Change in Profit sharing ratio of Partners Test

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Change in Profit sharing ratio of Partners Test - 8

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Weekly Quiz Competition

Question 1
1 / -0

Why it is necessary to compare and revalue the assets and liabilities?

A
Both Realizable value Assets and liabilities may be differ from those shown in the balance sheet and Realizable value of Assets and liabilities always similar with those shown in the balance sheet

B
Realizable value of Assets and liabilities always similar with those shown in the balance sheet

C
Realizable value Assets and liabilities may be differ from those shown in the balance sheet

D
To prepare the profit and loss account

Solution

At the time of reconstitution of a partnership firm, it is necessary to revalue the assets and reassess the liabilities. For this purpose 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 2
1 / -0

Where will you record unrecorded liabilities?

A
Profit and Loss Account

B
Revaluation Account

C
Partners capital account

D
Partners current account

Solution

All unrecorded liabilities will be recorded in the revaluation account at the time reconstitution of partnership firm. Unrecorded liabilities will be recorded in the debit side of revaluation account.
Question 3
1 / -0

Unless otherwise stated partner’s capital account should be assumed to be

A
Both Fluctuating and Fixed

B
Fluctuating

C
No need to prepare

D
Fixed

Solution

There are two method of preparing partners capital accounts:
1.Fixed Capital Method
2.Fluctuating Capital Method
When nothing is mentioned in the question then it should be assumed that capitals of partners are fluctuating but if current accounts and capital accounts are given separately then it should be assumed that capitals of partners are fixed.
Question 4
1 / -0

The balance of revaluation account is transferred to

A
Profit and Loss adjustment A/c

B
Partner’s Capital A/c

C
Profit and Loss A/c

D
Profit and Loss Appropriation A/c

Solution

Any profit that arises out of revaluation account should be credited to the old partners’ capital/current account in their old profit sharing ratio. But if any loss arises out of revaluation account should be debited to the old partners’ capital/current account in their old profit sharing ratio.
Question 5
1 / -0

Which of the following is false regarding the content of revaluation account:

A
Credited with increase in the value of asset

B
Debit with decrease in the value of asset

C
Debit with increase in the value liabilities

D
Debit with increase in the value of asset

Solution

All revalued contents will be shown in revaluation account as follows:
1.Increase in asset credit side
2.Decrease in asset debit side
3.Increase in liability debit side
4.Decrease in liability credit side
Question 6
1 / -0

In the journal entry for increase in the value of assets in revaluation. Assets A/c should be

A
Can be debited as well as credited

B
Credited

C
Debited

D
Not to be shown

Solution

Asset Account will be debited and revaluation account will be credited to record the increase in the value of asset. Journal Entry: Asset A/c Dr. To Revaluation Account
Question 7
1 / -0

When revaluation account is prepared the assets and liabilities appear in the balance sheet of new firm at their _______ figure

A
Old

B
Market

C
Place

D
Revised

Solution

Balance sheet is prepared with the new values of assets and liabilities. At the time of reconstitution partners may show some assets at the same price but in most of the cases all assets and liabilities are shown at a revised value.
Question 8
1 / -0

P, Q and R who are presently sharing profits and losses in the ratio 5:3:2 decide to share future profits and losses in the ratio of 2:3:5 with effect from 1st April 2012. Balance sheet show creditors amounted ` 200000. If it is decided that an item of ` 10000 included in sundry creditors is not likely to be claimed. what will be the effect of this decision

A
Decrease in the amount of Debtors

B
Increase in the amount of creditors

C
Decrease in the amount of creditors

D
No change in the amount of Debtors

Solution

Due value of creditors is Rs.2,00,000 (at present) but if some amount is not payable in future from this due amount then this derease in the amount of creditors will be shown in the credit side of revaluation account.
Question 9
1 / -0

While recording the unrecorded liabilities items provision for taxation made ` 10000 .which account should be credited

A
Revaluation

B
Bank

C
Tax

D
Provision for tax

Solution

Provision made for taxation will be recorded as follows:
Journal Entry: Revaluation Account Dr.
To Provision for Tax A/c
Revalution account will be debited and provision for tax account will be credited.
Question 10
1 / -0

If Assets are increasing but liabilities decreasing; in such a case Revaluation A/c will show_____

A
Do not prepare Revaluation A/c

B
Neither Gain or Loss

C
Profit

D
Net loss

Solution

Increase in assets will be recorded in the credit side of revaluation account and decrease in liabilities will also be recorded in the revaluation account credit side. In both cases, there will be increase in profit, hence, revaluation account will show profit.

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Change in Profit sharing ratio of Partners Test - 8

Result

Change in Profit sharing ratio of Partners Test - 8

Score

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Rank

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SHARING IS CARING

Question 1

Both Realizable value Assets and liabilities may be differ from those shown in the balance sheet and Realizable value of Assets and liabilities always similar with those shown in the balance sheet

Realizable value of Assets and liabilities always similar with those shown in the balance sheet

Realizable value Assets and liabilities may be differ from those shown in the balance sheet

To prepare the profit and loss account

Solution

Question 2

Profit and Loss Account

Revaluation Account

Partners capital account

Partners current account

Solution

Question 3

Both Fluctuating and Fixed

Fluctuating

No need to prepare

Fixed

Solution

Question 4

Profit and Loss adjustment A/c

Partner’s Capital A/c

Profit and Loss A/c

Profit and Loss Appropriation A/c

Solution

Question 5

Credited with increase in the value of asset

Debit with decrease in the value of asset

Debit with increase in the value liabilities

Debit with increase in the value of asset

Solution

Question 6

Can be debited as well as credited

Credited

Debited

Not to be shown

Solution

Question 7

Old

Market

Place

Revised

Solution

Question 8

Decrease in the amount of Debtors

Increase in the amount of creditors

Decrease in the amount of creditors

No change in the amount of Debtors

Solution

Question 9

Revaluation

Bank

Tax

Provision for tax

Solution

Question 10

Do not prepare Revaluation A/c

Neither Gain or Loss

Profit

Net loss

Solution

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