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Retirement or Death of a partner Test - 17

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Retirement or Death of a partner Test - 17
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Weekly Quiz Competition
  • Question 1
    1 / -0
    The value of the reputation of a firm in respect of the profits expected in future over and above the normal profits is ________.
    Solution
    Goodwill is one of the special aspects of partnership accounts which requires adjustment at the time of reconstitution of a firm. It is an intangible asset. Goodwill is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits. Goodwill can be defined as "the present value of a firm's anticipated excess earnings".
  • Question 2
    1 / -0
    what are accumulated profits ?
    Solution
    Accumulated Profits and Losses is the sum of an enterprise’s profits and losses left, after the dividend is paid. It can also be termed as either retained capital, retained earnings or earned surplus.
    Sometimes, an enterprise might have accrued profits but not yet transferred to capital accounts of the partners. These are usually in the form of general reserve, reserve fund and/or Profit and Loss account balance. 
    Therefore, C is the correct option.
  • Question 3
    1 / -0
    Normal Profit = ________________
    Solution
    Goodwill is calculated under super profits method by multiplying the no. of years purchased with super profits. The excess of actual profits over the normal profits is termed as super profits, 
    Normal Profit = Capital Employed X Normal Rate of Return/100
  • Question 4
    1 / -0
    Give journal entry of:
    General reserve, transferred to partners capital accounts:
  • Question 5
    1 / -0
    Money value of the reputation of business is known as ______.
    Solution
    Business goodwill is a key intangible asset that represents the portion of the business value that cannot be attributed to other business assets. The value of a company brand name, solid customer relations, good employee relations represent goodwill. 
  • Question 6
    1 / -0
    Interest on capital of partner is a _________.
    Solution

    Interest on Capital in Partnership Accounts

    When  rate of interest will be as agreed upon by the partners. Interest is charged on the opening balance of the partner’s capital account. When additional capital is introduced and some capital is withdrawn permanently, the interest will be calculated on the amount of the capital used in the business during a particular period. Interest is treated as an expense, as it is a charge on the profits of the firm. The following journal entry will be made :

    For Interest on Capital

    Interest on Capital A/c Dr.

    To Partner’s Capital A/c

    (Being Crediting ‘Interest on Capital’ to Capital Account)


  • Question 7
    1 / -0
    A partner may retire from the firm ________.
    Solution
    The partners are retire if they are unsound by mind and not in capacity to do work example criminal partner , physically handicap etc. are such partner are retire and also willing of partner want to retire are also retire from their partnership.
  • Question 8
    1 / -0
    Monetary value of business reputation is called _______.
    Solution
    Over the time, a well-established business develops an advantage of good name, reputation and wide business connections. This helps the business to earn more profits as compared to a newly set up business. In accounting, the monetary value of such advantage is known as "goodwill". It is regarded as an intangible asset.
  • Question 9
    1 / -0
    At time of admission overstated asset  is transferred to _______account. 
  • Question 10
    1 / -0
    P and Q are two partners sharing profit and loss equally. P draws Rs. 2,000 at the end of each month for 6 months whereas Q draws Rs. 4,000 at the beginning of each month for six months. Assuming that interest on drawing is to be charged @ 5% p.a interest on drawing of Q will be _____.
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