[200] MCQs of Admission of Partner chapter Class 12
Bishan and Sudha were partners in a firm sharing profits and losses in the ratio of 5:3. Alena was admitted as a new partner. It was decided that the new profit sharing ratio of Bishan, Sudha and Alena will be 10:6:5. The sacrificing ratio of Bishan and Sudha will be:
a) 5:3
b) 25:78
c) 6:5
d) 2:1
Ans:- a)
Explanation:-
Bishan Sacrifices = 5/8 – 10/21 = 25/168
Sudha Sacrifices = 3/8 – 6/21 = 15/168
Sacrificing ratio of Bishan and Sudha
25 : 15 i.e., 5 : 3
P and Q are partners in a firm having capitals of ₹15,000 each. R is admitted for 1/3rd share for which he has to bring ₹20,000 for his share of capital. The amount of goodwill will be
a) ₹8,000
b) ₹10,000
c) ₹9,000
d) ₹11,000
Ans:- b)
Explanation:-
= Net Worth of the firm (Including Goodwill) = 20,000 × 3 = ₹ 60,000
= Net Worth of the firm (Excluding Goodwill) = 15,000 + 15,000 + 20,000 = ₹ 50,000
= Goodwill of the firm = 60,000 – 50,000 = ₹ 10,000
A and B are partners sharing profits in the ratio of 5:3. A surrenders 1/4th of his share and B surrenders 1/5 of his share in favour of C, a new partner. What is the sacrificing ratio?
a) 4:5
b) 5:4
c) 12:25
d) 25:12
Ans:- d)
Explanation:-
= A sacrifices = 5/8 x 1/4 = 5/32
= B sacrifices = 3/8 x 1/5 = 3/40
= sacrificing ratio after making base equal
= 5/32 x 40/40 : 3/40 x 32/32
= 200 : 96 i.e., 25 : 12
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
Ans:- c)
Sun and Star were partners in a firm sharing profits in the ratio of 2:1. Moon was admitted as a new partner in the firm. The new profit sharing ratio was 3:3:2. Moon brought the following assets towards his share of goodwill and his capital:
Machinery – ₹2,00,000
Furniture – ₹1,20,000
Stock – ₹80,000
Cash – ₹50,000
If his capital is considered as ₹3,80,000, the goodwill of the firm will be:
a) ₹70,000
b) ₹2,80,000
c) ₹4,50,000
d) ₹1,40,000
Ans:- a)
Solution:-
Machinery A/c Dr. 2,00,000
Furntirue A/c Dr. 1,20,000
Stock A/c Dr. 80,000
Cash A/c Dr. 50,000
To Moon’s Capital A/c 3,80,000
To Premium for Goodwill A/c (B/f) 70,000
A and B are partners sharing profits in the ratio of 11:4. C was admitted. A surrendered 1/11th of his share and B 1/4th of his share in favour of C. The sacrificing ratio will be:
a) 11:4
b) 1:1
c) 4:11
d) 7:4
Ans:- b)
Explanation:-
= A sacrifices = 11/15 x 1/11 = 1/15
= B sacrifices = 4/15 x 1/4 = 1/15
= Sacrificing ratios of A and B after making base equal
= 1/15 : 1/15 i.e., 1 : 1
A new partner can be admitted into the partnership.
a) with the consent of anyone partner
b) with the consent of a majority of partners
c) with the consent of all the partners
d) with the consent of 2/3rd of old partners
Ans:- c)
Explanatio:-
As per the Provision of Partnership Act 1932, New partner can be admitted only with the consent of all the partners.
A and B are partners sharing profits and losses in the ratio of 5:3. C is admitted in the firm. He brings ₹70,000 as cash and ₹43,000 for goodwill. New profit ratio between A, B and C is 7:5:4. The sacrificing ratio of A and B is:
a) 3:1
b) 1:3
c) 4:5
d) 5:9
Ans:- a)
Explanation:-
= A sacrifices = 5/8 – 7/16 = 3/16
= B sacrifices = 3/8 – 5/16 = 1/16
= Sacrificing ratio of A and B is
= 3/16 : 1/16 i.e., 3 : 1
Mona and Tina were partners in a firm sharing profits in the ratio of 3:2. Naina was admitted with 1/6th share in the profits of the firm. At the time of admission, Workmen’s Compensation Reserve appeared in the Balance Sheet of the firm at ₹32,000. The claim on account of workmen’s Compensation was determined at ₹40,000. Excess of claim over the reserve will be
a) Credited to Revaluation Account
b) Debited to Revaluation Account
c) Credited to old partner’s capital account
d) Debited to old partner’s capital account
Ans:- b)
Explanation:-
If Workmen Compensation Claim is more than the available Workmen Compensation Reserve. The excess will be debited to Revaluation Account.
P and Q are partners sharing profits in the ratio of 9:7. R is admitted as a partner with 9/20th share in the profits, which he takes 1/5th from P and 1/4th from Q. Sacrificing ratio will be:
a) 5:4
b) 9:7
c) 7:9
d) 4:5
Ans:- d)
Explanation:-
P Sacrifices = 1/5
Q sacrifices = 1/4
Sacrificing ratio after making base equal
1/5 x 4/4 : 1/4 x 5/5
4/20 : 5/20 i.e., 4 : 5
A and B are in partnership sharing profits in the ratio of 3:2. They take C as a new partner. Goodwill of the firm is valued at ₹3,00,000 and C brings ₹30,000 as his share of goodwill in cash which is entirely credited to the Capital Account of A, New profit sharing ratio will be:
a) 3:2:1
b) 6:3:1
c) 5:4:1
d) 4:5:1
Ans:- c)Explanation:-
= C’s share in Profit = 30,000/3,00,000 = 1/10
= C takes his share entirely from A
= A’s new share = 3/5 – 1/10 = 5/10
= B’s new share = 2/5 – 0/1 = 2/5
= New Profit sharing ratio after making base equal
= 5/10 : 2/5 x 2/2 : 1/10
= i.e., 5 : 4 : 1
X and Y are partners sharing profits in the ratio of 2:1. They admit Z into the partnership for 1/4th share in profits for which he brings ₹20,000 as his share of capital. Hence, the adjusted capitals of X and Y will be
a) ₹40,000 and ₹20,000 respectively
b) ₹32,000 and ₹16,000 respectively
c) ₹60,000 and ₹30,000 respectively
d) ₹20,000 and ₹40,000 respectively
Ans:- a)
Explanation
Calculation of the new profit sharing ratio
= Old Ratio = 2 : 1
= Z admitted for 1/4th share
= Remaining share = 1 – 1/4 = 3/4
= X’s new share = 3/4 × 2/3 = 6/12
= Y’s new share = 3/4 × 1/3 = ₹ 3/12
= New profit sharing ratio after making base equal
= 6/12 : 3/12 : 1/4 × 3/3 = 6 : 3 : 3
= 2 : 1 : 1
= Total Capital of the firm = ₹ 20,000 × 4 = ₹ 80,000
= X’s capital in the new firm = 80,000 × 2/4 = ₹ 40,000
= Y’s capital in the new firm = 80,000 × 1/4 = ₹ 20,000
Mita and Sumit are partners in a firm with capitals of ₹6,00,000 and ₹4,00,000 respectively. Keshav was admitted as a new partner for 1/5th share in the profits of the firm. Keshav brought ₹40,000 as his share of goodwill premium and ₹3,00,000 of his capital. The amount of goodwill premium credited to Sumit will be
a) ₹20,000
b) ₹24,000
c) ₹16,000
d) ₹40,000
Ans:- a)
Explanation:-
= Sacrificing ratio is always equal to the old profit sharing if no additional information is given for the the sahre of new partner
= Sacrificing ratio of Mita and Sumit is 1 : 1
= Sumit will be credited
= 40,000 x 1/2 = ₹ 20,000
A, B and C are partners sharing in the ratio of 5:4:3. They admit D for 1/7th share. It is agreed that B would retain his original share. Sacrificing ratio will be:
a) A, B and C – 5:4:3
b) A and C – 4:4
c) A and C – 5:4
d) A and C – 5:3
Ans:- d)
Explanation:-After discarding B’s share in old profit sharing ratio the sacrificing ratio will be equal to the old profit sharing ratio of A and C i.e., 5 : 3
At the time of admission, if the profit sharing ratio among the old partners does not change then sacrificing ratio will be
a) equal
b) according to the contribution of capital
c) their old profit sharing ratio
d) according to a new partner
Ans:- c)Explanation:-
In the absence of any further information about the future share of the old partners, the sacrificing ratio is always equal to the old profit sharing ratio
X and Y are partners sharing profits in the ratio of 3:1. They admit Z as a partner who pays ₹40,000 as goodwill. The new profit sharing ratio is 2:1:1 among X, Y and Z. The amount of goodwill that will be credited to
a) X and Y as ₹30,000 and ₹10,000
b) X only
c) Y only
d) None of these
Ans:- b)
Explanation:-
X sacrificies = 3/4 – 2/4 = 1/4
Y sacrifices = 1/4 – 1/4 = 0/4
As only X sacrifices, the amount of goodwill will be credited to X only
Anil and Balu are partners in a firm. They decided to admit Chirag for 1/4th share in the firm. The goodwill of the firm is valued at ₹30,000. Goodwill also appears in the books at ₹12,000. What amount is Chirag supposed to bring for goodwill?
a) ₹3,000
b) ₹4,500
c) ₹7,500
d) ₹10,500
Ans:- c)
= Chirag will bring Premium for goodwill
= 30,000 x 1/4
= ₹ 7,500
A and B are partners sharing profits and losses in the ratio of 5:4. C is admitted for 1/5th share. A and B decided to share equally in future. Sacrificing ratio will be:
a) 5:4
b) 2:7
c) 7:2
d) 1:1
Ans:- c)
Explanation:-
= Remaining Share = 1 – 1/5 = 4/5
= A’s new share = 4/5 x 1/2 = 4/10
= B’s new share = 4/5 x 1/2 = 4/10
= New profit sharing ratio after making base equal
= 4/10 : 4/10 : 1/5 x 2/2
= 4 : 4 : 2 i.e., 2 : 2 : 1
= A sacrifices = 5/9 – 2/5 = 7/45
= B sacrifices = 4/9 – 2/5 = 2/45
= sacrificing ratio of A and B is
= 7 : 2
L and M share profits of a business in the ratio of 5:3. They admit N as a partner in the firm for 1/4th share in the profits. For the purpose of admission of N, Goodwill of the firm is to be valued at 4 years purchase of the Average Super Profit of the last 3 years. The average Profit of the last 3 years is ₹ 20,000. The normal Profit is ₹ 12,000.
i) The new profit sharing ratio is
a) 4:3:1
b) 3:3:2
c) 15:9:8
d) 4:2:1
Ans:- c)
Explanation:-
= Remaining Share = 1 – 1/4 = 3/4
= L’s new share = 3/4 x 5/8 = 15/32
= M’s new share = 3/4 x 3/8 = 9/32
= New Profit Sharing ratio after making base equal
= 15/32 : 9/32 : 1/4 x 8/8
= 15 : 9 : 8
ii) For adjustment of goodwill, the entry will be:
a) N’s Capital A/c Dr ₹8,000
To L’s Capital A/c ₹8,000
b) N’s Capital A/c Dr ₹8,000
To L’s Capital A/c ₹5,000
To M’s Capital A/c ₹3,000
c) N’s Capital A/c Dr ₹6,000
To L’s Capital A/c ₹3,000
To M’s Capital A/c ₹3,000
d) N’s Capital A/c Dr ₹8,000
To L’s Capital A/c ₹3,000
To M’s Capital A.c ₹5,000
Ans:- b)
Explanation:-
Calculation of Goodwill of the firm
= Super Profit = Average Profit – Normal Profit
= ₹ 20,000 – ₹ 12,000 = ₹ 8,000
Goodwill = Super Profit x 4 year’s purchase
= 8,000 x 4 = ₹ 32,000
N’s share in goodwill = 32,000 x 1/4 = ₹ 8,000
L and m will share it in their sacrificing ratio i.e., 5 : 3
L will be credited = 8,000 x 5/8 = ₹ 5,000
M will be credited = 8,000 x 3/8 = ₹ 3,000
Journal entry
N’s Capital A/c Dr. 8,000
L’s Capital A/c ₹ 5,000
M’s Capital A/c ₹ 3,000
If at the time of admission, there is some unrecorded asset, it will be:
a) Debited to Revaluation Account
b) Credited to Revaluation Account
c) Debited to Goodwill Account
d) Credited to Partner’s Capital Accounts
Ans:- b)
A and B are partners in firm sharing profits in the ratio 3:2. C is admitted as a partner. The new profit sharing ratio of A, B and C is 7:3:2 The sacrificing ratio of A and B is:
a) 3:2
b) 1:9
c) 2:5
d) 8:7
Ans:- b)
Explanation:-
= A sacrifices = 3/5 – 7/12 = 1/60
= B sacrifices = 2/5 – 3/12 = 9/60
Sacrificing ratio of A and B is
= 1/60 : 9/60 i.e., 1 : 9
An increase in the value of liabilities at the time of admission for a partner is
a) Debited to Revaluation Account
b) Credited to Revaluation Account
c) Credited to Partner’s Capital Account
d) Debited to Partner’s Capital Account
Ans:- a)
If at the time of admission, there is some unrecorded liability, it will be:
a) Debited to Revaluation Account
b) Credited to REvaluation Account
c) Debited to Goodwill Account
d) Credited to partner’s Capital Accounts
Ans:- a)
A and B are partners. They admit C for 1/3rd share. In future, the ratio between A and B would be 2:1. Sacrificing ratio will be:
a) 2:1
b) 1:1
c) 5:1
d) 1:5
Ans:- d)
Explanation:-
Remaining Share = 1 – 1/3 = 2/3
A and B would share it in 2 : 1
A’s new share = 2/3 x 2/3 = 4/9
B’s new share = 2/3 x 1/3 = 2/9
A, B and C new profit sharing ratio after making base equal
4/9 : 2/9 : 1/3 x 3/3 i.e., 4 : 2 : 3
A sacrifice = 1/2 – 4/9 = 1/8
B sacrifices = 1/2 – 2/9 = 5/18
Sacrificing ratio of A and B is
1/18 : 5/18 i.e., 1 : 5
For which of the following situations, old profit sharing ratio of partners is used at the time of admission of a new partner?
a) When a new partner brings only a part of his share of goodwill
b) When a new partner is not able to bring his share of goodwill
c) When, at the time of admission, goodwill already exists in the Balance Sheet
d) When a new partner brings his share of goodwill in cash
Ans:- c)
P and Q are partners sharing profits and losses as 2:1. R and S are admitted and the profit-sharing ratio becomes 3:2:4:1. Goodwill is valued at ₹90,000. R and S bring the required goodwill in cash which will be credited to:
a) P ₹30,000; Q ₹15,000
b) P ₹66,000; Q ₹24,000
c) P ₹33,000; Q ₹12,000
d) P ₹27,000; Q ₹18,000
Ans:- c)
Explanation:-
Sacrificing Ratio of P & Q
P sacrifices = 2/3 – 3/10 = 11/30
Q sacrifices = 1/3 – 2/10 = 4/30
Sacrificing Ratio of P & Q is
= 11/30 : 4/30 i.e., 11 : 4
R’s Premium for goodwill = 90,000 x 4/10 = ₹ 36,000
S’s premium for goodwill = 90,000 x 1/10 = ₹ 9,000
Total Premium for goodwill = 36,000 + 9,000 = 45,000
P & Q will be credited with it in sacrificing ratio i.e., 11 : 4
= P will be credited = 45,000 x 11/15 = ₹ 33,000
= Q will be credited = 45,000 x 4/15 = ₹ 12,000
A, B and C are partners in a firm sharing profits and losses equally. They admitted D for 1/4th share in the firm. The new profit sharing ratio will be:
a) 4:3:2:1
b) 1:1:1:1
c) 2:2:2:1
d) Can not be calculated
Ans:- b)
Explanation:-
= Remaining Share = 1 – 1/4 = 3/4
A, B and C would share it in their old profit sharing ratio i.e., 1 : 1 : 1
= A’s new share = 3/4 x 1/3 = 3/12
B’s new share = 3/4 x 1/3 = 3/12
C’s new share = 3/4 x 1/3 = 3/12
New profit sharing ratio after making base equal
= 3/12 : 3/12 : 3/12 : 1/4 x 3/3
3 : 3 : 3 : 3 i.e., 1 : 1 : 1 : 1
Shortcut:-
=As 4th partner comes in for 1/4th share & old partner would share remaining share equally
=Thus all partners would be equal partners for 1 : 1 : 1 : 1
A B and C are equal partners. D is admitted as a partner in the firm for 1/4th share. D brings ₹20,000 as capital and ₹5,000 being half of the premium for goodwill. The value of goodwill of the firm is
a) ₹10,000
b) ₹40,000
c) ₹20,000
d) None of these
Ans:- b)
Explanation:-
Premium for goodwill brought in by B
= ₹ 5,000 + ₹ 5,000 = ₹ 10,000
= Goodwill of the firm
= D’s premium for Goodwill x reciprocal of his share
= 10,000 x 4 = ₹ 40,000
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 ₹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 ₹6,000; B ₹6,000
b) A ₹30,000; B ₹18,000; C ₹12,000
c) A ₹30,000; B ₹20,000; C ₹10,000
d) A ₹30,000; B ₹30,000
Ans:- d)
Explanation:-
A sacrifices = 3/6 – 5/12 = 1/12
B sacrifices = 2/6 – 3/12 = 1/12
C sacrifices = 1/6 – 2/12 = 0/12
Sacrificing ratio of A and B is 1 : 1
A will be credited
= 60,000 x 1/2 = ₹ 30,000
B will be credited
= 60,000 x 1/2 = ₹ 30,000
Aditya and Shiv were partners in a firm with capitals of ₹3,00,000 and ₹2,00,000, respectively. Naina was admitted as a new partner for 1/4th share in the profits of the firm. Naina brought ₹1,20,000 for her share of goodwill premium and ₹2,40,000 for her capital. The amount of goodwill premium credited to Aditya will be:
a) ₹40,000
b) ₹30,000
c) ₹72,000
d) ₹60,000
Ans:- d)
Explanation:-
Sacrificing ratio of Aditya and Shiv is equal to the old profit sharing ratio i.e. 1 : 1
= Aditya will be credited = 1,20,000 x 1/2 = ₹ 60,000
P and Q are partners in a firm having capitals of ₹15,000 each. R is admitted as a partner for 1/3rd share for which he has to bring ₹20,000 for his share of capital. The amount of goodwill will be
a) ₹8,000
b) ₹10,000
c) ₹9,000
d) ₹11,000
Ans:- b)
Explanation:-
Total Capital of the firm (including premium) = R’s Capital x reciprocal of his share
= 20,000 x 3 = ₹ 60,000
Net Worth of the firm (excluding premium) = P’s Capital + Q’s Capital + R’s Capital
= ₹ 15,000 + ₹ 15,000 + ₹ 20,000 = ₹ 50,000
Goodwill of the firm = Total Capital (including premium) – Total Capital (excluding premium)
= ₹ 60,000 – ₹ 50,000 = ₹ 10,000
A and B are partners sharing profits and losses as 2:1. C is admitted and the profit-sharing ratio becomes 4:3:2. Goodwill of the firm is valued at ₹94,500. C brings required goodwill in cash. Goodwill amount will be credited to:
a) A ₹14,000 and B ₹7,000
b) A ₹12,000 and B ₹9,000
c) A ₹21,000
d) A ₹94,500
Ans:- c)
Explanation:-
A sacrifices = 2/3 – 4/9 =2/9
B sacrifices = 1/3 – 3/9 = 0/9
C’s premium for goodwill
94,500 x 2/9 = ₹ 21,000
As only A sacrifices, premium for goodwill brought in by C will only be credited to A
The profit-sharing ratio of A, B and C, who are partners in the firm is 4:3:2. After D is admitted, the sacrificing ratio will be:
a) 5:3:2
b) 3:2:1
c) 4:3:2
d) 1:1:1
Ans:- c)
Explanation:-
In the absence of any additional information about the new partners share in profit, the sacrificing ratio is always equal to the old profit sharing ratio.
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
Ans:- c)
Explanation:-
Cash A/c Dr.
To Premium for Goodwill A/c
Ram and Shyam share profits and losses in the ratio of 5:3. Brij is admitted for 3/10th share of profits half of which was gifted by Ram and the remaining share was taken by Brij equally from Ram and Shyam. The new ratio among the partners is:
a) 4:3:3
b) 3:4:3
c) 10:4:6
d) 5:2:3
Ans:- a)
Explanation:-
Ram sacrifices = 3/10 x 1/2 + 3/20 x 1/2
= 3/20 + 3/40 = 9/40
Shayam sacrifices = 3/20 x 1/2 = 3/40
Ram’s new share = 5/8 – 9/40 = 16/40
Shyam’s new share = 3/8 – 3/40 = 12/40
New profit sharing ratio of Ram, Shyam and Brij
= 16/40 : 12/40 : 3/10 x 4/4
= 16 : 12 : 12 i.e., 4 : 3 : 3
X and Y are partners with capitals of ₹ 18,000 and ₹ 12,000 respectively. A new partner Z is admitted with 1/5th share in profits. He brings ₹14,000 for his capital. Profit and Loss A/c has a credit balance of ₹ 10,000 on the date of admission of Z. Value of hidden goodwill at the time of Z’s admission will be
a) ₹16,000
b) ₹25,000
c) ₹20,000
d) None of these
Ans:- a)
Explanation:-
Total Capital of the firm (including goodwill) = Z’s Capital x reciprocal of his share
= 14,000 x 5 = ₹ 70,000
Total Capital of the firm (excluding goodwill)
= X’s Capital + Y’s Capital + Z’s Capital + Profit & Loss A/c (Cr)
= ₹ 18,000 + ₹ 12,000 + ₹ 14,000 + ₹ 10,000
= 54,000
Goodwill of the firm = Total Capital (including premium) – Total Capital (excluding premium)
= ₹ 70,000 – ₹ 54,000
= 16,000
A and B are partners sharing profits in the ratio of 2:1. C is admitted for 1/4th share of profits which he acquired equally from A and B. C brings ₹30,000 as goodwill, it will be credited to old partners as:
a) ₹15,000 each
b) ₹20,000, ₹10,000 respectively
c) ₹10,000, ₹20,000 respectively
d) None of these
Ans:- a)
Explanation:-
As C acquires his share 1/4th equally from A and B, sacrificing ratio of A & B is 1 : 1. A will be credited
= 30,000 x 1/2 = ₹ 15,000
B will be credited
= 30,000 x 1/2 = ₹ 15,000
X and Y are partners sharing profits and losses in the ratio of 3:2. They admit Z into partnership with 1/5th share in profits which he acquires equally from X and Y. Z brings in ₹40,000 as goodwill in cash. Goodwill amount will be credited to:
a) X ₹20,000; Y ₹20,000
b) X ₹25,000; Y ₹15,000
c) X ₹24,000; Y ₹16,000
d) X ₹4,000; Y ₹4,000
Ans:- a)
Explanation:-
As Z acquires his share 1/5th equally from X and Y, sacrificing ratio of X & Y is 1 : 1
X will be credited
= 40,000 x 1/2 = ₹ 20,000
B will be credited
= 40,000 x 1/2 = ₹ 20,000
X and Y share profits and losses in the ratio of 2:1. They take Z as a partner and the new profit sharing ratio becomes 3:2:1. Z brings ₹9,000 as a premium for goodwill. The full value of goodwill will be
a) ₹60,000
b) ₹36,000
c) ₹54,000
d) ₹27,000
Ans:- c)
Goodwill of the firm
= Z’s Capital x reciprocal of his share
= 9,000 x 6 = ₹ 54,000
A and B are sharing profits and losses in the ratio of 4:1. C is admitted as a new partner for 1/3rd share of profits for which he pays ₹3,00,000 as goodwill. If A and B agree to share future profits equally, then the amount of goodwill to be credited to A is:
a) ₹3,00,000
b) ₹9,00,000
c) ₹4,80,000
d) ₹4,20,000
Ans:- d)
Explanation:-
Calculation of new profit sharing ratio of A, B and C
Remaining share = 1 – 1/3 = 2/3
It will be shared by A and B in 1 : 1
A’s new share = 2/3 x 1/2 = 2/6
B’s new share = 2/3 x 1/2 = 2/6
New profit sharing ratio of A and B after making base equal
= 2/6 : 2/6 : 1/3 x 2/2
= 2 : 2 : 2 i.e., 1 : 1 : 1
Calculation of sacrificing ratio of A and B
A sacrifices = 4/5 – 1/3 = 7/15
B gain = 1/5 – 1/3 = – 2/15
Goodwill of the firm = 3,00,000 x 3 = ₹ 9,00,000
A will be credited = 9,00,000 x 7/15 = ₹ 4,20,000
A and B are partners sharing profits and losses in the ratio of 3:2. C is admitted into a partnership for 1/5th share in profit. He pays ₹1,00,000 as goodwill. The ratio of the partner’s A, B and C in the new firm would be 3:1:1. Goodwill will be credited to:
a) Only A ₹1,00,000
b) Only B ₹1,00,000
c) A ₹60,000; B ₹40,000
d) A ₹75,000; B ₹25,000
Ans:- b)
Explanation:-
Sacrificing ratio of A and B
A sacrifices = 3/5 – 3/5 = 0/5
B sacrifices = 2/5 – 1/5 = 1/5
As only A sacrifices, he will be credited by ₹ 1,00,000
At the time of admission, if the profit sharing ratio among the old partners does not change then sacrificing ratio will be
a) Equal
b) according to the contribution of capital
c) their old profit sharing ratio
d) according to a new partner
Ans:- c)
Explanation:-
If the remaining share is shared by old partners in their old profit sharing ratio. The sacrificing ratio is always equal to the old profit sharing ratio.
On admission of a new partner, the revaluation profit/loss is transferred to:
a) All partners in new ratio
b) Old partners in sacrificing ratio
c) Old partners in the old ratio
d) None of these
Ans:- c)
Explanation:-
Accumulated profit/loss belongs to the old partners in old profit sharing as it was earned in past
A and B are partners in a firm sharing profits in the ratio of 2:1. C is admitted as a partner. A and B surrender 1/2 of their respective share in favour of C. C is to bring his share of the premium for goodwill in cash. The goodwill of the firm is estimated at ₹60,000. Credit
will be given to:
a) A ₹15,000; B ₹15,000
b) A ₹40,000; B ₹20,000
c) A ₹30,000; B ₹30,000
d) A ₹20,000; B ₹10,000
Ans:- b)
Explanation:-
A sacrifices = 2/3 x 1/2 = 2/6
B sacrifices = 1/3 x 1/2 = 1/6
sacrificing ratio of A and B is 2 : 1
A will be credited
= 60,000 x 2/3 = ₹ 40,000
B will be credited
= 60,000 x 1/3 = ₹ 20,000
If at the time of admission of a new partner, there is some unrecorded liability, it will be transferred to:
a) Capital accounts of old partners
b) Capital accounts of all partners
c) Goodwill account
d) Revaluation account
Ans:- d)
Explanation:-
Unrecorded liabilities are recorded to the debit side of the revaluation Account.
P and S are partners sharing profits in the ratio of 3:2. R is admitted with 1/5th share and he brings in ₹84,000 as his share of goodwill which is credited to the capital accounts of P and S respectively with ₹63,000 and ₹21,000. The new profit sharing ratio will be:
a) 3:1:5
b) 9:7:4
c) 3:2:5
d) 7:9:4
Ans:- b)
Explanation:-
Sacrificing ratio of P and s is
= 6300 : 21,000 i.e. 3 : 1
P sacrifices = 1/5 x 3/4 = 3/20
S sacrifices = 1/5 x 1/4 = 1/20
P’s new share = 3/5 – 3/20 = 9/20
S’s new share = 2/5 – 1/20 = 7/20
New profit sharing ratio of P, S and R after making base equal
= 9/20 : 7/20 : 1/5 x 4/4 = 9 : 7 : 4
A revaluation account is prepared to find out the profit or loss on:
a) Sale of fixed assets
b) Revaluation of assets and liabilities
c) Sale of goods
d) Sale of services
Ans:- b)
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 ₹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 ₹6,000; B ₹6,000
b) A ₹30,000; B ₹18,000; C ₹12,000
c) A ₹30,000; B ₹20,000; C ₹10,000
d) A ₹30,000; B ₹30,000
Ans:- d)
Explanation:-
Calculation of sacrificing ratio of A, B and C
Old Ratio of A, B and C is 3 : 2 : 1
New Ratio of A, B, C and D is 5 : 3 : 2 : 2
= A sacrifices = 3//6 – 5/12 = 1/12
= B sacrifices = 2/6 – 3/12 = 1/12
= C sacrifices = 1/6 – 2/12 = 0/12
Sacrificing ratio of A and B is
1/12 : 1/12 = 1 : 1
A will be credited
= 60,000 x 1/2 = ₹ 30,000
B will be credited
= 60,000 x 1/2 = ₹ 30,000
A, B, C and D are partners. A and B share 2/3rd of profits equally and C and D share remaining profits in the ratio of 3:2. Find the profit sharing ratio of A, B, C and D.
a) 5:5:3:2
b) 7:7:6:4
c) 2.5:2.5:8:6
d) 3:9:8:3
Ans:- a)
Explanation:-
A’s share = 2/3 x 1/2 = 1/3
B’s share = 2/3 x 1/2 = 1/3
remaining share 1 – 1/3 = 2/3, It would be share by C and D in 3 : 2
C’s share = 1/3 x 3/5 = 3/15
D’s share = 1/3 x 2/5 = 2/15
New profit sharing ratio of A, B, C and D is after making base equal
= 1/3 x 5/5 : 1/3 x 5/5 : 3/15 : 2/15
= 5 : 5 : 3 : 2
Anita and Banita were partners sharing profits and losses in the ratio of 3:1. Savita was admitted for 1/5th share in the profits. Savita was unable to bring her share of goodwill premium in cash. The Journal entry recorded for goodwill premium is given below:
Savita’s Current A/c Dr. 24,000
To Anita’s Capital A/c 8,000
To Banita’s Capital A/c 16,000
(Adjustment of goodwill premium on Savita’s Admission)
The new profit sharing ratio of Anita, Babita and Savita, will be
a) 41:7:12
b) 13:12:10
c) 3:1:1
d) 5:3:2
Ans:- a)
Explanation:-
sacrificing ratio of Anita and Banita is
= 8,000 : 16,000 i.e., 1 : 2
Anita Sacrifices = 1/5 x 1/3 = 1/15
Banita sacrifices = 1/5 x 2/3 = 2/15
Anita’s new share = 3/4 – 1/15 = 41/60
Banita’s new share = 1/4 – 2/15 = 7/60
New profit sharing ratio of Anita, Banita and Savita is
= 41/60 : 7/60 : 1/5 x 12/12
= 41 : 7 : 12
X and Y are partners sharing profits and losses in the ratio of 5:3. On admission, Z brings ₹70,000 as cash and ₹40,000 against goodwill. New profit ratio between X, Y and Z is 7:5:4. The Sacrificing ratio of X and Y is:
a) 3:1
b) 1:3
c) 4:5
d) 5:9
Ans:- a)
Explanation:-
X sacrifices = 5/8 – 7/16 = 3/16
Y sacrifices = 3/8 – 5/16 = 1/16
sacrificing ratio of X and Y is
= 3/16 : 1/16 i.e., 3 : 1
A and B are partners sharing profits and losses as 2:1. C and D are admitted and the profit-sharing ratio becomes 3:2:4:1. Goodwill is valued at ₹90,000. C and D bring the required goodwill in cash. Credit will be given to:
a) A ₹30,000; B ₹15,000
b) A ₹66,000; B ₹24,000
c) A ₹33,000; B ₹12,000
d) A ₹27,000; B ₹18,000
Ans:- c)
Explanation:-
A sacrifices = 2/3 – 3/10 = 11/30
B sacrifices = 1/3 – 2/10 = 4/30
sacrificing ratio of A and B is 11 : 4
C’s premium for goodwill
= 90,000 x 4/10 = ₹ 36,000
D’s premium for goodwill
= 90,000 x 1/10 = ₹ 9,000
Total premium for goodwill brought in
= ₹ 36,000 + ₹ 9,000 = ₹ 45,000
A will be credited
= 45,000 x 11/15 = ₹ 33,000
B will be credited
= 45,000 x 4/15 = ₹ 12,000
X, Y and Z are partners sharing profit in the ratio of 3:2:1. They agree to admit M into the firm. X, Y and Z agreed to give 1/3rd, 1/6th, 1/9th share of their profit. The share of profit of M will be:
a) 11/54
b) 12/54
c) 13/54
d) 14/54
Ans:- c)
Explanation:-
X sacrifices = 3/6 x 1/3 = 3/18
Y sacrifices = 2/6 x 1/6 = 2/36
Z sacrifices = 1/6 x 1/9 = 1/54
M’s share
= 3/18 + 2/36 + 1/54
= 26/108 i.e., 13/54
_______ goodwill is the excess of the desired total capital of the firm over the actual combined capital of all partners.
a) premium
b) Share
c) Hidden
d) Old
Ans:- c)
