Admission of a Partner Test

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Admission of a Partner Test - 4

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Weekly Quiz Competition

Question 1
1 / -0

Incoming partner may acquire his share from the old partners
(i) In their old profit sharing ratio
(ii) In a particular ratio
(iii) In particular fraction from some of the partners
In which of the above mentioned alternatives

A
Only I and iii

B
Only i and ii

C
Only i

D
All the three

Solution

A newly admitted partner may acquire his share of profit from one partner or two partners or from all partners in an agreed ratio. He may acquire his share in old ratio of the partners or in an agreed ratio for sacrifice.
Question 2
1 / -0

The amount of goodwill brought in by the new partner is shared by the ____ partners in their ____ ratio

A
Gaining partner, gaining

B
Sacrificing partners, sacrificing

C
All old partners in old ratio

D
All partners (including new) in new ratio

Solution

The amount of premium for goodwill brought in by the new partner will be shared ONLY by the sacrificing partners in their sacrificing ratio.
Question 3
1 / -0

X and Y are partners sharing profits in the ratio of 3:2. Z is admitted for 1/5 share. All partners have decided to share future profits equally. The profit of new partnership firm was Rs.30,000. This profit will be shared by all the partners in _______

A
Gaining Ratio

B
Sacrificing Ratio

C
Old Ratio

D
New Ratio

Solution

Distribution of profit is to be done in new profit sharing ratio:
X = 30,000 × 1/3 = 10,000
Y = 30,000 × 1/3 = 10,000
Z = 30,000 × 1/3 = 10,000
Question 4
1 / -0

What adjustments are mainly done at the time of admission of a new partner?
(i) Adjustment in Profit sharing ratio
(ii) Goodwill
(iii) Accumulated profits, Reserves and losses

A
Only (ii)

B
Only (i) and (ii)

C
Only (i)

D
All (i), (ii) and (iii)

Solution

Adjustments to be done at the time of admission of a partner are:
1.Change in profit sharing ratio
2.Adjustment for premium for goodwill
3.Adjustment of old goodwill (given in balance sheet)
4.Revaluation account (revaluation of assets and re-assessment of liabilities)
5.Accumulated profits and reserves
6.Adjustment of capital
Question 5
1 / -0

When a new partner is admitted he acquires his share of profits from the old partners , this will ____ the old partner’s shares in profits:

A
Reduce

B
Increase

C
Remain same

D
No change

Solution

Old partners will sacrifice some share in favor of a new partner. In simple words, when a new partner is admitted he acquires his share of profits , this will reduce the old partner’s shares in profits.
Question 6
1 / -0

Is admission of a new partner a reconstitution of partnership firm:

A
Yes

B
No

C
It is dissolution of firm

D
It is called merger

Solution

Admission of a new partner will reconstitute the partnership firm. It means it is the end of old partnership and beginning of a new partnership among the partners. It does not mean the end of the firm.
Question 7
1 / -0

Why new profit ratio is determined even for old partners?

A
Ratio keeps on changing in every six month

B
No change in agreement

C
Change in the agreement among all partners

D
Due to change in external environment

Solution

When a new partner is admitted the old partners sacrifice their share of profits and hence there will be a change in their old ratios. So new profit sharing ratio should be calculated for all the old partners.
Question 8
1 / -0

Sacrificing ratio is calculated for :

A
The old partners

B
It is related to new partners

C
It is related to all partners

D
It is related to all partners (including new)

Solution

When the new partner is admitted he gets his share of profits from the old partners. In other words the old partners sacrifice a part of their share to admit the new partner. Hence the sacrificing ratio is calculated for the old partners. Sacrificing ratio = Old ratio - New ratio.(of the old partners)
Question 9
1 / -0

__________ means good name, good reputation earned by a firm through the hard work and honesty of its owners

A
Goodwill

B
Revaluation Profit

C
Low Average profit

D
Negative Super Profit

Solution

Goodwill means good name, good reputation earned by a firm through the hard work and honesty of its owners.
Question 10
1 / -0

WHEN the value of goodwill is not given at the time of admission of a new partner, it IS inferred from the capital OF THE NEW FIRM and profit sharing ratio. This concept is called

A
Hidden Goodwill

B
Average Goodwill

C
Premium for Goodwill

D
Purchased Goodwill

Solution

It is known as hidden goodwill. Following formula should be used to calculate the value of hidden goodwill: Total Capital of the NEW firm – Combined capital of ALL partners = Hidden Goodwill

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Re-Attempt Weekly Quiz Competition

Admission of a Partner Test - 4

Result

Admission of a Partner Test - 4

Score

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Rank

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SHARING IS CARING

Question 1

Only I and iii

Only i and ii

Only i

All the three

Solution

Question 2

Gaining partner, gaining

Sacrificing partners, sacrificing

All old partners in old ratio

All partners (including new) in new ratio

Solution

Question 3

Gaining Ratio

Sacrificing Ratio

Old Ratio

New Ratio

Solution

Question 4

Only (ii)

Only (i) and (ii)

Only (i)

All (i), (ii) and (iii)

Solution

Question 5

Reduce

Increase

Remain same

No change

Solution

Question 6

Yes

No

It is dissolution of firm

It is called merger

Solution

Question 7

Ratio keeps on changing in every six month

No change in agreement

Change in the agreement among all partners

Due to change in external environment

Solution

Question 8

The old partners

It is related to new partners

It is related to all partners

It is related to all partners (including new)

Solution

Question 9

Goodwill

Revaluation Profit

Low Average profit

Negative Super Profit

Solution

Question 10

Hidden Goodwill

Average Goodwill

Premium for Goodwill

Purchased Goodwill

Solution

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