InterviewSolution
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InterviewSolution
This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
In which account increase in the value of asset is credited on the admission of a partner. |
| Answer» Correct Answer - Revaluation A/c | |
| 2. |
X and Y are partners sharing profits in the ratio of 3 : 2. They admitted P and Q as new partners. X surrendered 1/3rd of his share in favour of P and Y surrenderd 1/4th of his share in favour of Q. Calculate new profit-sharing ratio of X,Y,P and Q. |
| Answer» New Profit-sharing Ratio of X,Y,P and Q-4: 3 : 2 :1. | |
| 3. |
When a new partner brings cash for goodwill the amount is credited to theA. Premium for Goodwill Account.B. Capital Account of the new partner.C. Cash Account.D. None of the above. |
| Answer» Correct Answer - A | |
| 4. |
State with reason whether at the time of admission of a partner, partnership is dissolved or partnership firm is dissolved. |
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Answer» 1. Dissolution by Agreement :A firm may be dissolved if all the partners agree to the dissolution. Also, if there exists a contract between the partners regarding the dissolution, the dissolution may take place in accordance with it. 2. Compulsory Dissolution :In the following cases the dissolution of a firm takes place compulsorily: Insolvency of all the partners or all but one partner as this makes them incompetent to enter into a contract. When the business of the firm becomes illegal due to some reason. When due to some event it becomes unlawful for the partnership firm to carry its business. For example, a partnership firm has a partner who is of another country and India declares war against that country, then he becomes an enemy. Thus, the business becomes unlawful. 3. When certain contingencies happen The dissolution of the firm takes place subject to a contract among the partners, if: The firm is formed for a fixed term, on the expiry of that term. The firm is formed to carry out specific venture, on the completion of that venture.A partner dies. A partner becomes insolvent. 4. Dissolution by Notice ;When the partnership is at will, the dissolution of a firm may take place if any one of the partners gives a notice in writing to the other partners stating his intention to dissolve the firm. 5. Dissolution by Court :When a partner files a suit in the court, the court may order the dissolution of the firm on the basis of the following grounds: In the case where a partner becomes insane In the case where a partner becomes permanently incapable of performing his duties. When a partner becomes guilty of misconduct and it affects the firm’s business adversely. When a partner continuously commits a breach of the partnership agreement. In a case where a partner transfers the whole of his interest in the partnership firm to a third party. In a case where the business cannot be carried on except at a loss When the court regards the dissolution of the firm to be just and equitable on any ground. |
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| 5. |
A, B and C are partners sharing profits in the ratio of 4 : 3 : 2. D is admitted for 1/3rd share in future profis. What is the sacrificing ratio? |
| Answer» Sacrificing-4 : 3 : 2. | |
| 6. |
When A and B sharing profits and loses in the ratio of 3 : 2, admit C as a partner giving him 1/5th share of profits. This will be given by A and BA. equally.B. in the ratio of their profits.C. in the ratio of their capitals.D. None of the above. |
| Answer» Correct Answer - B | |
| 7. |
Ravi and Mukesh are sharing profits in the ratio of 7 : 3. They admit Ashok for 3/7 share in the firm which he takes 2/7th from Ravi and 1/7th from Mukesh. Calculate new profit-shareing ratio. |
| Answer» New Profit-sharing Ratio- 29: 11: 30. | |
| 8. |
Kabir and Farid are partners in a firm sharing profits and losses in the ratio of 7 : 3. Kabir surrenders 2/10th from his share and Farid surrenders 1/10th from his share in fovour of Jyoti, the new partner. Calculate new profit-sharing ratio and sacring ratio and sacrificing ratio. |
| Answer» New Profit-sharing Ratio-5 : 2 : 3, sacrificing Ratio-2 : 1. | |
| 9. |
X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. They admit A into partnership and give him 1/5th share of profits. Find the new profit-sharing ratio. |
| Answer» New Profit-sharing Ratio- 10:6:4:5. | |
| 10. |
X and Y are partners sharing profits and losses in the of 3 : 2. They admit Z into partnership. X gives 1/3rd of his share while Y gives 1/10th from his share to Z. Calculate new profit-sharing ratio and sacrificing ratio. |
| Answer» New Profit-sharing Ratio-4 : 3 : 3, Sacrificing Ratio-2 : 1. | |
| 11. |
A and B are partners in a firm with capital of RS.60,000 and RS.1,20,000 respectively. They decide to admit C into the partnership for 1/4th share in the future profits. C is to bring in a sum of RS.70,000 as his capital. Calculate amount of goodwill. |
| Answer» Goodwill -RS.30,000. | |
| 12. |
X, Y and Z are equal partners with capitals of RS.1,500, RS.1,750 and RS.2,000 respectively. They agree to admit W into equal partnership upon payment in cash RS.1,500 for 1/4th share of the goodwill and RS.1,800 as his capital, both sums to remain in the business. the liabilities of the old firm amounted to RS.3,000 and the assets, apart from cash, consist of Motors RS.1,200, Furntiure RS.400, Stock RS.2,650 and Debtors RS.3,780. The Motors and Furniture were revalued at RS.950 and RS.380 respectively. Pass Journal entries to give effect to the above arrangement and also show Balance Sheet of the new firm. |
| Answer» Loss on Revaluation-RS.270, Balance Sheet Total-RS-RS.11,280. | |
| 13. |
X and Y are partners with capitals of RS.50,000 each. They admit Z as a partner of 1/4th share in the profits of the firm. Z bring in RS.80,000 as his share of capital. The Profit and Loss Account showed a credit balance of RS.40,000 as on date of admission of Z. Given necressary Journal entries to record the goodwill. |
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Answer» Correct Answer - Hidden Goodwill-RS.1,00,000. Hidden Goodwill `=(RS.80,000xx4//1)-(RS.50,000+RS.50,0000+RS.40,000+RS.80,000)` |
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| 14. |
If the incoming partner is to bring in premium of goodwill in cash and also a balance exists in the Goodwill Account, then this Goodwill Account is written off among the old partners inA. the new profit-sharing ratio.B. the old profit-sharing ratio.C. the sacrificing ratio.D. None of the above. |
| Answer» Correct Answer - B | |
| 15. |
State the ratio in which the partners share the gain or loss on revaluation of assets and liabilities. |
| Answer» Correct Answer - Old Ratio | |
| 16. |
State one right acquired by a newly admitted partner. |
| Answer» 1. Right to share the profits of the Partnership firm. | |
| 17. |
State the other right which a newly admitted partner acquirsd besides the right to share the profit of the firm. |
| Answer» Right to share the assets of the firm. | |
| 18. |
State the need for treatment of goodwill on admission of a partner. |
| Answer» Goodwill is the result of past efforts of the existing partners. But when a new partner is admitted old partner sacrifice their future share in the profits. Therefore, to compensate them their sacrifice new partner has to bring his/ her share of goodwill which is distributed among the old partners. | |
| 19. |
A and B are in partnership sharing profit and losses in the ratio of 5 : 3. C is admitted as a partner who pays RS.40,000 as capital and the necessary amount of goodwill which is valued at RS.60,000 for the firm. His share of profits will be 1/5th which he takes 1/10th from A and 1/10th from B. Give Journal entries and also calculate future profit-sharing ratio of the partners. |
| Answer» New Profit-sharing Ratio-21 : 11 : 8. | |
| 20. |
What do you understand by admission of a partner? |
| Answer» When a new partner is admitted in a running business due to the requirement of more capital or may be to take advantage of the experience and competence the newly admitted partner or any other reason, it is called admission of a part in partnership firm. | |
| 21. |
A, B and C were partners in a firm sharing profits in the ratio of 3 : 2 : 1. They admited D as a new partner for 1/8th share in the profits, which he acquired 1/16th from B and 1/16th from C. Calculate the new profit-sharing ratio of A, B, C and D. |
| Answer» New profit-sharing Ratio -24 : 13 : 5 : 6. | |
| 22. |
M and J are partners in a firm sharing profits in the ratio of 3 : 2. They admit R as a new partner. The new profit-sharing ratio between M, J and R will be 5 : 3 : 2, R brought in RS.25,000 for his share of premium for goodwill. Pass necessary Journal entries for the treatment of goodwill. |
| Answer» Goodwill will be shared by M and J equally. | |
| 23. |
How is new partner admitted to the firm? |
| Answer» A new partner is admitted in a running business due to the requirement of more capital or may be to take advantage of the experience and competence the newly admitted partner. | |
| 24. |
List any two matters that need adjustments at the time of admission of a partner. |
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Answer» 1. Calculation of new profit sharing ratio and sacrificing ratio. 2. Accounting treatment of Goodwill. |
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| 25. |
State any one purpose of admitting a new partner in a firm. |
| Answer» When a new partner is admitted in a running business due to the requirement of more capital or may be to take advantage of the experience and competence the newly admitted partner. | |
| 26. |
State the reason of contributing for goodwill by a new partner at the time of his admission. Or Why should a new partner contribute towards goodwill on his admission? |
| Answer» Goodwill is the result of past efforts of the existing partners. But when a new partner is admitted old partner sacrifice their future share in the profits. Therefore, to compensate them their sacrifice new partner has to bring his/ her share of goodwill which is distributed among the old partners. | |
| 27. |
What is meant by Revaluation Account? |
| Answer» Revaluation account is a nominal account prepared for the purpose of distributing and transferring the profit or loss arising out of increase or decrease in the book value of assets and/ or liabilities of the partnership firm at the time of Change in profit sharing ratio, admission of a partner, retirement of a partner | |
| 28. |
what is meant by "Sacrificing Ratio" ? |
| Answer» It is the ratio in which old partners agree to sacrifice their share of profit in favour of new partner/ partners | |
| 29. |
State the ratio in which the old partners share accumulated profits, reserves and losses. |
| Answer» Correct Answer - Old Ratio | |
| 30. |
P, Q and R were on partnership terms sharing and losses in the ratio of 6 : 3 : 1. They decide to take S into partnership with effect from 1st April, 2019. The new profit-sharing ratio between P, Q, R and S will be 3 : 3 : 3 : 1. They also decide to record the effect of the following without affecting their book values, by passing a single adjustment entry: `{:(,"Book Values (RS)"),("General Reserve","1,80,000"),("Contingency Reserve","30,000"),("Profit and Loss A//C (Cr.)","90,000"),("Advertisement Suspense A//c (Dr.)","1,20,000"):} Pass the necessary single adjustment entry. |
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Answer» Calculation of Net Effect of Accumulated profits, Losses and Resreve: `{:(,"Book Values (RS)"),("General Reserve","1,80,000"),("Contingency Reserve","30,000"),("Profit and Loss A//C (Cr.)","90,000"),(,overline("3,00,000")),("Advertisement Suspense A//c (Dr.)","1,20,000"),("Net Effect",underline underline overline("1,80,000")):}` Calculation of Sacrifice/(Gain) of Each Partner: `{:(,P,Q,R,S),((i)"Their Old Share","3/10","3/10","1/10",....),((ii)"Their New Share",underline "3/10",underline "3/10",underline "3/10",underline "1/10"),((iii)"Difference" (i-ii),underline "3/10",underline "....",underline("2/10"),underline ("1/10")),(,, "Sacifice","Gain", "Gain"):}` |
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| 31. |
State the two main rights that a newly admitted partner acquires in the firm. Or State the rights acquried by a newly admitted partner. |
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Answer» 1. Right to share the assets of the firm. 2. Right to share the profits of the firm. |
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| 32. |
State whether Revaluation Account is debited or credited to record the decrease in the amount of creditors. |
| Answer» Revaluation Account is credited to record the decrease in the amount of creditors. | |
| 33. |
State whether Revaluation Account is debited of credited to record the decrease in the value of Plant and Machinery. |
| Answer» Revaluation Account is debited to record the increase in the value of Plant and Machinery. | |
| 34. |
State whether Revaluation Account is debited or credited to record the increase in Provision for Doubtful Debts. |
| Answer» Revaluation Account is debited to record the increase in Provision for Doubtful Debts. | |
| 35. |
State whether Revaluation Account is debited or credited to record the increase in the amount of creditors. |
| Answer» Revaluation Account is debited to record the decrease in the amount of creditors. | |