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Admission of a Partner Test - 39

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Admission of a Partner Test - 39
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Weekly Quiz Competition
  • Question 1
    1 / -0
    Which of these terms are not associated with Joint Venture Accounting?
  • Question 2
    1 / -0
    X and Y are partners sharing profits in the ratio of 3 : 1. They admit Z as a partner who paid $$Rs.40,000$$ as Goodwill, the new profit sharing ratio being 2: 1: 1 among X, Y and Z respectively. The amount of goodwill will be credited to __________.
    Solution
    Old ratio (X and Y) = 3 : 1 
    New ratio ( X, Y and Z) = 2 : 1 : 1
    Sacrificing ratio = Old ratio - New ratio
    X's sacrificing ratio = (3/4) - (2/4) = 1/4
    Y's sacrificing ratio = (1/4) - (1/4) = 0
    Therefore, the amount of goodwill will be credited to only sacrificing partner i.e., X 
  • Question 3
    1 / -0
    A and B share profits and losses equally. They admit C as an equal partner and goodwill was valued as Rs.30,000. C is to bring in 30,000 as his capital and necessary cash towards his share of Goodwill. What will be the final effect of goodwill in the partners capital account?
    Solution
    Total Goodwill of the firm = Rs. 30,000
    C's share of goodwill        = Rs. 30,000 x 1/3 = Rs. 10,000
    Sacrificing ratio between A & B = 1 : 1
    Therefore, the following entry shall be made:
    =>  Premium for goodwill A/c                     Dr.  10,000
                   To A's Capital A/c  (10,000 x 1/2)                      5,000
                   To B's Capital A/c  (10,000 x 1/2)                      5,000
  • Question 4
    1 / -0
    A balance sheet is prepared after the new partnership agreement, assets and liabilities are usually shown at _________. 
    Solution
    When Revaluation Account is opened and the balance sheet is prepared after the new partnership agreement like admission, retirement, death etc. the assets and liabilites are recorded at revalued figures.
    Therefore, B is the correct option.
  • Question 5
    1 / -0
    In normal trading business, which of the following would not be found in a partner's current account?
    Solution
    Goodwill does not appear in partner's current account instead there are two ways in showing goodwill, one is to show them in the balance sheet (open a goodwill account) and the other one is to not show them in the balance sheet (do not open a goodwill account).
  • Question 6
    1 / -0
    Which of these would reduce the net profit of a partnership firm
  • Question 7
    1 / -0
    At the time of retirement of a partner full goodwill is credited to the accounts of ________.
    Solution
    If at time of retirement of a partner, goodwill appear in the balance sheet of a firm, it is written of by debiting all the partners capital accounts in their old profit sharing ratio and crediting the goodwill account.
  • Question 8
    1 / -0
    A new partner may be admitted to partnership _____________________.
    Solution

    Section 31(1) of the Indian Partnership Act,1932 deals with the provisions of admission of a new partner in the partnership firm. According to the provisions of said section, a new partner can be admitted only with the consent of all the existing partners in the firm.

  • Question 9
    1 / -0
    At the time when a new partner enters, goodwill _________.
    Solution
    Goodwill is an intangible asset. It plays a very important role in investment decisions. When a firm enjoys goodwill, it is considered that it earns a higher rate of return on investment. Thus, it influences investors in their decision making process. When a new partner joins an existing firm, the existence of goodwill influences the decision of the parties concerns. Thus it ensures the investor that he will earn a higher return on his investment and this is the reason that he is willing to pay an extra amount called premium to the persons whose efforts have created goodwill.
  • Question 10
    1 / -0

    A and B are partners sharing the profit in the ratio of 3 : 2. They take C as the new partner who brings in 50,000 against capital and 20,000 against goodwill. New profit sharing ratio is 1: 1: 1 . In what ratio will this amount of goodwill be shared among the old partners ?

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