Admission of a Partner Test

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Admission of a Partner Test - 12

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following formula is used to calculate goodwill under super profit method?

A
Goodwill = Weighted average profit x No. of year purchase.

B
Goodwill = Average profit x No. of year purchase.

C
Goodwill = Super profit x No. of year purchases.

D
Any of the above.
Question 2
1 / -0

After crediting the ______ partners by the amount of goodwill brought in by the ______ partner, the existing goodwill must be written off by debiting the old partners in their old profit sharing ratio.

A
old, old

B
new, old

C
old, new

D
none of the above
Question 3
1 / -0

The remuneration of an auditor of a partnership firm is fixed by ___________________.

A
The Partnership Act

B
The Companies Act

C
The Government

D
None of the above
Question 4
1 / -0

Which of the following formula is used to calculate goodwill under weighted average profit method ?

A
Goodwill = Weighted average profit x no. of year purchase.

B
Goodwill = Average profit x no. of year purchase.

C
Goodwill = Super profit x no. of year purchase.

D
Goodwill = Super profit x Annuity factor.
Question 5
1 / -0

In which of the following cases, the need for the valuation of goodwill in a firm may arise?

A
Admission of new partner.

B
While changing profit sharing ratio.

C
Retirement or death of a partner.

D
All of above.
Question 6
1 / -0

Under revaluation method, __________ account is credited in their profit sharing ratio when no goodwill exists in the books at the time of admission of a new partner.

A
goodwill

B
old partners' capital

C
new partners' capital

D
old partners' current
Question 7
1 / -0

Which of the following formula is used to calculate goodwill under simple average profit method?

A
Goodwill = Weighted average profit x No. of year purchase.

B
Goodwill = Average profit x No. of year purchase.

C
Goodwill = Super profit x No. of year purchases.

D
Goodwill = Super profit x Annuity factor.
Question 8
1 / -0

Which of the following factors generally contribute to the value of goodwill of a firm?

A
Efficiency of management.

B
Risk involved in the business.

C
Location of the business.

D
All of above.
Question 9
1 / -0

General Reserve at the time of admission of a partner is transferred to ____________ .

A
Revaluation Account

B
Old Partner's Capital Account

C
Capital Accounts of all partners, including new partner

D
None of the above

Solution

Sometimes a firm may have accumulated reserves not yet transferred to the partner's capitals accounts. These are in the form of general reserve, reserve fund etc. The new partner is not entitled to share in these reserves. Hence, at the time of admission, these reserves are transferred to the old partner's capital accounts in their profit sharing ratio.
Question 10
1 / -0

$$Z$$ is admitted to a firm for $$1/4^{th}$$ share in the profit, for which he brings in Rs.$$10,000$$ towards premium for goodwill. It will be taken by the old partners in ____________ .

A
The old profit-sharing ratio

B
The new profit-sharing ratio

C
The sacrificing ratio

D
None of the above

Solution

Premium for goodwill is the additional amount brought in by the incoming partner to compensate for the loss in share of the super profits of the old partners. It is distributed among the old partners in the ratio in which they forego their shares in favour of the new partner which is called the sacrificing ratio.

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Admission of a Partner Test - 12

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Admission of a Partner Test - 12

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SHARING IS CARING

Question 1

Goodwill = Weighted average profit x No. of year purchase.

Goodwill = Average profit x No. of year purchase.

Goodwill = Super profit x No. of year purchases.

Any of the above.

Question 2

old, old

new, old

old, new

none of the above

Question 3

The Partnership Act

The Companies Act

The Government

None of the above

Question 4

Goodwill = Weighted average profit x no. of year purchase.

Goodwill = Average profit x no. of year purchase.

Goodwill = Super profit x no. of year purchase.

Goodwill = Super profit x Annuity factor.

Question 5

Admission of new partner.

While changing profit sharing ratio.

Retirement or death of a partner.

All of above.

Question 6

goodwill

old partners' capital

new partners' capital

old partners' current

Question 7

Goodwill = Weighted average profit x No. of year purchase.

Goodwill = Average profit x No. of year purchase.

Goodwill = Super profit x No. of year purchases.

Goodwill = Super profit x Annuity factor.

Question 8

Efficiency of management.

Risk involved in the business.

Location of the business.

All of above.

Question 9

Revaluation Account

Old Partner's Capital Account

Capital Accounts of all partners, including new partner

None of the above

Solution

Question 10

The old profit-sharing ratio

The new profit-sharing ratio

The sacrificing ratio

None of the above

Solution

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