Important MCQs of Change in Profit Sharing Ratio (Class 12 Accountancy)
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Multiple Choice Questions with answers of Change in Profit Sharing Ratio chapter of Class 12 Accountancy
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Sacrificing Ratio:
a) New Ratio – Old Ratio
b) Old Ratio – New Ratio
c) Old Ratio – Gaining Ratio
d) Gaining Ratio – Old Ratio
Ans:- b)
Gaining Ratio:
a) New Ratio – Sacrificing Ratio
b) Old Ratio – Sacrificing Ratio
c) New Ratio – Old Ratio
d) Old Ratio – New Ratio
Ans:- c)
A and B were partners in a firm sharing profit or loss equally. With effect from 1st April, 2019 they agreed to share profits in the ratio
of 4:3. Due to change in profit sharing ratio, A’s gain or sacrifice will be:
a) Gain 1/14
b) Sacrifice 1/14
c) Gain 4/7
d) Sacrifice 3/7
Ans:- a)
Explanation:-
A’s gain/sacrifice = 1/2 – 4/7 = – 1/14 (Gain)
A and B were partners in a firm sharing profit or loss in the ratio of 3:5. With effect from 1st April, 2019, they agreed to share profits or
losses equally. Due to change in profit sharing ratio, A’s gain or sacrifice will be:
a) Gain 3/8
b) Gain 1/8
c) Sacrifice 3/8
d) Sacrifice 1/8
Ans:- b)
Explanation:-
A’s gain/sacrifice = 3/8 – 1/2 = – 1/8 (gain)
A and B were partners in a firm sharing profits and losses in the ratio of 2:1. With effect from 1st January, 2019 they agreed to share
profits and losses equally. Individual partner’s gain or sacrifice due to change in the ratio will be:
a) Gain by A 1/6, Sacrifice by B 1/6
B) Sacrifice by A 1/6, Gain by by B 1/6
c) Gain by A 1/2, Sacrifice by B 1/2
d) Sacrifice by A 1/2, Gain by B 1/2
Ans:- b
Explanation
A’s gain/sacrifice = 2/3 – 1/2 = 1/6 (sacrifice)
B’s gain/sacrifice = 1/3 – 1/2 = – 1/6 (gain)
A and B share profits and losses in the ratio of 3:2. With effect from 1st January, 2019, they agreed to share profits equally. Sacrificing
ratio and Gaining Share will be:
a) Sacrifice by A 1/10, Sacrifice by B 1/10
b) Gain by A 1/10, Gain by B 1/10
c) Sacrifice by A 1/10, Gain by B 1/10
d) Gain by A 1/10, Sacrifice by B 1/10
Ans:- c)
Explanation
A’s gain/Sacrifice = 3/5 – 1/2 = 1/10 (sacrifice)
B’s gain/sacrifice = 2/5 – 1/2 = – 1/10 (gain)
A and B were partners in a firm sharing profit or loss in the ratio of 3:1. With effect from Jan. 1, 2019 they agreed to share profit or loss
in the ratio of 2:1. Due to change in profit & Loss sharing ratio, B’s gain or sacrifice will be:
a) Gain 1/12
b) Sacrifice 1/12
c) Gain 1/3
d) Sacrifice 1/3
Ans:- a)
Explanation:-
B’s gain/sacrifice = 1/4 – 1/3 = – 1/12 (gain)
A, B and C were partners sharing profit or loss in the ratio of 7:3:2. From Jan 1, 2019 they decided to share profit or loss in the ratio
of 8:4:3. Due to change in the profit sharing ratio, B’s gain or sacrifice will be:
a) Gain 1/60
b) Sacrifice 1/60
c) Gain 2/10
d) Sacrifice 3/60
Ans:- a)
Explanation:-
B’s gain/sacrifice = 3/12 – 4/15 = – 1/60 (gain)
X, Y and Z are partner in a firm sharing profits and losses in the ratio of 5:3:2. The partners decide to share future profits and losses
in the ratio of 3:2:1. Each partner’s gain or sacrifice due to change in the ratio will be:
a) X sacrifice 1/30, Y gain 1/30, Z nil
b) X Gain 1/30, Y Nil, Z sacrifice 1/30
c) X Nil, Y Sacrifice 1/30, Z Gain 1/30
d) X Nil, Y Gain 1/30, Z sacrifice 1/30
Ans:- d)
Explanation:-
X’s gain/sacrifice = 5/10 – 3/6 = 0/30
Y’s gain/sacrifice = 3/10 – 2/6 = – 1/30 (gain)
Z’s gain/sacrifice = 2/10 – 1/6 = 1/30 (sacrifice)
A, B and C were partners in a firm sharing profits and losses in the ratio of 3:2:1. The partners decide to share future profits and losses in the ratio of 2:2:1. Each partner’s gain or sacrifice due to change in ratio will be:
a) Sacrifice A 3/30, Gain B 2/30, Gain C 1/30
b) Gain A 2/30, Gain B 1/30, Sacrifice C 3/30
c) Sacrifice A 3/30, Gain B 1/30, Gain C 2/30
d) Gain A 1/30, Gain B 1/15, Sacrifice C 1/10
Ans:- a)
Explanation:-
A’s gain/sacrifice = 3/6 – 2/5 = 3/30 (sacrifice)
B’s gain/sacrifice = 2/6 – 2/5 = – 2/30 (gain)
C’s gain/sacrifice = 1/6 – 1/5 = – 1/30 (gain)
A, B and C were partners in a firm sharing profits and losses in the ratio of 4:3:2. The partners decide to share future profits and losses in the ratio of 2:2:1. Each partner’s gain or sacrifice due to change in the ratio will be:
a) Sacrifice A 2/45, Sacrifice B 1/45, Gain C 3/45
b) Gain A 2/45, Sacrifice B 3/45, Gain C 1/45
c) Sacrifice A 2/45, Gain B 3/45, Sacrifice C 1/45
d) Gain A 2/45, Gain B 1/45, sacrifice C 3/45
Ans:- c)
Explanation:-
A’s gain/sacrifice = 4/9 – 2/5 = 2/45 (sacrifice)
B’s gain/sacrifice = 3/9 – 2/5 = – 3/45 (gain)
C’s gain/Sacrifice = 2/9 – 1/5 = 1/45 (sacrifice)
A, B and C were partners in a firm sharing profits in 4:3:2 ratio. They decided to share future profits in 4:3:1 ratio. Sacrificing ratio and
gaining ratio will be:
a) A sacrifice 4/72, B Sacrifice 3/72, C gain 7/72
b) A Gain 3/72, B Gain 4/72, C sacrifice 7/72
c) A Sacrifice 3/72, B Sacrifice 4/72, C Gain 7/72
d) A Gain 4/72, B Gain 3/72, C Sacrifice 7/72
Ans:- d)
Explanation:-
A’s gain/sacrifice = 4/9 – 4/8 = – 4/72 (gain)
B’s gain/sacrifice = 3/9 – 3/8 = – 3/72 (gain)
C’s gain/Sacrifice = 2/9 – 1/8 = 7/72 (sacrifice)
X, Y and Z were partners sharing profits in the ratio 2:3:4 with effect from 1st January, 2019 they agreed to share profits in the ratio
3:4:5. Each partner’s gain or sacrifice due to change in the ratio will be:
a) X Gain 1/36, Y Nil, Z sacrifice 1/36
b) X Sacrifice 1/36, Y Nil, Z Gain 1/36
c) X Gain 1/36, Y Sacrifice 1/36, Z Nil
d) X Sacrifice 1/36, Y Gain 1/36, Z Nil
Ans:- a)
Explanatio:-
X’s gain/sacrifice = 2/9 – 3/12 = – 1/36 (gain)
Y’s gain/sacrifice = 3/9 – 4/12 = 0/36 (Nil)
Z’s gain/sacrifice = 4/9 – 5/12 = 1/36 (sacrifice)
X, Y and Z were in partnership sharing profits in the ratio of 4:3:1. The partners agreed to share future profits in the ratio 5:4:3. Each
partner’s gain or sacrifice due to change in ratio will be:
a) X sacrifice 2/24, Y Sacrifice 1/24, Z gain 3/24
b) X Gain 2/24, Y Gain 1/24, Z Sacrifice 3/24
c) X Sacrifice 1/24, Y Sacrifice 2/24, Z Gain 3/24
d) X sacrifice 2/24, Y Gain 3/24; Z Sacrifice 1/24
Ans:- a)
Explanation:-
X’s gain/sacrifice = 4/8 – 5/12 = 2/24 (sacrifice)
Y’s gain/sacrifice = 3/8 – 4/12 = 1/24 (sacrifice)
Z’s gain/sacrifice = 1/8 – 3/12 = – 3/24 (gain)
A, B and C are equal partners in the firm. It is now agreed that they will share the future profits in the ratio of 5:3:2. Sacrificing ratio
and gaining ratio of different partners will be:
a) A Sacrifice 5/30, B Gain 1/30, C Gain 4/30
b) A Gain 5/30, B Sacrifice 4/30, C Sacrifice 1/30
c) A Gain 5/30, B Sacrifice 1/30, C Sacrifice 4/30
d) A Sacrifice 5/30, B Gain 4/30, C Gain 1/30
Ans:- c)
Explanation:-
A’s gain/sacrifice = 1/3 – 5/10 = – 5/30 (gain)
B’s gain/sacrifice = 1/3 – 3/10 = 1/30 (sacrifice)
C’s gain/sacrifice = 1/3 – 2/10 = 4/30 (sacrifice)
P and Q were partners sharing profits and losses in the ratio of 3:2. They decided that with effect from 1st January, 2019 they would share profits and losses in the ratio of 5:3. Goodwill is valued at ₹1,28,000. In adjustment entry:
a) Cr. P by ₹3,200, Dr. Q by ₹3,200
b) Cr. P by ₹37,000, Dr. Q by ₹37,000
c) Dr. P by ₹37,000, Cr. Q by ₹37,000
d) Dr. P by ₹3,200, Cr. Q by ₹3,200
Ans:- d)
Explanation:-
P’s gain/sacrifice = 3/5 – 5/8 = – 1/40 (gain)
Q’s gain/sacrifice 2/5 – 3/8 = 1/40 (sacrifice)
Adjustment Entry of Goodwill is
Gaining Partner’s Capital A/c Dr.
To Sacrificing Partner’s Capital A/c
P will contribute = 1,28,000 x 1/40 = ₹ 3,200 (Dr.)
Q will get = 1,28,000 x 1/40 = ₹ 3,200 (Cr.)
Journal Entry
P’s Capital A/c Dr. 3,200
To Q’s Capital A/c 3,200
A, B and C are partners sharing profits in the ratio of 4:3:2 decided to share profits equally. Goodwill of the firm is valued at ₹10,800. Adjusting entry for goodwill:
a) A’s Capital A/c Cr. by ₹4,800; B’s Capital A/c Cr. by ₹3,600;
C’s Capital A/c Cr. by ₹2,400.
b) A’s Capital A/c Cr. by ₹3,600; B’s Capital A/c Cr. by ₹3,600;
C’s Capital A/c Cr. by ₹3,600
c) A’s Capital A/c Dr. by ₹1,200; C’s Capital A/c Cr. by ₹1,200
d) A’s Capital A/c Cr. by ₹1,200; C’s Capital A/c Dr. by ₹1,200
Ans:- d)
Explanation:-
A’s gain/sacrifice = 4/9 – 1/3 = 1/9 (sacrifice)
B’s gain/sacrifice = 3/9 – 1/3 = 0/9 (Nil)
C’s gain/sacrifice = 2/9 – 1/3 = – 1/9 (gain)
Partner’s Share in Goodwill
A = 10,800 x 1/9 = 1200 (cr.)
C = 10,800 x 1/9 = 1200 (Dr.)
Adjusting Entry of Goodwill
C’s Capital A/c Dr. 1200
To A’s Capital A/c 1200
A, B and C were partners sharing profits and losses in the ratio of 7:3:2. From 1st January, 2019 they decided to share profits and losses in the ratio of 8:4:3. Goodwill is ₹1,20,000. Adjustment entry for goodwill:
a) Cr. A by ₹6,000; Dr B by ₹2,000; Dr. C by ₹4,000
b) Dr. A by ₹6,000; Cr B by ₹2,000; Cr. C by ₹4,000
c) Cr. A by ₹6,000; Dr. B by ₹4,000; Dr. C by ₹2,000
d) Dr. A by ₹6,000; Cr. B by ₹4,000; Cr. C by ₹2,000
Ans:- a)
Explanation:-
A’s gain/sacrifice = 7/12 – 8/15 = 3/60 (sacrifice)
B’s gain/sacrifice = 3/12 – 4/15 = – 1/60 (gain)
C’s gain/sacrifice = 2/12 – 3/15 = – 2/60 (gain)
Partner’s share in Goodwill
A = 1,20,000 x 3/60 = ₹ 6,000 (Cr.)
B = 1,20,000 x 1/60 = ₹ 2,000 (Dr.)
C = 1,20,000 x 2/60 = ₹ 4,000 (Dr.)
Adjusting Entry of Goodwill
B’s Capital A/c Dr. 2,000
C’s Capital A/c Dr. 4,000
To A’s Capital A/c 6,000
P, Q and R were partners in a firm sharing profits in 5:3:2 ratio. They decided to share the future profits in 2:3:5. For this purpose, the goodwill of the firm was valued at ₹1,20,000. Adjustment entry for the treatment of goodwill due to change in the profit sharing ratio is:
a) Cr. P by ₹24,000; Dr. R by ₹24,000
b) Cr. P by ₹60,000; Dr. R by ₹60,000
c) Cr. P by ₹36,000; Dr. R by ₹36,000
d) Dr. P by ₹36,000; Dr. R by ₹36,000
Ans:- c)
Explanation:-
P’s gain/sacrifice = 5/10 – 2/10 = 3/10 (Sacrifice)
Q’s gain/sacrifice = 3/10 – 3/10 = 0/10 (Nil)
R’s gain/sacrifice = 2/10 – 5/10 = – 3/10 (gain)
Partner’s share in Goodwill
P = 1,20,000 x 3/10 = ₹ 36,000 (Cr)
R = 1,20,000 x 3/10 = ₹ 36,000 (Dr)
Adjusting Entry for Goodwill
R’s Capital A/c Dr. 36,000
To P’s Capital A/c 36,000
Avya, Divya and Kavya were equal partners. They decided to change the profit sharing ratio to 4:3:2. For this purpose the goodwill of the firm was valued at ₹90,000. The journal entry for the treatment of goodwill on change in profit sharing ratio will be:
a) Kavya’s Capital A/c Dr. 10,000
To Avya;s Capital A/c 10,000
b) Divya’s Capital A/c Dr. 10,000
To Avya’s Capital A/c 10,000
c) Avya’s Capital A/c Dr. 90,000
To Kavya’s Capital A/c 90,000
d) Avya’s Capital A/c Dr. 10,000
To Kavya’s Capital A/c 10,000
Ans:- d)
Explanation:-
Avya’s gain/sacrifice = 1/3 – 4/9 = – 1/9 (gain)
Divya’s gain/sacrifice = 1/3 – 3/9 = 0/9 (Nil)
Kavya’s gain/sacrifice = 1/3 – 2/9 = 1/9 (Sacrifice)
Partner’s Share in Goodwill
Avya = 90,000 x 1/9 = ₹ 10,000 (Dr.)
Kavya = 90,000 x 1/9 = ₹ 10,000 (Cr.)
Adjusting Journal Entry of Goodwill
Avya’s Capital A/c Dr. 10,000
To Kavya’s Capital A/c 10,000
Red, Blue and White were partners in a firm sharing profits in the ratio of 1:2:2. They decided to share future profits in the ratio of
7:5:3 with effect from 1st April, 2019. Their Balance Sheet as on that date showed a balance of ₹22,500 in Deferred Revenue Expenditure
Account. The amount to be debited respectively to the capital accounts of Red, Blue and White for writing off Deferred Revenue Expenditure will be:
a) ₹7,500, ₹7,500 and ₹7,500
b) ₹4,500, ₹9,000 and ₹9,000
c) ₹10,500, ₹7,,500 and ₹4,500
d) ₹11,250, Nil and ₹11,250
Ans:- b)
Explanation:-
Deferred Revanue Expenditure is an accumulated loss. It would be debited to all the partners in their old ratio
Red will be debited = 22,500 x 1/5 = ₹ 4,500
Blue will be debited = 22,500 x 2/5 = ₹ 9,000
While will be debited 22,500 x 2/5 = ₹ 9,000
A, B and are partners in a firm sharing profits in the ratio of 3:4:1. They decided to share profits equally w.e.f 1st April, 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 adjusting entry reflecting the change in profit sharing ratio. The Journal entry is:
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
Ans:- b)
Explanation:-
A’s gain/sacrifice = 3/8 – 1/3 = 1/24 (sacrifice)
B’s gain/sacrifice = 4/8 – 1/3 = 4/24 (sacrifice)
C’s gain/Sacrifice = 1/8 – 1/3 = – 5/24 (gain)
Partner’s share in Profit & Loss (Cr)
A = 96000 x 1/24 = ₹ 4,000 (cr)
B = 96000 x 4/24 = 16000 (cr)
C = 96000 x 5/24 = 20,000 (Dr)
Adjusting Entry of Profit & Loss A/c Credit Balance
C’s Capital A/c Dr. 20,000
To A’s Capital A/c 4,000
To B’s Capital A/c 16,000
A, B and C are partner sharing profits in the ratio of 1:2:3. On 1-4-2019 they decided to share the profits equally. On the date there was
a credit balance of ₹1,20,000 in their Profit and Loss Account and a balance of ₹1,80,000 in General Reserve Account. Instead of closing the General Reserve Account and Profit and Loss Account, It is decided to record an adjusting entry for the same. In the necessary adjustment entry to give effect to the above arrangement.
a) Dr. A by ₹50,000; Cr B by ₹50,000
b) Cr. A by ₹50,000; Dr B by ₹50,000
c) Dr. A by ₹50,000; Cr C by ₹50,000
d) Cr. A by ₹50,000; Dr C by ₹50,000
Ans – c)
Ans:- c)
Explanation:-
A’s gain/sacrifice = 1/6 – 1/3 = – 1/6 (gain)
B’s gain/sacrifice = 2/6 – 1/3 = 0/6 (Nil)
C’s gain/sacrifice = 3/6 – 1/3 = 1/6 (sacrifice)
Partner’s share in Net Accumulated Profit
Net Accumuluated Profit = P & L A/c (Cr) + General Reserve
= ₹ 1,20,000 + ₹ 1,80,000 = ₹ 3,00,000
A’s share = 3,00,000 x 1/6 = ₹ 50,000 (Dr.)
C’s share = 3,00,000 x 1/6 = 50,000 (Cr.)
Adjusting Journal Entry
A’s Capital A/c Dr. 50,000
To C’s Capital A/c 50,000
