Change in Profit sharing ratio of Partners Test

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Change in Profit sharing ratio of Partners Test - 3

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Weekly Quiz Competition

Question 1
1 / -0

________ ratio in which the partners share all the accumulated profits, reserves, losses and fictitious assets in case of reconstitution of partnership firm

A
Sacrificing Ratio

B
New Ratio

C
Gaining Ratio

D
Old Ratio

Solution

All accumulated profits, reserves, losses and fictitious assets will be distributed by the old partners in their old ratio at the time of reconstitution of partnership firm.
Question 2
1 / -0

Why do existing partners change their profit sharing ratio:

A
Due to change in capital contribution

B
Due active participation in management by a partner

C
Both Due to change in capital contribution and Due active participation in management by a partner

D
Due to Tax Policy of Government

Solution

Sometimes old partners may change their existing profit sharing ratio without admitting a new partner or without retirement or death of a partner. The main reason of change in existing ratio is to make ratio favorable as per the contribution of partners’ capitals and to compensate a partner who is actively participating in the management of firm.
Question 3
1 / -0

In case of change in profit sharing ratio among the existing partners who will compensate the existing partners:

A
Sacrificing partner shall compensate

B
Only one partner

C
Gaining partner shall compensate

D
All Partner’s shall compensate

Solution

Whenever there is change in the existing profit sharing ratio, a gainer partner will compensate the sacrificing partner, for this purpose these steps should be followed by the partners:
1.Find out the Gainer due to change in existing profit sharing ratio
2.Find out the Sacrificing partner
3.Now, Debit the gainer partner and credit the sacrificing partner
Question 4
1 / -0

The significance of calculating sacrificing ratio:

A
To determine the amount of compensation to be paid by gaining partner

B
To determine the amount of compensation to be paid by all partner

C
To determine the amount of compensation to be paid by sacrificing partner

D
To determine the amount of compensation to be paid by new partner

Solution

Sacrificing ratio tells us the amount of sacrifice made by the partner. That’s why sacrificing partner is credited while prepapring journl entries so that gainer partner may compensate the sacrificing partner.
Question 5
1 / -0

L, M and N are sharing profits and losses in the ratio of 5:3:2. If they all decide to share equally. Then who will sacrifice his share

A
C

B
A

C
B

D
No one will sacrifice

Solution

Calculation of Sacrificing ratio:
1.A = 5/10 – 1/3 = (+)5/30 Sacrifice
2.B = 3/10 – 1/3 = (-)1/30 Gain; - sign indicate Gain
3.C = 2/10 – 1/3 = (-)4/30 Gain; - sign indicate Gain
In the above question only A is sacrificing.
Question 6
1 / -0

Goodwill of the firm is 30,000. Gain of A is 1/6 and Sacrifice of B is 1/6. How will be adjust goodwill?

A
Debit B and Credit A with Rs.5,000

B
Debit A and Credit B with Rs.5,000

C
Debit A and B with 15,000 each and Credit Goodwill with Rs.30,000

D
Debit Goodwill with Rs.10,000 and Credit A and B with Rs.5,000 each

Solution

In this case adjustment will be made as follows:
1.Goodwill of the firm Rs.30,000 (given)
2.A’s Gain share in goodwill 30,000 × 1/6 = 5,000
3.B’s Sacrifice share of goodwill 30,000 × 1/6 = 5,000
Now, Debit the gainer and credit the sacrificing partner.
Question 7
1 / -0

X, Y and Z are sharing profits and losses in the ratio of 5:3:2. Who will be debited and who will be credited, when they have decided to share profits equally in future?

A
Y and X Dr. and Z Cr.

B
Y and Z Dr. and X Cr.

C
Y Debit and X & Z Cr.

D
X and Z Dr. and Y Cr.

Solution

1.X will be credited because his share has been reduced from 5/10 to 1/3, X's sacrifice = 5/10-1/3 = 15/30-10/30=5/30 (Sacrificed)

2.Y will be debited because his share has been increased from 3/10 to 1/3, Y's gain = 3/10-1/3=9/30-10/30= -1/30 (Gained)

3.Z will be debited because his share also increased from 2/10 to 1/3, Z's gain = 2/10-1/3=6/30-10/30 = -4/30 (Gained)
Now, Y and Z debited and X will be credited.
Question 8
1 / -0

A, B and C are sharing profits and losses in the ratio 10:6:4 with effect from 01/04/2013 they decide to share profit and losses equally. Which partner has to sacrifice

A
B

B
A

C
C

D
All

Solution

Calculation of sacrifice or gain:
1.Old Ratio 10:6:4
2.New Ratio 1:1:1
3.A’s Sacrifice (old – new share) = 10/20-1/3 = 1/6
4.B is gainer (old – new share) = 6/20 - 1/3 = (-) 1/30
5.C is gainer (old – new share) = 4/20 - 1/3 = (-) 4/30
Question 9
1 / -0

Vinod and Pandey are partners sharing profits in the ratio of 7:3 respectively. On 1.4.2015 they have decided to change their profit sharing ratio to 6:4. Calculate sacrifice/gain of Vinod.

A
Vinod’s Gain 1/10

B
Vinod’s Sacrifice 1/10

C
Vinod’s Gain 2/10

D
Vinod’s Sacrifice 2/10

Solution

Calculation of sacrifice or gain:
Formula = Old Share – New Share
Vinod = 7/10 – 6/10 = 1/10 Sacrifice
Pandey = 3/10 – 4/10 = -1/10 Gain
Question 10
1 / -0

X, Y and Z are partners sharing profits in the ratio of 4:3:2. They admit a new partner M in the partnership firm for 1/3rd share in future profit. What will be the new ratio of all the partners?

A
8 : 6 : 5 : 3

B
8 : 6 : 4 : 2

C
8 : 6 : 2 : 1

D
8 : 6 : 4 : 9

Solution

Calculation of new ratio:
Let the profit be = 1
Remaining profit after M’s share = 1 – 1/3 = 2/3
Now divide this remaining profit in X, Y and Z to find out the new ratio

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Re-Attempt Weekly Quiz Competition

Change in Profit sharing ratio of Partners Test - 3

Result

Change in Profit sharing ratio of Partners Test - 3

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SHARING IS CARING

Question 1

Sacrificing Ratio

New Ratio

Gaining Ratio

Old Ratio

Solution

Question 2

Due to change in capital contribution

Due active participation in management by a partner

Both Due to change in capital contribution and Due active participation in management by a partner

Due to Tax Policy of Government

Solution

Question 3

Sacrificing partner shall compensate

Only one partner

Gaining partner shall compensate

All Partner’s shall compensate

Solution

Question 4

To determine the amount of compensation to be paid by gaining partner

To determine the amount of compensation to be paid by all partner

To determine the amount of compensation to be paid by sacrificing partner

To determine the amount of compensation to be paid by new partner

Solution

Question 5

C

A

B

No one will sacrifice

Solution

Question 6

Debit B and Credit A with Rs.5,000

Debit A and Credit B with Rs.5,000

Debit A and B with 15,000 each and Credit Goodwill with Rs.30,000

Debit Goodwill with Rs.10,000 and Credit A and B with Rs.5,000 each

Solution

Question 7

Y and X Dr. and Z Cr.

Y and Z Dr. and X Cr.

Y Debit and X & Z Cr.

X and Z Dr. and Y Cr.

Solution

Question 8

B

A

C

All

Solution

Question 9

Vinod’s Gain 1/10

Vinod’s Sacrifice 1/10

Vinod’s Gain 2/10

Vinod’s Sacrifice 2/10

Solution

Question 10

8 : 6 : 5 : 3

8 : 6 : 4 : 2

8 : 6 : 2 : 1

8 : 6 : 4 : 9

Solution

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