Retirement or Death of a partner Test

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Retirement or Death of a partner Test - 3

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Weekly Quiz Competition

Question 1
1 / -0

A , B and C are partners in a firm sharing profits in the ratio of 5 : 3 : 2. C died on 31st March 2010. What will be the new ratio of A and B:

A
3 : 2

B
5 : 3

C
1:3

D
1 : 1

Solution

Ratio of A and B will be 5:3 (after adjusting the old share and acquired share).
Question 2
1 / -0

According to AS 26, which goodwill is recorded in the books :

A
purchased goodwill

B
self generated goodwill

C
both (i) and (ii)

D
None of the above

Solution

purchased goodwill
Question 3
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Except outgoing partner, which other partner can be credited at the time of settlement of goodwill amount?

A
Sacrificing partner

B
Partner who has no gain or sacrifice

C
Gainer partner

D
All the partners

Solution

If any partner sacrificing instead of gaining at the time of retirement or death, in such a case that partner’s capital account should be credited for the adjustment of goodwill amount.
Question 4
1 / -0

Retirement or death of a partner will create a situation for the continuing partners, which is known as:

A
Reconstitution of Firm

B
Liquidation

C
Dissolution of firm

D
Both Dissolution of firm and Liquidation

Solution

Retirement or death of a partner will create a situation for the continuing partners, which is known as Reconstitution.
Question 5
1 / -0

New Ratio – Old Ratio = ?

A
Gain Ratio

B
New ratio of continuing partners

C
Sacrificing ratio

D
Both Sacrificing ratio and New ratio of continuing partners

Solution

At the time of retirement or death of a partner, gain ratio of remaining partners is calculated as follows:
New Ratio – Old Ratio = Gain Ratio
Question 6
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Balance of forfeiture a/c after the shares have been re-issued is transferred to:

A
Capital reserve

B
securities premium reserve

C
general reserve

D
None of these

Solution

Capital reserve
Question 7
1 / -0

How sacrificing ratio is differ from gaining ratio on the basis of mode of calculation

A
It is calculated by taking difference between gaining and new ratio

B
It is calculated by taking difference between old and gaining ratio

C
It is calculated by taking difference between old and new ratio

D
It is calculated by taking difference between new and old ratio

Solution

Sacrificing Ratio is calculated by deducting new share from the old share. Gaining ratio is calculated by deducting old share from the new share.
Question 8
1 / -0

L, M and N are partners sharing ratio 3:2:1. M died and N the son of M is of the opinion that the rightful owner of his father’s share of profit and the profit of the firm be shared between L and N equally. L does not agree to settle the dispute because there is partnership deed which is showing old profit sharing ratio 3:2:1.

A
Distribute profit between L and N equally

B
Distribute profit between L and N in the ratio of 1:11

C
Distribute profit between L and N in the ratio of 3:2

D
Distribute profit between L and N in the ratio of 3:1

Solution

The profit should be distributed among the Land N in Ratio 3:1. Profits cannot be shared equally because there is partnership deed and profit should be distributed accordingly.
Question 9
1 / -0

Why is outgoing partner entitled to a share of goodwill of the firm

A
Goodwill earned by the firm is the effort of retired partners

B
Goodwill earned by the firm is the effort of all the partners

C
Goodwill earned by the firm is the effort of new partners

D
Goodwill earned by the firm is the effort of only one the partners

Solution

Goodwill earned by the firm is the effort of all the partners. When a partner retires from the firm, he should get his share of goodwill other than his capital amount (adjusted).
Question 10
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Which of the following is effect of the retirement of a partner?

A
The combined share of remaining partners increases

B
The combined share of remaining partners remains same

C
Both The combined share of remaining partners decreases and The combined share of remaining partners remains same

D
The combined share of remaining partners decreases

Solution

The main effect of retirement of a partner is that the combined share of remaining partners increases due to the reason that the remaining partner gets the share given by the retiring partner.

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Re-Attempt Weekly Quiz Competition

Retirement or Death of a partner Test - 3

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Retirement or Death of a partner Test - 3

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Rank

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SHARING IS CARING

Question 1

3 : 2

5 : 3

1:3

1 : 1

Solution

Question 2

purchased goodwill

self generated goodwill

both (i) and (ii)

None of the above

Solution

Question 3

Sacrificing partner

Partner who has no gain or sacrifice

Gainer partner

All the partners

Solution

Question 4

Reconstitution of Firm

Liquidation

Dissolution of firm

Both Dissolution of firm and Liquidation

Solution

Question 5

Gain Ratio

New ratio of continuing partners

Sacrificing ratio

Both Sacrificing ratio and New ratio of continuing partners

Solution

Question 6

Capital reserve

securities premium reserve

general reserve

None of these

Solution

Question 7

It is calculated by taking difference between gaining and new ratio

It is calculated by taking difference between old and gaining ratio

It is calculated by taking difference between old and new ratio

It is calculated by taking difference between new and old ratio

Solution

Question 8

Distribute profit between L and N equally

Distribute profit between L and N in the ratio of 1:11

Distribute profit between L and N in the ratio of 3:2

Distribute profit between L and N in the ratio of 3:1

Solution

Question 9

Goodwill earned by the firm is the effort of retired partners

Goodwill earned by the firm is the effort of all the partners

Goodwill earned by the firm is the effort of new partners

Goodwill earned by the firm is the effort of only one the partners

Solution

Question 10

The combined share of remaining partners increases

The combined share of remaining partners remains same

Both The combined share of remaining partners decreases and The combined share of remaining partners remains same

The combined share of remaining partners decreases

Solution

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