Admission of a Partner Test

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Admission of a Partner Test - 59

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Weekly Quiz Competition

Question 1
1 / -0

X, Y, Z were partners sharing profits in ratio 5:3:2. Goodwill does not appear in books, but it is agreed to be worth Rs 1,00,000 X retires from the firm and Y and Z decide to share future profits equally. X's share of goodwill will be debited to Y's and Zs capital A/c in a ratio:

A
$$\dfrac{1}{2}:\dfrac{1}{2}$$

B
2 : 3

C
3 : 2

D
None

Solution
Question 2
1 / -0

In the event of amalgamation of partnership firms, the goodwill of each partner is credited to the partners of the respective firms in ________________.

A
Old profit sharing ratio

B
New profit sharing ratio

C
Capital ratio

D
Gaining ratio

Solution

For Adjustment of Goodwill in case of amalgamation : The good will transferred from the old firm to the new firm may be maintained as it is or may be written off or may be reduced by the New Firm. If the goodwill is written off or reduced the entry will be as follows :
All Partner's Capital A/cs .............. Dr.
To Goodwill A/c
(All partner's capital A/c are debited in the new profit sharing ratio)
Question 3
1 / -0

When the goodwill is raised at its full value and written off at retirement of a partner, the remaining partners share goodwill in _________.

A
old profit sharing ratio

B
new profit sharing ratio

C
gaining ratio

D
sacrificing ratio

Solution

The retiring partner is entitled to his/her share of goodwill at the time of retirement because the goodwill is the result of the efforts of all the partners
including the retiring one in the past. When a partner retires from the firm, the continuing partner will gain in future profits. The retiring partner is compensated for his/her share of goodwill by the continuing partners who gains in their gaining ratio.
Journal entry when goodwill adjustment entry need to be made through partner's capital accounts without raising goodwill in the book:
Continuing partner's capital A/c Dr. (in gaining ratio)
To Retiring partner's capital A/c (with his share of goodwill)
Question 4
1 / -0

A partner in a firm _____________________.

A
Cannot transfer his share to an outsider

B
Can transfer his share to an outsider with the consent of majority partners

C
Can transfer his share to an outsider without the consent of any other partners

D
Can transfer his share to an outsider with the consent of all other partners
Question 5
1 / -0

If vendors are issued fully paid shares of Rs 1,00,000 in consideration of net assets of Rs 80,000, the balance of Rs 20,000, will be debited to

A
Profit and Loss A/c

B
Goodwill A/c

C
Capital Reserve A/c

D
Capital A/c
Question 6
1 / -0

The articles of association can be altered by ___________ .

A
A resolution of the board of directors

B
An ordinary resolution in general meeting

C
A special resolution in general meeting

D
Obtaining permission from the Company Law Board
Question 7
1 / -0

In endowment life policy, the amount is payable _____________________.

A
On the death of the policy-holder

B
At the end of the period specified

C
On death of the holder or expiry of period, whichever is earlier

D
On death of the holder or expiry of period, whichever is later
Question 8
1 / -0

A, B and C are partners sharing profits equally. A retires and goodwill appearing in the books at Rs.3,000 is valued a Rs.6,000. A will get the credit of Rs. ________.

A
2,000

B
3,000

C
500

D
1000

Solution

Value of the Goodwill = Rs. 6,000
Book value of the Goodwill = Rs. 3,000
Net goodwill to be distributed to the partners = Rs. 6,000 - 3,000 = Rs. 3,000
A' share in the goodwill = 1/3 x Rs. 3,000 = Rs. 1,000
Question 9
1 / -0

Tick the correct answer.
______ is an intangible asset.

A
Goodwill

B
Stock

C
Building

D
Cash

Solution

Goodwill is an intangible Asset. An Intangible asset is an asset that cannot be seen or felt. It is hard to evaluate and it has no physical substance.
Question 10
1 / -0

$$X$$ and $$Y$$ shared profits and losses in the ratio of $$3:2$$ with effect from $$1^{st}$$April,2018 they agreed to share profits equally. The goodwill of the firm was valued at $$Rs. 60,000$$. The necessary single adjustment entry will be :

A
Dr. $$Y$$ and Cr. $$X$$ with $$Rs. 6,000$$.

B
Dr. $$X$$ and Cr. $$Y$$ with $$Rs. 6,000$$.

C
Dr. $$X$$ and Cr. with $$Rs. 600$$.

D
Dr. $$Y$$ and Cr. $$X$$ with $$Rs. 600$$.

Solution

Old ratio (X and Y) = 3 : 2
New ratio (X and Y) = 1 : 1
Gaining ratio = New ratio - Old ratio
X's gain = (1/2) - (3/5) = -1/10 (sacrifice)
Y's gain = (1/2) - (2/5) = 1/10
Total goodwill of the firm = Rs. 60000
Amount of goodwill will be compensated by gaining partner to sacrificing partner in their gaining and sacrificing ratio. Therefore, necessary single adjustment entry will be:
Y's capital A/c Dr. 6000
To X's capital A/c 6000

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Re-Attempt Weekly Quiz Competition

Admission of a Partner Test - 59

Result

Admission of a Partner Test - 59

Score

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Rank

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SHARING IS CARING

Question 1

$$\dfrac{1}{2}:\dfrac{1}{2}$$

2 : 3

3 : 2

None

Solution

Question 2

Old profit sharing ratio

New profit sharing ratio

Capital ratio

Gaining ratio

Solution

Question 3

old profit sharing ratio

new profit sharing ratio

gaining ratio

sacrificing ratio

Solution

Question 4

Cannot transfer his share to an outsider

Can transfer his share to an outsider with the consent of majority partners

Can transfer his share to an outsider without the consent of any other partners

Can transfer his share to an outsider with the consent of all other partners

Question 5

Profit and Loss A/c

Goodwill A/c

Capital Reserve A/c

Capital A/c

Question 6

A resolution of the board of directors

An ordinary resolution in general meeting

A special resolution in general meeting

Obtaining permission from the Company Law Board

Question 7

On the death of the policy-holder

At the end of the period specified

On death of the holder or expiry of period, whichever is earlier

On death of the holder or expiry of period, whichever is later

Question 8

2,000

3,000

500

1000

Solution

Question 9

Goodwill

Stock

Building

Cash

Solution

Question 10

Dr. $$Y$$ and Cr. $$X$$ with $$Rs. 6,000$$.

Dr. $$X$$ and Cr. $$Y$$ with $$Rs. 6,000$$.

Dr. $$X$$ and Cr. with $$Rs. 600$$.

Dr. $$Y$$ and Cr. $$X$$ with $$Rs. 600$$.

Solution

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