in partnership sharing profits and losses in the ratio of 5:4:1. Two New partners A and B are admitted. Profits are to shared in the ratio of 3:4:2:2:1 respectively. A is to pay Rs.30,000 for his share of goodwill but E is unable to pay for goodwill. Calculate the the gain of Z.
(a) 12,000
(b) 15,000
(c) 16,000
(d) 20,000

Answer : A

Question. Which of the following statement is correct?
(a) Goodwill is a fictitious asset.
(b) Goodwill is a current asset.
(c) Goodwill is a wasting asset.
(d) Goodwill is an intangible asset.

Answer: D

Question. Why new partner needs to bring goodwill?
(a) To compensate the sacrificing partners
(b) For Revaluation Account
(c) For Revaluation of Assets
(d) For all of the above

Answer : A

Question. Assertion (A) : Purchased Goodwill is that Goodwill for which the firm has paid consideration in cash or kind and purchased Goodwill only is recorded in the books of accounts.
Reason (R) : Value of Goodwill is a subjective assessment but it is ascertained when both purchaser and seller agree to its valuation.
Choose the correct option from the following:
(a) Assertion and Reason both are correct and Reason is the correct.
(b) Assertion and Reason both are correct but Reason is not correct explanation of assertion.
(c) Only Assertion is correct.
(d) Reason is correct but Assertion is not correct.

Answer: A

Question. 8 Average profits of a firm during the last few years are Rs. 70,000 and normal rate of return in a similar business is 10%. If the goodwill of the firm is Rs.1,00,000 at 4 years’ purchase of super profit, find the capital employed by the firm.
(a) 5,00,000
(b) 4,00,000
(c) 4,50,000
(d) 6,00,000

Answer : C

Question. When Goodwill is not purchased goodwill account can
(a) Never be raised in the books.
(b) Be raised in the books.
(c) Be partially raised in the books.
(d) Be raised as per the agreement of the partners.

Answer : A

Question. Average profit of a business over the last five years were Rs.60,000. The normal rate of return on capital employed in such a business is estimated at 10% p.a. Capital invested in the business 4,00,000. Amount of goodwill, if it is based on 3 years’ purchase of last 5 years super profits will be
(a) Rs.1,00,000
(b) Rs.1,80,000
(c) Rs.60,000
(d) Rs.1,20,00060,000

Answer : C

Question. On admission of a partner, which of the following items the Balance Sheet is transferred to the credit of Capital Accounts of old partners in the old profit sharing ratio, if Capital Accounts are maintained following Fluctuating Capital Accounts Method.
(a) Deferred Revenue Expenditure
(b) Profit and Loss Account (Debit Balance)
(c) Profit and Loss Account (Credit Balance)
(d) Balance in Drawings Account of Partners
Answer. C

Question. When the new partner brings cash for goodwill, the amount is credited to:
(a) Realisation Account
(b) Cash Account
(c) Premium for Goodwill Account
(d) Revaluation Account
Answer. C

Question. A and B are partners in a firm having a capital of Rs 54,000 and Rs 36,000 respectively. They admitted C for 1/3rd share in the profits C brought proportionate amount of capital. The Capital brought in by C would be:
(a) Rs 90,000
(b) Rs 45,000
(c) Rs 5,400
(d) Rs 36,00
Answer. B

Question. Ramesh and Suresh are partners sharing profits in the ratio of 2 : 1 respectively, Ramesh capital Rs 1,02,000 and Suresh capital are Rs 73,000. They admit Mahesh and agree to give him 1/5th share in future profit. Mahesh brings Rs 14,000 as his share of goodwill. He agrees to contribute capital in the new profit-sharing ratio. How much capital will be brought by Mahesh?
(a) Rs 43,750
(b) Rs 45,000
(c) Rs 47,250
(d) Rs 48,000
Answer. C

Question. In case of Admission of a Partner, the entry for Unrecorded Investments is:
(a) Debit Partners’ Capital A/cs and Credit Investments A/c.
(b) Debit Revaluation A/c and Credit Investments A/c.
(c) Debit Investments A/c and Credit Revaluation A/c.
(d) None of the above.
Answer. C

Question. If at the time of Admission there is an Unrecorded Liability, it is:
(a) Debited to Revaluation Account.
(b) Credited to Revaluation Account.
(c) Debited to Goodwill Account.
(d) Credited to Partners’ Capital Accounts.
Answer. A

Question. At the time of Admission of a Partner, undistributed profits appearing in the balance sheet of the old firm is transferred to the capital account of:
(a) Old partners in old profit sharing ratio
(b) Old partners in new profit sharing ratio
(c) All the partners in new profit sharing ratio
(d) None of these
Answer. A

Question. Kartik and Rana are partners sharing profits in the ratio of 4: 1. Their capitals were Rs 90,000 and Rs 70,000 respectively.They admitted Kuldeep for 1/3rd share in the future profits. Kuldeep brought Rs 1,00,000 as his capital. Firm’s Goodwill is:
(a) Rs 40,000
(b) Rs 1,40,000
(c) Rs 3,00,000
(d) Rs 2,60,000
Answer. A

Question. A new partner may be admitted to a partnership:
(a) With the consent of all partners
(b) With the consent of two third of old partners
(c) With the consent of any one of the partners
(d) Without consent of old partners
Answer. A

Question. Which account should be debited when capital is introduced by a partner:
(a) Current Account
(b) Owner’s Equity Account
(c) Cash Account
(d) Current Account
Answer. C

Question. At the time of Admission of a new partner, General Reserve is:
(a) Debited to capital of old partners
(b) Credited to capital of old partners.
(c) Allowed to remain in balance sheet
(d) Debited to current account
Answer. B

Question. On Admission time building appreciated by Rs 2,00,000 journal entry will be:
(a) Building A/c Dr. 2,00,000
To Old Partner’s A/c 2,00,000
(b) Revaluation A/c Dr. 2,00,000
To Building A/c 2,00,000
(c) Building A/c Dr. 2,00,000
To Revaluation A/c 2,00,000
(d) Old Partner’s A/c Dr. 2,00,000
To Building A/c 2,00,000
Answer. C

Question. A and B are partners sharing profits and losses as 2 : 1. C is admitted and profit sharing ratio becomes 4 : 3 : 2.
Goodwill is valued at Rs 94,500. C brings required goodwill in cash. Goodwill amount will be credited to:
(a) A Rs 14,000 and B Rs 7,000
(b) A Rs 12,000 and B Rs 9,000
(c) A Rs 21,000
(d) A Rs 94,500
Answer. C

Question. Partners A, B and C share the profits of a business in the ratio of 3 : 2 : 1 respectively. They admit D who brings in Rs 60,000 for his share of goodwill. A, B, C and D decide to share the profits respectively in the ratio of 5: 3 : 2 : 2. Credit will be given to:
(a) A Rs 6,000; B Rs 6,000
(b) A Rs 30,000; B Rs 18,000; C Rs 12,000
(c) A Rs 30,000; B Rs 20,000; C Rs 10,000
(d) A Rs 30,000; B Rs 30,000
Answer. D

Question. Capitals of Sumit and Raj, after all adjustments, were Rs 2,00,000 and Rs 1,50,000 respectively. They decided to admit Kamal as a new partner for 1/5th share. Kamal brought Rs 1,00,000 as capital. He has to bring appropriate amount of goodwill share. How much he will bring as his share of goodwill:
(a) Rs 50,000
(b) Rs 40,000
(c) Rs 20,000
(d) Rs 10,000
Answer. D

At the time of Admission of a new partner, General Reserve given in the old balance sheet is distributed to the partners due to:
(a) It belongs to first partner
(b) It belongs to all the partners including new partner
(c) It belongs to only sacrificing partners
(d) It belongs to all old partners
Answer. D

Question. AK and BK are partners in a firm. They admit CK as a partner for 1/4th share in the profits of the firm. CK brings Rs 2,00,000 as his share of capital. The value of total assets of the firm is Rs 5,40,000 and outside liabilities are valued at Rs 1,00,000 on that date. CK’s premium share for goodwill:
(a) Rs 30,000
(b) Rs 40,000
(c) Rs 50,000
(d) Rs 60,000
Answer. B

Question. At the time of Admission of a new partner, the following adjustment related to asset was found: “Stock is overvalued by 10%, Rs 66,000 Book value”. Actual value of stock is:
(a) Rs 66,000
(b) Rs 59,400
(c) Rs 60,000
(d) Rs 72,600
Answer. C

Question. What is the Treatment of Profit & Loss Account (Cr. Balance) given in Balance Sheet, at the time of admission of a new partner?
(a) Transfer to Revaluation Account.
(b) Transfer to Balance Sheet of reconstituted firm.
(c) Transfer to Incoming partner.
(d) Transfer to Old Partners’ Capital Accounts.
Answer. D

Question. Reserve or general reserve appearing in the balance sheet will be divided among old partners during admission in _______ ratio.
(a) gaining
(b) new
(c) sacrificing
(d) old
Answer. D

Question. ‘A’, ‘B’ and ‘C’ share profits and losses in the ratio of 3 : 2 : 1. ‘D’ is admitted with 1/6th share which he gets entirely from ‘A’. New ratio will be:
(a) 2 : 2 : 1 : 1
(b) 3 : 1 : 1 : 1
(c) 2 : 2 : 2 : 1
(d) None of these
Answer. A

Question. ‘X’ and ‘Y’ are partners sharing profits equally. ‘Z’ was admitted for 1/5 share. Calculate new profit sharing ratio.
(a) 2 : 3 : 1
(b) 3 : 3 : 1
(c) 6 : 5 : 2
(d) 2 : 2 : 1
Answer. D

Question. ‘A’ and ‘B’ are partners sharing profits and losses in the ratio of 5 : 3. On admission, ‘C’ brings Rs 70,000 cash and Rs 48,000 against goodwill. New profit sharing ratio between ‘A’, ‘B’ and ‘C’ is 7 : 5 : 4. The sacrificing ratio among ‘A’ and ‘B’ is:
(a) 4 : 1
(b) 4 : 7
(c) 5 : 4
(d) 3 : 1
Answer. D

Question. A firm has an unrecorded investment of Rs 5,000. Entry in the firm’s journal on admission of a partners will:
(a) Unrecorded Investment A/c Dr. 5,000
To Revaluation A/c 5,000
(b) Partners’ Capital A/c Dr. 5,000
To Unrecorded Investment A/c 5,000
(c) Revaluation A/c Dr. 5,000
To Unrecorded Investment A/c 5,000
(d) None of the above
Answer. A

Question. ‘A’ and ‘B’ share profits in the ratio of 3 : 2. ‘A’s’ capital is Rs 40,000, ‘B’s’ capital is Rs 30,000. ‘C’ is admitted for 1/5th share in profits. What is the amount of capital which ‘C’ should bring?
(a) Rs 17,500
(b) Rs 16,000
(c) Rs 1,00,000
(d) Rs 64,000
Answer. A

Question. ‘A’ and ‘B’ carry on business and share profits and losses in the ratio of 3 : 2. Their respective capitals are Rs 1,20,000 and Rs 4,000. ‘C’ is admitted for 1/5th share in profit and brings Rs 1,20,000 as his share of capital. Capitals of ‘A’ and ‘B’ to be adjusted according to ‘C’s’ share.
Calculate the amount required to bring by ‘A’.
(a) Rs 30,000
(b) Rs 1,68,000
(c) Rs 60,000
(d) Rs 28,000
Answer. B

Question. ‘A’ and ‘B’ are partners in a firm sharing profits in 3 : 2 ratio. They admitted ‘C’ as a new partner and the new profit sharing ratio will be 2 : 1 : 1. ‘C’ brought in Rs 40,000 as premium for goodwill for it’s share. What will be the journal entry for the premium of goodwill shared by old partners as per sacrificing ratio?
(a) Premium for goodwill A/c Dr. 40,000
To A’s Capital A/c 16,000
To B’s Capital A/c 24,000
(b) A’s Capital A/c Dr. 16,000
B’s Capital A/c Dr. 24,000
To Premium for Goodwill A/c 40,000
(c) Premium for Goodwill A/c Dr. 40,000
To Bank A/c 40,000
(d) Bank A/c Dr. 40,000
To Premium for Goodwill A/c 40,000
Answer. A

Question. X and Y share profits in the ratio of 3 : 2. Z was admitted as a partner who gets 1/5 share. New profit sharing ratio, if Z acquires 3/20 from X and 1/20 from Y would be: 
(a) 9 : 7 : 4
(b) 8 : 8 : 4
(c) 6 : 10 : 4
(d) 10 : 6 : 4
Answer. A

Asha and Nisha are partners’ sharing profit in the ratio of 2 : 1. Asha’s son Ashish was admitted for 1/4 share of which 1/8 was gifted by Asha to her son. The remaining was contributed by Nisha. Goodwill of the firm is valued at Rs 40,000. How much of the goodwill be credited to the old partners’ capital account. 
(a) Rs 2,500 each
(b) Rs 5,000 each
(c) Rs 20,000 each
(d) None of these
Answer. B

Question. On the Admission of a new partner, increase in the value of assets is debited to:
(a) Profit and Loss Adjustment Account
(b) Assets Account
(c) Old Partners’ Capital Accounts
(d) None of these
Answer. B

Question. When the incoming partner brings his share of premium for goodwill in cash, it is adjusted by crediting to:
(a) His Capital Account
(b) Premium for Goodwill Account
(c) Sacrificing Partners’ Capital Accounts
(d) None of these
Answer. C

Question. A, B and C were Partners in a firm sharing profits in 3 : 2 : 1 ratio. They admitted D for 10% profits. Calculate new Profit-Sharing Ratio.
(a) 15 : 9 : 8 : 7
(b) 31 : 14 : 10 : 15
(c) 9 : 6 : 3 : 2
(d) 13 : 10 : 7 : 5
Answer. C

Question. X and Y are partners sharing profits in the ratio of 3 : 2. Z is admitted for 1/4th share in profits which he acquires equally from X and Y. The new ratio will be:
(a) 9 : 6 : 5
(b) 19 : 11 : 10.
(c) 3 : 3 : 2
(d) None of these
Answer. B

Question. For which of the following situations, the old profit sharing ratio of partners is used at the time of admission of a new partner?
(a) When new partner brings only a part of his share of goodwill.
(b) When new partner is not able to bring his share of goodwill.
(c) When at the time of admission, goodwill already appears in the balance sheet.
(d) When new partner brings his share of goodwill in cash.
Answer. C

Question. A and B share profits and losses in the ratio of 3 : 1. C is admitted into partnership for 1/4th share. The sacrificing ratio of A and B is:
(a) Equal
(b) 3 : l
(c) 2 : l
(d) 3 : 2
Answer. B

Question. Where there is no partnership agreement exists between partners, what will be the profit sharing ratio between the partners?
(a) Equal
(b) Unequal
(c) It will depend on a partner’s capital
(d) It will depend on the experience of a partner
Answer. A

Question. A and B are partners in a firm sharing profits and losses in the ratio of 3 : 2. A new partner C is admitted. A surrenders 1/15th share of his profit in favour of C and B surrenders 2/15th of his share in favour of C. The new ratio will be:
(a) 8 : 4 : 3
(b) 42 : 26 : 7
(c) 4 : 8 : 3
(d) 26 : 42 : 7
Answer. B

Question. An incoming partner pays his share of goodwill in cash, and profit sharing ratio of old partner is changed, Goodwill be distributed among old partners:
(a) As their old profit ratio
(b) According to new ratio
(c) According to sacrifice ratio
(d) None of these
Answer. C

Question. Ram and Sita are partners sharing profits in the ratio of 5 : 4. They admit Lakshman as a partner for a 1/10th share of profits which he acquires in equal proportion from Ram and Sita. The new ratio of the partners will be:
(a) 5 : 4 : 1
(b) 31 : 30 : 8
(c) 91 : 18 : 71
(d) 91 : 71 : 18
Answer. D

Question. A and B are partners sharing profits and losses in the ratio of 4 : 3. They admit C with 3/7th share, which he gets 2/7th from A and 1/7th from B. The new ratio of partners would be:
(a) 1 : 1 : 1
(b) 2 : 3 : 2
(c) 3 : 2 : 2
(d) 2 : 2 : 3
Answer. D

Question. A and B are partners in a firm sharing profits in the ratio of 3 : 2. They admit C into partnership for 1/5th share. C brings Rs 30,000 as capital and Rs 10,000 as premium for goodwill. New profit sharing ratio will be 5 : 3 : 2. How much amount of premium is to debited/credited in B’s Capital Account?
(a) Debit Rs 3,000
(b) Credit Rs 3,000
(c) Debit Rs 5,000
(d) Credit Rs 5,000
Answer. D

Question. A and B are partners sharing profits and losses in the ratio of 7 : 5. They agree to admit C, their manager, into partnership who is to get 1/6th share in the profits. He acquires this share as 1/24th from A and 1/8th from B, The new profit sharing ratio will be:
(a) 13 : 7 : 4
(b) 7 : 13 : 4
(c) 7 : 5 : 6
(d) 5 : 7 : 6
Answer. A

Question. Assertion : At the time of Admission of a partner, Accumulated profits and losses are transferred to Revaluation Account.
Reason : At the time of Admission of a partner the Accumulated Profits & Losses are transferred to Capital/Current account in old Profit Sharing Ratio.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Pankaj & Shivangi are partners in a firm sharing profits and losses in the ratio of 7 : 5. They admit Pallavi as a partner for 1/5th Share in a firm. The new profit-sharing ratio will be 2 : 2 : 1.
Reason : When Pallavi is admitted as a new partner, the new profit sharing ratio will be 7 : 5 : 3
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Anjali is admitted in a firm for 1/4th share in the profits for which he brings Rs 60,000 as goodwill. It will be taken by the old partners in the sacrificing ratio.
Reason : The amount of Premium for Goodwill is to be adjusted in the sacrificing ratio of the partners and will be debited to the partner gaining and credited to the partner who is sacrificing.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : At the time of Admission of a partner the balance of General Reserve shown in the Balance Sheet on Liabilities side will be distributed in New Ratio.
Reason : The General reserve shown in the books is to be distributed in old ratio and will be Credited to Old partner’s Capital / Current account.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Revaluation account is debited to transfer Gain on Revaluation to Old partner’s capital/current account in their old profit sharing ratio.
Reason : The Gain on Revaluation of Assets or Reassessment of the Liabilities is to be transferred to the Partners Capital/Current Account in their old profit sharing ratio.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : New partner Shivi was admitted to the firm. As she is the new partner she does not have the right on the Assets of the firm till she earns them.
Reason : According to Section 31 of the Indian Partnership Act, 1932, as a person is admitted as a partner he acquires the right to share in the assets of the firm.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Admission of a partner means reconstitution of a firm as existing agreement comes to an end and a new agreement comes into effect because of the admission of a partner.
Reason : At the time of the admission of a partner the existing agreement comes to an end which means the Dissolution of the partnership firm.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. C

Question. Assertion : Partners Capital account is credited with his share of gain on Revaluation Account if the capitals are Fixed.
Reason : Partners Current account is credited with his share of gain on Revaluation Account if the capitals are Fixed.
Partner’s Capital account is credited with his share of gain on Revaluation Account if the capitals are Fluctuating.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : At the time of the admission of a partner, Revaluation Account will be debited to record the claim on Workmen Compensation for Rs 10,000 as the Reserve for the same was only for 8,000.
Reason : The Claim for Workmen Compensation will be debited by Rs 2,000 as the reserve for the same is already for Rs 8,000.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : The ratio in which all the partners including the new partner share in future profits and losses is known as New Profit Sharing Ratio.
Reason : The ratio in which all the partners including the new partner share in future profits and losses is known as Sacrificing Ratio.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. C

Arjun and Karan are partners in a firm sharing profits and losses in the ratio of 3 : 2. Atul is admitted for ⅕th share in profits of the firm. Calculate the new profit ratio of partners if,

Question. Atul gets it equally from Arjun and Karan
(a) 2 : 3 : 5
(b) 5 : 3 : 2
(c) 5 : 2 : 6
(d) None of these
Answer. B

Question. Atul gets it from Arjun and Karan in the ratio of 2 : 1.
(a) 7 : 5 : 3
(b) 2 : 3 : 1
(c) 9 : 6 : 1
(d) 8 : 8 : 9
Answer. A

Question. Atul gets it wholly from Arjun.
(a) 4 : 5 : 6
(b) 2 : 2 : 1
(c) 2 : 1 : 5
(d) 1 : 2 : 3
Answer. B

Question. Atul gets it 3/20th from Arjun and 1/20th from Karan.
(a) 9 : 4 : 7
(b) 7 : 2 : 1
(c) 9 : 7 : 4
(d) 2 : 4 : 6
Answer. C

Khyati and Maitreyi of Varanasi were partners in a firm with capitals Rs 1,20,000 and Rs 1,60,000 respectively. On 1.4.2019 they admitted Prakriti as a partner for ¼th share in profits of her payment of Rs 2,00,000 as her capital and Rs 90,000 for her 1/4th share of goodwill.
On that date the creditors of Khyati and Maitreyi were Rs 60,000 and bank overdraft was Rs 15,000. Their assets apart from cash included Stock Rs 10,000; Debtors Rs 40000; Plant and machinery Rs 80,000; Land and Building Rs 2,00,000.It was agreed that stock should be depreciated by Rs 2,000; Plant and machinery by 20%, Rs 5,000 should be written off as bad debts and Land and Building should be appreciated by 25%.

Based on above information you are required to answer the following questions:

Question. Stock depreciated by Rs 2,000 it will be shown in:
(a) Debit side of revaluation Account
(b) Credit side of revaluation Account
(c) Credit side of partner’s capital account
(d) None of these
Answer. A

Question. Prakriti brings her share of goodwill in cash, it will be shared by old partners in:
(a) Ratio of sacrifice
(b) Old profit sharing ratio
(c) New profit sharing ratio
(d) In capital ratio
Answer. A

Question. Premium for Goodwill amount will be credited to:
(a) Khyati Rs 45,000; Maitreyi Rs 45,000
(b) Khyati Rs 60,000; Maitreyi Rs 30,000
(c) Khyati Rs 40,000; Maitreyi Rs 50,000
(d) None of these
Answer. A

Question. What value of land and building will be shown in the balance sheet of firm as at 1.4.2019 if its appreciated by 25%.
(a) Rs 2,40,000
(b) Rs 2,70,000
(c) Rs 2,50,000
(d) None of these
Answer. C

Question. Profit on revaluation transferred to Khyati’s Capital A/c will be:
(a) Rs 13,200
(b) Rs 13,800
(c) Rs 13,700
(d) Rs 13,500
Answer. D

Nikhil and Pawan were partners in a firm sharing profit and loss in the ratio of 2: 1 with capitals Rs 60,000 and Rs 50,000 respectively. Their Balance Sheet as on 31.03.2016 showed creditors Rs 57,000; WCF Rs 35000 and General reserve Rs 30,000. Their assets included banks Rs 24,000; profit and loss (Dr.) ; Machinery Rs 22,000; Investment Rs 2000. Debtors valued Rs 44,000; provision for bad debt Rs 6,000; Building Rs 135000 and stock Rs 6000.
Partners decide to admit ‘Harshit’ for 1/5 share future profit on the following terms:
Harshit acquire his share of profit from Nikhil.
Goodwill of the firm was valued at Rs 60,000. Building to be over valuated by Rs 2,000. Provision on debtors should be maintained 5%. Machinery to be reduced by 5%.Claim for WCF 17000. Market value of investment Rs 5,000 and taken by Nikhil at this value. Harshit bought Rs 60,000, as a capital.

Based on above information you are required to answer the following questions:

Question. What will be new profit sharing ratio of Nikhil, Pawan and Harshit?
(a) 2 : 3 : 1
(b) 5 : 2 : 1
(c) 7 : 8 : 9
(d) None of these
Answer. D

Question. After settlement of WCF claim how much remaining amount will be credited in Nikhil’s And Pawan’s Capital Account?
(a) Nikhil Rs 17,000; Pawan Rs 1,000
(b) Nikhil Rs 10,000; Pawan Rs 8,000
(c) Nikhil Rs 12,000; Pawan Rs 6,000
(d) None of these
Answer. C

Question. Profit and loss (Dr.) appearing in the blance sheet will be distributed in which ratio?
(a) New profit sharing ratio
(b) Sacrificing Ratio
(c) Old ratio
(d) None of these
Answer. C

Question. How much new partner will compensate for his share acquired by Nikhil?
(a) Rs 12,000
(b) Rs 18,000
(c) Rs 16,000
(d) Rs 10,000
Answer. A

Kamakshi and Prakriti are partners sharing profits in the ratio of 2 : 1. Ronit is Admitted as a new partner and the new ratio is decided as 5 : 3 : 2.
The assets and liabilities are revalued as building was appreciated by 25% (Book value of Building Rs 4,00,000), the provision for doubtful debts was reduced from Rs 5,000 to Rs 3,000. A provision for Rs 4,000 was to be made for an outstanding bill for repairs, unrecorded investment were worth Rs 10,000, unrecorded liability towards supplier was Rs 12,000.

Question. Profit on revaluation will be:
(a) Rs 96,000
(b) Rs 86,000
(c) Rs 89,999
(d) Rs 95,000
Answer. A

Question. Unrecorded liability of Rs 12,000 towards supplier will be:
(a) Debited to Revaluation Account
(b) Credited to Revaluation Account
(c) Debited to Goodwill Account
(d) Credited to Partners’ Capital Account
Answer. A

Question. Unrecorded investment worth Rs 10,000 will be:
(a) Debited to Revaluation Account
(b) Credited to Revaluation Account
(c) Debited to Goodwill Account
(d) Credited to Partners’ Capital Account
Answer. B

Question. Provision for doubtful debts account will be credited to Revaluation Account by:
(a) Rs 3,000
(b) Rs 2,000
(c) Rs 5,000
(d) None of these
Answer. B

 

Multiple Choice Questions

1 When a new partner brings his share of goodwill in cash, the amount is to be debited to:
(a) Premium A/c
(b) Cash A/c
( c) Capital A/cs of old partners
(d) Capital A/cs of new partner

2 A and B are partners sharing profits in equal ratio. A’s capital is ₹ 90,000 and B’s capital is ₹ 60,000. They admit C and agree to give 1/5th share in future profit, C brings ₹ 70,000 as his capital. Value of hidden goodwill at the time of admission of C is:
(a) ₹ 70,000
(b) ₹ 1,30,000
( c) ₹ 3,50,000
(d) ₹ 1,50,000

3 The new partner’s share of goodwill is taken by old partners in their:
(a) New profit sharing ratio
(b) Old profit sharing ratio
( c) Gaining ratio
(d) Sacrificing ratio

4 Revaluation Account is a
(a) Personal Account
(b) Real Account
( c) Nominal Account
(d) None of the above

5 X and Y are partners in a firm sharing profits and losses in the proportion of 2:1. They admit a new partner Z for 1/6 th share in profit. What is the new profit sharing ratio of X,Y and Z?
(a) 5:3:10
(b) 2:1:6
( c) 1:1:1
(d) 10:5:3

6 In case of Workmen Compensation Reserve, if the amount claimed is more than the amount lying in WCR, then the shortfall will be recorded in:
(a) Revaluation Account
(b) Partner’s Capital Account
( c) Balance Sheet
(d) None of these

7 State whether the following statements are true or false:
a) Payment of premium for Goodwill is the method of compensating sacrificing partners for the sacrifice they make in favour of new partner.

b) Contingent liability becoming a certain liability is credited to Revaluation Account at the time of admission of a partner.

c) On revaluation of assets and reassessment of liabilities, capital accounts of old partners remain unchanged.
d) At the time of admission of a partner, capital of partners cannot be adjusted on the basis of old partner’s capitals.
e) Employees Provident Fund is a liability and therefore it will not be distributed.

8 For any increase in the value of asset, the Revaluation Account is __________.

9 Investment Fluctuation Reserve is a reserve set aside out of profit to adjust the difference between __________ and __________ of investment.

10 If goodwill is appearing in the Balance Sheet at the time of admission of a new partner; the existing goodwill is written off among _________ partners in ________ ratio.

11 P and Q are in partnership sharing profits and losses in the ratio of 3:2 respectively. R joins the partnership for 25% share. Calculate the new profit sharing ratio and sacrificing ratio after R’s admission.

12 P and Q are in partnership sharing profits and losses in the ratio of 2:1 respectively. R joins the partnership for 1/5th share. Calculate the new profit sharing ratio and sacrificing ratio after R’s admission.

13 X and Y are in partnership sharing profits and losses in the ratio of 3:2. Z is admitted for 1/4th share. Afterwards W enters for 20%. Compute the profit sharing ratio of X, Y, Z and W after W’s admission

14 T and U are in partnership sharing profits and losses in the ratio of 2:1 respectively. V joins the partnership for 1/5th share and the share becomes 8:4:3. Calculate the Sacrificing Ratio. The new partner is physically challenged. State the value highlighted.

15 E and F are in partnership sharing profits and losses in the ratio of 3:2 respectively. R joins the partnership for 25% share and new ratio becomes 9:6:5. Calculate the sacrificing ratio.

16 A and B are partners sharing profits in the ratio of 3:2. A surrenders 1/6th of his share and B surrenders 1/4th of his share in favour of C, a new partner. What is the new ratio?

17 R and T are partners in a firm sharing profits in the ratio of 3:2. S joins the firm. R surrenders ¼th of his share and T 1/5^th of his share in favour of S. Find the new profit sharing ratio.

18 D and R are partners in a firm, sharing profits in the ratio of 7:3. They admit S for 3/7^th share of profits, which he takes 2/7^th from D and1/7th from R. Calculate their new profit sharing ratio.

19 A and B are partners in a firm, sharing profits in the ratio of 7:5. They admit C for 1/6^th share of profits, which he takes 1/24^th from A and 1/8th from B. Calculate the new profit sharing ratio.

20 A, B, C and D are in partnership sharing profits and losses in the ratio of 36:24:20:20 respectively. E joins the partnership for 1/5th share. A, B, C and D would share profits in future among themselves as 3:4:2:1. Calculate the new profit sharing ratio.

21 X and Y are partners in a firm sharing profits and losses in the ratio of 3:2. Z is admitted as partner with 1/8th share in profits. It is decided that X and Y will share profits and losses in future in the ratio of 4:3. Calculate the new profit sharing ratio. 22 X, Y and Z are partners in the ratio of 3:2:1. W is admitted with 1/6th share in profits. Z would retain his original share. Find out new profit sharing ratio.

23 Ram and Shyam share profits and losses in the ratio of 5:3. Bhushan is admitted for 3/10th share of profits half of which was gifted by Ram and the remaining share was taken by Z equally from Ram and Sham. Calculate the new ratio.

24 Ram and Shyam are partners in a firm sharing profits and losses in the ratio of 3:2. They admit Rahim as a partner for 1/5^th share. Rahim acquires his share from Ram and Shyam in the ratio 2:3. The goodwill stands in the books at ₹ 25,000. Rahim paid ₹ 15,000 privately to Ram and Shyam as his share of goodwill. Journalise.

25 Amit and Bablu are partners sharing profits in the ratio of 3:2. Chintu is admitted paying a premium for 1/4th share of profit of which he acquires 1/6^th from Amit and 1/12^th from bablu. Goodwill of the firm is valued at ₹ 8,400. Goodwill already appears in the books at ₹ 5,000. Partners withdrew 40% of goodwill credited to them. Give journal entries.

26 Raj and Nath are partners in a firm sharing profits in the ratio of 3:2. On 1^st April, 2017 they admit Singh as a new partner for 3/13th share in the profits. The new ratio will be 5:5:3. Singh contributed the following assets towards his capital and for his share of goodwill. Stock ₹1,00,000, Debtors ₹ 90,000, Land ₹ 70,000, Plant and Machinery ₹ 1,10,000. On the date of admission of Singh, the goodwill of the firm was valued at ₹ 6,50,000. Journalise in the books of the firm.

27 Ranvir and Seth are partners in a firm sharing profits and losses in the ratio of 3:2. They admit Zaman as a new partner for 1/5th of share as are between them. Ranvir and Seth decide to share future profits and losses in the ratio of 13:7. The goodwill of the firm is valued at ₹ 25,000. Goodwill already appears in the books at ₹ 20,000. Z brings in 60% of his requisite share of firm’s goodwill and ₹ 1,00,000 as his capital in cash. The amount of goodwill brought in cash is withdrawn by the concerned partners to the extent of 30% of what is credited to them. The profits for the first year of new partnership amounts to ₹ 50,000. Journalise.

28 A and B are partners in a firm sharing profits and losses in the ratio of 3:2. They admit Z as a partner for 1/5^th share. Z acquires his share from A and B in the ratio of 2:3. The goodwill of the firm has been valued at ₹ 20,000. Z brings in ₹ 1,00,000 as his capital but is unable to bring in the necessary amount in cash as his share of firm’s goodwill. Pass journal entries under each of the following cases, assuming the capitals are fixed. :
Case (a) When no goodwill appears in the books.
Case (b) When goodwill appears in the books at ₹15,000

 

Please click on below link to download CBSE Class 12 Accountancy Admission of A Partner Worksheet Set A