CBSE Class 12 Accountancy Change in Profit Sharing Worksheet Set C

Question. In case of change in profit-sharing ratio, the gaining partner must compensate the sacrificing partners by paying the proportional amount of
(a) capital
( b) cash
(c) goodwill
(d) none of the above
Answer. C

Question. In case of change in profit-sharing ratio, the accumulated profits are distributed to the partners in
(a) new ratio
(b) old ratio
(c) sacrificing ratio
(d) equal ratio
Answer. B

Question. A partnership is reconstituted due to change in profit sharing ratio.State whether True or False
Answer. TRUE

Question. A,B and C are sharing profits in the ratio of 3:2:1.They decided to share equally in future .B’s has neither sacrificed nor gained . State whether True or False
Answer. TRUE

Question. A,B and C were are partners in a firm sharing profits in the ratio of 3:4:1 .They decided to share profits equally w.e.f from 1 .4.2019. On that date the profit and loss account showed the credit balance of 96,000.instead of closing the profit and loss account ,it was decided to record an adjustment entry reflecting the change in profit sharing ratio .In the journal entry:
a) Dr. A by 4,000; Dr. B by 16,000; Cr C by 20,000
b) Cr. A by 4,000; Cr. B by 16,000; Dr C by 20,000
c) Cr. A by 16,000; Cr. B by 4,000; Dr C by 20,000
d) Dr. A by 16,000; Dr. B by 4,000; Cr C by 20,000
Answer. B

Question. Increase in the value of assets and decrease in the value of liabilities result in……………for the existing partners and should be ……….to P/L Adjustment a/c
Answer. GAIN,CREDITED

Question. Out of the following which is not a part of change in profit sharing ratio
(a) Determination of sacrificing and gaining ratio
(b) Accounting of goodwill
(c) Accounting of reserves, accumulated profits and losses
(d) Dissolution of partnership firm
Answer. D

Question. Ankita and Neha are sharing profits in the ratio of 2:1.Now they have decided that new profit sharing ratio will be equal. What will be the Gain/Sacrifice ratio?
(A) Ankitagain1/6and Nehasacrifice1/6
(B) Ankitasacrifice1/6andNehagain1/6
(C)Ankita gain 4/5 and Neha sacrifice 4/5
(D)Ankitasacrifice2/3andNehagain1/6
Answer. B

Question. In which of the following situation, partner’s capital a/c is credited?
(a) Transfer of accumulated profit or reserves
(b) Transfer of revaluation loss
(c) Writing off the existing book value of goodwill
(d) All of the above
Answer. A

Short Answer Questions

1. Joseph and Monu were partners in a firm carrying on a tiffin service in Mumbai. Joseph noticed that a lot of food is left at the end of the day. To avoid wastage, she suggested that it should be distributed to the needy. Monu wanted that it should be mixed with the food being served the next day. Monu then gave a proposal that if his share in the profit is increased, he will not mind free distribution of left over food. Joseph happily agreed. So they decided to change their profit sharing ratio to 2:3 with immediate effect. On that date, revaluation of assets and reassessment of liabilities was carried out that resulted into a profit of ₹8,000. On that date, the good will of the firm was valued as₹30,000.

Question. Profit on revaluation will be :
(A) Debited to capital account of partners in 2:3
(B) Debited to capital account of partners in
(C) 1:1
(D) Credited to capital account of partners in 2:3 \
(E) Credited tocapital account of partner sin 1:1
Answer. D

Question. Sacrifice/Gain of Joseph and Monu will be:
(A) Josephsacrifice1/10,Monugains1/10
(B) Monusacrifice1/10,Josephgains1/10
(C) OnlyJosephgain1/10
(D) OnlyMonusacrifice1/10
Answer. A

Question. At the time of change in profit sharing ratio, gaining partner capital is and Sacrificing partner is _for adjustment of goodwill.
(A) Credited, Debited
(B) Debited, Credited
(C) Increased, Decreased
(D) Decreased, Credited
Answer. B

Question. The journal entry for adjustment of goodwill will be
(A) Monu’s capitalA/c   Dr.  30,000
To Joseph’s capitalA/c               30,000
(B) Joseph’scapital A/c  Dr. 15,000
To Monu’s capital A/c        15,000
(C) Monu’s capitalA/c    Dr. 3,000
To Joseph’s capitalA/c        3,000
(D) Joseph’s capitalA/c   Dr. 27,000
To Monu’s capitalA/c         27,000
Answer. C

Question. Nithya and Anand are partners in a firm sharing profits and losses equally. With effect from 1st April,2022, they decided to share profits in the ratio of 3:2. On the date of change in the profit sharing ratio, he profit and loss A/c had a credit balance of Rs.1,50,000.
Pass necessary journal entry for the distribution of the balance in the profit & loss A/c before the change in the profit sharing ratio.
Answer. Profit & Loss A/c Dr 1,50,000
To Nithya’s capital A/c 75,000
To Anand’s capital A/c 75,000

2. A, B and C are partners sharing profits and losses in the ratio of 5:3:2. A was unable to devote time to business due to her other commitments. Therefore adjustments were required in the agreed terms of partnership. They decided to share future profits and losses in the ratio of 2:3:5. With effect from 1st April,2021.The values of assets and liabilities did not require any adjustments. However, an unrecorded computer of value Rs.60,000 and a claim of a customer of Rs.30,000 was to be brought in the books. The balance sheet has goodwill of Rs.10,000 as an asset, other assets(excluding goodwill were Rs.6,00,000 whereas liabilities were Rs.50,000.
Normal rate of return is 15% and average profit is Rs.90,000.

Question. Calculate Goodwill under capitalisation of average profit will be
Answer. Rs.20,000

Question. Calculate Sacrificing and gaining ratio of the partners
Answer. A-3/10 (sacrifice), B-nil, c-3/10(gain)

Question. Who is neither a gaining nor a sacrificing partner
Answer. B

Question. Sonu and Monu are partners in a firm sharing profits in the ratio of 3:2. With effect from 1st April,2022 they agreed to share profits equally. For this purpose goodwill of the firm is valued at Rs.75,000. You are required to fill up the following journal entry:
Monu’s capital A/c Dr --------
To Sonu’s capital A/c ----
Answer. 
Monu’s capital A/c (7500 x 1/10) 7500
To Sonu’s capital A/c 7500
(Adjustment made for goodwill on change in
The profit sharing ratio)

Please click on below link to download CBSE Class 12 Accountancy Change in Profit Sharing Worksheet Set C