Change in Profit sharing ratio of Partners Test

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Change in Profit sharing ratio of Partners Test - 7

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Weekly Quiz Competition

Question 1
1 / -0

Re-assessment of liabilities means:

A
Change in the values of assets

B
Only decrease in the values of liabilities

C
Change in the values of liabilities

D
Only increase in the values of liabilities

Solution

Re-assessment of liabilities means checking increase or decrease in the amount of liabilities or if a new liability is arises which is not yet recorded in the books of account. Re-assessment of liabilities is done through the revaluation account.
Question 2
1 / -0

An account prepared to carry out the scheme of revaluation of assets and reassessment of liabilities :

A
Profit and Loss Account

B
Memorandum Balance Sheet

C
Realisation Account

D
Revaluation account

Solution

Revaluation account is prepared to record any increase/decrease in the value of assets and liabilities. The value of some assets may increase or decrease with the passage of time. Similarly some liabilities may also show an increase/decrease in the value. The Revaluation account is credited if there is an increase in the value of assets or decrease in the value of liabilities. On the other hand it is debited if there is any decrease in the value of assets or an increase in the value of liabilities.
Question 3
1 / -0

Revaluation of assets on the reconstitution of partnership is necessary because their present value may be different from their _____

A
Place Value

B
Market Value

C
Net Value

D
Book Value

Solution

The actual value of the assets and liabilities may be different from their book value as shown by the balance sheet. That’s why revaluation account is prepared to record this change in assets and liabilities.
Question 4
1 / -0

The purpose of revaluation account is to ascertain the

A
Revaluation Profit/Loss

B
Reassessment

C
Both Revaluation Profit/Loss and Reassessment

D
Actual value of debtors

Solution

Main purpose of preparing revaluation account is to assess the profit or loss. Revalutation account is prepared to record the revaluation of assets and re-assessment of liabilities. The profit or loss arising because of revaluation is transfered to old partners capital account in their old profit sharing ratio.
Question 5
1 / -0

For calculating the Proportional Amount of Net Effect of Revaluation for Sacrificing Partner is

A
Sacrificing Partner = Share Sacrificed × Net Effect of Revaluation

B
Sacrificing Partner = Share Sacrificed × Gross Effect of Revaluation

C
Gaining Partner = Share Sacrificed × Net Effect of Revaluation

D
Sacrificing Partner = Share Gained × Net Effect of Revaluation

Solution

This is a situation where revaluation profit or loss is not directly distributed by the partners. The net effect of revaluation will be adjusted in their gain or sacrificing ratio. Gainer partner will be debited by his gain share in revaluation profit or loss and sacrificing partner will be credited by his sacrificing share.
Question 6
1 / -0

When partners decide to record the net effect of revaluation of assets and liabilities , a single adjusting entry involving the ____________ of gaining partners’ and sacrificing partner is passed

A
Revaluation account

B
Balance sheet

C
Profit and /loss account

D
Capital/current Account

Solution

When only net effect of revaluation is recorded by doing a single entry, in such a case partners’ capital or current account will be involved for the adjustment. The net effect of revaluation will be adjusted in their gain or sacrificing ratio. Gainer partner will be debited by his gain share in revaluation profit or loss and sacrificing partner will be credited by his sacrificing share.
Question 7
1 / -0

___________on the reconstitution of partnership is necessary because their present value may be different from their book value

A
Reassessment of assets

B
Valuation of assets

C
Revaluation of assets

D
Assessment of assets

Solution

At the time of reconstitution of partnership firm, it is necessary to prepare revaluation account or revalue the assets and re-assess the liabilities otherwise present value of the assets will be different from the previous book value of assets.

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Re-Attempt Weekly Quiz Competition

Change in Profit sharing ratio of Partners Test - 7

Result

Change in Profit sharing ratio of Partners Test - 7

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Rank

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SHARING IS CARING

Question 1

Change in the values of assets

Only decrease in the values of liabilities

Change in the values of liabilities

Only increase in the values of liabilities

Solution

Question 2

Profit and Loss Account

Memorandum Balance Sheet

Realisation Account

Revaluation account

Solution

Question 3

Place Value

Market Value

Net Value

Book Value

Solution

Question 4

Revaluation Profit/Loss

Reassessment

Both Revaluation Profit/Loss and Reassessment

Actual value of debtors

Solution

Question 5

Sacrificing Partner = Share Sacrificed × Net Effect of Revaluation

Sacrificing Partner = Share Sacrificed × Gross Effect of Revaluation

Gaining Partner = Share Sacrificed × Net Effect of Revaluation

Sacrificing Partner = Share Gained × Net Effect of Revaluation

Solution

Question 6

Revaluation account

Balance sheet

Profit and /loss account

Capital/current Account

Solution

Question 7

Reassessment of assets

Valuation of assets

Revaluation of assets

Assessment of assets

Solution

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