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Retirement of Partner Accounts MCQ
1. Partners X, Y and Z are sharing profit and Losses in the ratio 4:3:2. Y retires and goodwill is shown as Rs. 10,800 in books. If X and Z shares profit of 5:3, then gain in the profit sharing ratio is :
Gain in profit sharing ratio : X = 5/8 – 4/9 = 13/72, Z= 3/8 – 2/9= 11/72
So the gain in profit sharing ratio of is X: Z= 13:11. Hence option (a) is correct
2. Partners X, Y and Z are sharing profit and Losses in the ratio 4:3:2. Y retires and goodwill is shown as Rs. 10,800 in books. If X and Z shares profit of 5:3, then find the amount of goodwill to be shared between X & Z :
(a) Rs. 1,850 & Rs. 1,950
(b) Rs. 1,650 & Rs. 1,750
(c) Rs. 1,950 & Rs. 1,650
(d) None of the above
The gain in sharing ratio is X = 5/8 – 4/9= 13/72, Y = 3/8 – 2/9=11/72
Rs. 10,800 to be shared between X and Z in the ratio of 13:11
Share of X = 10,800 x 13/72 = 1950, Share of Z= 10800 x 11/72= 1650. So, option C is correct.
3. A, B and D are partners sharing profit and Losses in the ratio of 2:2:1. On retirement of B, goodwill was valued as Rs.30,000. Find the contribution of A and D respectively to compensate B.
(a) Rs.20,000 and Rs.10,000.
(b) Rs.8,000 and Rs.4,000.
(c) They will not contribute anything to compensate B
(d) Rs 4000 & 6000
B’ s share of goodwill = 30,000 x 2/5= Rs.12,000. New ratio after retirement is = 2:1
So, Gaining share of A = 2/3 – 2/5 = 4/15, Gaining share Share of D=1/3 – 1/5 = 2/15
So, Gaining Ratio of share of A:D = 4/15:2/15= 2:1
A will compensate B = Rs.12,000 x 2/3 =Rs. 8,000, D will compensate B = Rs.12,000 x 1/3 =Rs. 4,000. Hence option (b) is correct
4. A, B and D were partners in a firm sharing profits and losses in the ratio of 2:2:1 respectively with the capital balance of Rs.50,000 for A and B, for D Rs.25,000. B retired from the firm and balance in reserve on the date was Rs.15,000. If goodwill of the firm was valued as Rs.30,000 and revaluation profit was Rs.7,050. What amount will be transferred to the loan account of B.
Capital = 50,000. Reserve (15,000 x 2/5)= 6,000, Revaluation profit = (7,050 x 2/5)= 2,820
Goodwill (30,000 x 2/5)= 12,000. Total Amount to be transferred to B= 50000+6000+2820+12000=70820. Hence option (a) is correct
5. How unrecorded assets are treated at the time of retirement of a partner?
(a) Credited to revaluation account
(b) Credited to capital account of retiring partner only
(c) Debited to revaluation account
(d) Credited to partner’s capital account
On retirement of partner, value of unrecorded assets are credited to revaluation account
Hence option (a) is correct.
6. Out going partner is compensated for parting with firm’s future profits in favour of remaining partners. The remaining partners contribute to such compensation in : /1
(a) Gaining Ratio
(b) Capital Ratio
(c) Sacrificing Ratio
(d) Profit sharing Ratio
On retirement, the remaining partner should compensate the outgoing partner in the Gaining Ratio. Hence option (a) is correct.
7. X, V, Z are partners sharing profits and losses equally. They took a joint life policy of Rs.5,00,000with a surrender value of Rs.3,00,000. The firm treats the insurance premium as an expense. V retired and X and Z decided to share profits and losses in 2 : 1. The amount of Joint life policy will be transferred as :
(a) Credited to X, V and Z’s Capital accounts with Rs.1,00,000 each
(b) Credited to X, V and Z’s capital accounts with Rs.1,66,667 each
(c) Credited to X, and Z capital accounts with Rs.2,50,000 each
(d) Credited to V’s capital account with Rs.3,00,000each
On retirement, the surrender value of joint life policy (Rs 3 lacs) should be credited to old partners in old profit sharing ratio (i.e equally). Hence option (a) is correct.
8. X, V, Z were partners sharing profits in ratio 5 : 3 : 2. Goodwill does not appear in books, but it is agreed to be worth Rs.1,00,000. X retires from the firm and V and Z decide to share future profits equally. X’s share of goodwill will be debited to V’s and Z’s capital A/c in ratio:
(a) ½: ½
(c) 3: 2
On retirement, the continuing partners would compensate the outgoing partner in the profit sharing ratio, 3:2. Hence option (c) is correct.
9. A, B, C are partners sharing profits in the ratio of 2 : 2 : 1. A’s capital is Rs.50,000, B’s Capital Rs.70,000 and C Rs.35000. B retires fromthe firm and balance in reserve on the date was Rs.25,000. If good will of the firm was Rs.30,000 and profit on revaluation was Rs.7,500 then amount payable to B is :
Capital = 70000, Reserve – 25000 x 2/5 = 10000, Goodwill – 30000 x 2/5 = 12000, Profit on Revaluation 7500 x 2/5 = 3000. So, Amount payable to B = 70000+10000+12000+3000.
Hence option (d) is correct
10. A, B, and C are partners with capitals of Rs.1,00,000, Rs.75,000 and Rs.50,000. On C’s retirement his share is acquired by A and B in the ratio of 6 : 4. Gaining ratio will be :
(a) 3: 2
(b) 2: 2
(c) 2: 3
The gaining ratio will be 6:4 i.e 3:2. Hence option (a) is correct
11. At the time of retirement of a partner, firm gets …. from the insurance company against the joint life policy taken jointly for all the partners:
(a) Policy value for the retiring partner and surrender value for the rest
(b) Surrender value
(c) Policy amount
(d) None of these
At the time of retirement of a partner, firm gets surrender value from the insurance company against the joint life policy taken jointly for all the partners. Hence option (b) is correct.
12. X,Y,Z are partners sharing profits in the ratio 3:4:3. Y retires, and X and Z share profits in equal ratio. Find the new ratio of X and Z.
The new profit sharing ratio is equal, i.e 1:1. Hence option (d) is correct