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Retirement or Death of a partner Test - 30

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Retirement or Death of a partner Test - 30
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  • Question 1
    1 / -0
    Suresh consigned 2,000 pieces of goods to his agent costing 30 each an invoice price of 20% over cost price. 4/5th of the goods were sold by Agent at a profit margin of 25% on his cost. Sale value of goods will be _________.
    Solution
    Goods consigned to agent by suresh = 2000 pieces
    Cost of goods consigned = 2000 pieces @ Rs. 30 each = Rs. 60000
    Value of goods consigned to agent  = Cost + 20% = Rs. 60000 + 20% 
                                                                                        = Rs. 72000
    Cost of goods consigned for agent = Value of goods consigned to agent for suresh = Rs. 72000
    Cost of goods consigned for agent per piece = Rs. 72000 / 2000 pieces
                                                                                 = Rs. 36
    Goods sold by agent = 2000 pieces * (4/5) = 1600 pieces
    Sales value of goods sold by agent = (1600 Pieces * Rs. 36) + 25%
    Sales value of goods sold by agent = Rs. 72000
  • Question 2
    1 / -0
    When a new partner brings his share of goodwill in cash, the amount is debited to:
    Solution
    When a new partner brings his share of goodwill in cash, the amount is debited to cash account and credited to premium for goodwill account. The journal entry is:
    Cash a/c       Dr.
            To Premium for Goodwill a/c
  • Question 3
    1 / -0
    Firm has earned exceptionally high profits from a contract which will not be renewed. In such a case, the profit from this contract will not be included in:
    Solution
    Goodwill is calculated on the basis of ordinary profits from operations of the business arising in the normal course. 
    Any abnormal gain or loss that is not generated from the ordinary business operations, is infrequent in nature, and is unlikely to recur in the foreseeable future is excluded from the calculation of goodwill.
  • Question 4
    1 / -0
    X, Y and Z were partners sharing profits in the ratio of 1/5,1/31/5, 1/3 and 7/157/15 respectively. Z retires and his share was taken up by X and Y in the ratio of 3:23 : 2. The new ratio will be ________. 
    Solution
    Old ratio (X, Y, and Z) = 1/5, 1/3 and 7/15 or 3 : 5 : 7
    Z's profit share = 7/15
    X and Y decided to take his share in the ratio of 3 : 2
    Share of Z taken by X =  (7/5) *(3/5) = 21/75
    Share of Z taken by Y = (7/5) * (2/5) = 14/75
    New profit share = Old profit share + Share taken from Z
    X's new share = (3/15) + (21/75) = (15 + 21)/75  = 36/75
    Z's new share = (5/15) + (14/75) = (25 + 14)/75 = 39/75
    New profit sharing ratio (X and Y) = 36:39 = 12 : 13
  • Question 5
    1 / -0
    The profits for the last three years are: 2002-03 Rs 42,500; 2003-04 Profits Rs 56,000 and 2004-05 Profits Rs 68,000. The total liabilities of the firm are Rs 10,00,000 of which outsiders' liabilities Rs 5,00,000. The rate of interest expected from capital invested is 10%. Calculate the value of goodwill on capitalisation basis taking weighted average of Net Profit.
    Solution

  • Question 6
    1 / -0
    When a goodwill account is raised at the time of admission of a new partner, credit is given to old partners in their__________. 
  • Question 7
    1 / -0
    On the admission of a partner if goodwill account is to be raised, this should be debited to_________. 
  • Question 8
    1 / -0
    If A and B share profit in the ratio of 3:13 : 1 and if C is admitted as a new partner who purchases 1/41/4 share of profit from A, the new ratio of A, B and C will be________. 
  • Question 9
    1 / -0
    All accumulated profits and losses are written off among all partners in the___________. 
  • Question 10
    1 / -0
    Super profit is __________. 
    Solution
    Super profit means, excess profit that can be earned by a firm over and above
    the normal profit usually earned by similar firms under similar circumstances. In other words it is the excess of average profit over normal profit.
    Super profit is calculated as follows:
    Super profit = Average profit - Normal profit
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