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Death of Partner Accounts MCQ
1. B, C, D are partners sharing profits in the ratio 7 : 5 : 4. D died on 30th June 2006 and profits for the year 2005-2006 were Rs.12,000. How much share in profits for the period 1st April 2006 to 30th June 2006 will be credited to D’s Account?
D’s account will be credited in respect of his share of profit for 3 months (April to June which is 1/4th of the year) = ¼ x (12,000×4/16) = ¼ x 3000 = Rs.750. Hence option (b) is correct
2. R, E and D shares profits & Losses in the ratio 7:5:4. D died on 30th June 2008.The goodwill was valued on the basis of 3 years purchase of last 5 years average profits. If the profits are Rs.29,600, Rs.28,900, Rs.24,000 and Rs.26,800. What will be D’s share of good will?
(a) Rs. 20,494
(b) Rs. 27,600
(c) Rs. 27,000
(d) Rs 20,700
Average Profit =(29,600+28,900+ 24,000 + 26,800) /4 = Rs. 27,325. Goodwill = Rs. 27,325 x 3 yrs. Purchase = Rs. 81975. D’s share = (4/16)x 81975 = Rs. 20,494. Hence option (a) is correct
3. R, E and D shares profits and losses in the ratio 7:5:4. D died on 30th June 2008 and profits for the year 2007-2008 were Rs.24,000. How much share in profits for the period 1st April 2008 to 30th June 2008 will be credited to D’s Account?
(a) Rs. 2,000
(b) Rs. 1,500
(c) Rs. 3,000
(d) None of the above
D, s share in profits = 24,000 x 4/16 = Rs. 6,000. From 1st April – 30th June in 2008.
D’ s Account will be credited to Rs. 6,000 x 3/12 = Rs. 1,500. Hence option (b) is correct.
4. A, B and C were partners sharing profits in the portion of 3 : 2 : 1 respectively. On 31st March, 1997 their capital stood as follows:
A – Rs.40,000, B – Rs.3,00,000 and C – Rs.25,000.
A sum of Rs.1,20,000, also appeared as reserve fund in their balance sheet on this date. B retires on this date when the goodwill of the firm was valued at Rs.1,80,000.
Profit and Loss adjustment account prepared on that date without taking goodwill and reserve fund into consideration showed a net profit of Rs.28,500.
The net amount payable to B will be:
(d) None of the above.
Capital of B=3,00,000. Reserve Fund = 1,20,000x 2/6=40,000, Goodwill = 1,80,000 x 2/6=60,000. Net Profit = 28,000 x 2/6=9,500.
Net amount payable to B = 3,00,000+ 40,000+ 60,000 + 9,500=4,09,500. So, option (b) is correct
5. The balance of joint life policy account as shown in the balance sheet represents:
(a) Surrender value of a policy
(b) Annual premium of JLP
(c) Total premium paid by the firm
(d) Amount receivable on the maturity of the policy
The balance of joint life policy account as shown in the balance sheet represents surrender value of a policy. So, option (a) is correct.
6. A, B and C are partners sharing profits and losses in the ratio 2:2:1. C dies on 31st March 2007. The profit of the financial year ending 31st March 2007 is Rs.64000. The share of the deceased partner in the profits will be :
Share of profit of deceased partner = 64000 x 1/5 = 12800. Hence option (b) is correct
7. A,B,C are partners sharing profits in the ratio 1 : 1 : 2. C died on 30th June 2006 and profits for the accounting year ended on 31st December 2006 were Rs.24,000. How much share in profits will be credited to C’s account :
C’s account will be credited in respect of his share of profit for 6 months = ½ x (24000 x 2/4) = ½ x 12000 = 6000. Hence option (b) is correct.
8. Joint Life Policy amount received by a firm is distributed in
(a) Opening Capital Ratio
(b) Closing Capital Ratio
(c) Old profit sharing ratio of partners
(d) New ratio of partners
Joint Life Policy amount received by a firm is distributed in old profit sharing ratio of partners. Hence option (c) is correct.