Retirement or Death of a partner Test

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Retirement or Death of a partner Test - 31

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Weekly Quiz Competition

Question 1
1 / -0

X, Y and Z have been sharing profits and losses in the ratio of $$3 : 2 : 1$$. Z retires. His share is taken over by X and Y in the ratio of $$2 : 1$$. The new profit sharing will be _________.

A
$$3 : 2$$

B
$$1 : 1$$

C
$$11 : 7$$

D
$$2 : 1$$

Solution

Old ratio ( X, Y and Z) = 3 ; 2 : 1
Z's share = 1/6
Share of Z taken by X = (1/6) * (2/3) = 1/9
Share of Z taken by Y = (1/6) * (1/3) = 1/18
New profit sharing ratio = Old ratio + Share taken from Z
X's new share = (3/6) + (1/9) = 11/18
Y's new share = (2/6) + (1/18) = 7/18
Therefore, new share of X : Y = 11 : 7
Question 2
1 / -0

Goodwill arises because __________.

A
the firm is able to earn more than the normal return on the capital invested

B
the firm is quite odd in the industry

C
the firm is the market leader in terms of turnover

D
the investment made by the firm is quite large

Solution

Goodwill is the value of reputation of a firm in respect of profits expected in future over and above the normal rate of profits. The implication of the term over and above is that there is always a certain normal rate of profits earned by similar firms in the same locality. The excess profit earned by a firm due to its location advantage, better customer service, possession of a unique patent right, personal reputation of the partner or for similar other reasons.
Question 3
1 / -0

'A' and 'B', who are partners, share profits in the ratio of $$7 : 3$$, 'C' is admitted as a new partner, 'A' surrenders $$1/7$$ of his share and 'B' surrender $$1/3$$ of his share in favour of 'C'. The new profit sharing ratio will be ___________.

A
$$6 : 2 : 2$$

B
$$4 : 1 : 1$$

C
$$3 : 2 :2$$

D
None of these

Solution

Old ratio (A : B) = 7 : 3
Sacrificing ratio = Old ratio * suurender share
A's sacrificing ratio = (7/10) * (1/7) = 1/10
B's sacrificing ratio = (3/10) * (1/3) = 1/10
New share = Old share - sacrificing ratio
A's new share = (7/10) - (1/10) = (6/10)
B's new share = (3/10) - (1/10) = (2/10)
C's share = Sacrificing ratio of A and B
C's share = (1/10) + (1/10) = (2/10)
Therfore, new profit sharing ratio of A : B : C = 6 : 2 : 2
Question 4
1 / -0

Gaining ratio is equal to ____________.

A
old ratio minus new ratio

B
new ratio minus old ratio

C
old ratio plus new ratio

D
old ratio/ New ratio

Solution

Gaining Ratio is calculated at the time of retirement or death of partner which is given by retired partner to the partners who are still exist in partnership firm.
New ratio - It is the ratio which is calculated at the time of reconstitution of a firm i.e., at the time of admission of new partner and retirement or death of an existing partner.
Old ratio - It is the ratio for sharing profit and loss which was decided at the time of coming into partnership.
Formula of Gaining ratio = New ratio - Old ratio
Question 5
1 / -0

A, B and C are three partners sharing profits and losses in the ratio of $$4 : 3 : 2$$. D is admitted for $$1/ 10$$ share. The new ratio will be __________.

A
$$5 : 4 : 3 : 2$$

B
$$6 : 5 : 3 : 2$$

C
$$4 : 3 : 2 : 1$$

D
None of these

Solution

Old ratio (A, B, and C) = 4 : 3 : 2
D is admitted for 1/10 share
Let the combined share of profit for all partners after D's admission = 1
Combined share of A, B and C after D's admission = 1 - D's share
= 1 - (1/10)
= 9/10
New ratio = Old ratio * Combined share of A, B and C
A's new share = (4/9) * (9/10)
= 4/10
B's new share = (3/9) * (9/10)
= 3/10
C's new share = (2/9) * (9/10)
= 2/10
D's share = 1/10
Therefore, new share of A, B, C and D = (4/10), (3/10), (2/10) and (1/10)
= 4 : 3 : 2 : 1
Question 6
1 / -0

Find the goodwill of the firm using capitalisation, method from the following information:
Total Capital Employed in the firm Rs.8,00,000;
Reasonable Rate of Return 15%;
Profits for the year Rs. 12,00,000.

A
$$Rs.82,00,000$$

B
$$Rs.12,00,000$$

C
$$Rs.72,00,000$$

D
$$Rs.42,00,000$$

Solution

Calculation of goodwill under capitalisation basis:
Capital employed = Rs. 800000
Rate of return = 15%
Average profit = Rs. 1200000
Normal value of business = (Average profit/ Rate of return) * 100
Normal value of business = Rs. (1200000/15) * 100
Normal value of business = Rs. 8000000
Goodwill = Normal value of business - capital employed
Goodwill = Rs. (8000000 - 800000)
Goodwill = Rs. 7200000
Question 7
1 / -0

X and Y are sharing profits in the ratio of $$3 : 1$$. Z joined the firm by taking $$1/3^{rd}$$ share. The new profit sharing ratio is ___________.

A
$$3 : 1 : 2$$

B
$$3 : 2 : 1$$

C
$$6 : 5 : 4$$

D
$$4 : 1 : 3$$

Solution

Old ratio (X and Y) = 3 : 1
Z is admitted for 1/3 share
Let the combined share of profit for all partners after Z's admission = 1
Combined share of X and Y after Z's admission = 1 - Z's share
= 1 - (1/3)
= 2/3
New ratio = Old ratio * Combined share of X and Y
X's new share = (3/4) * (2/3)
= 2/4
Y's new share = (1/4) * (2/3)
= 1/6
Z's share = 1/3
Therefore, new share of X, Y and Z = (2/4), (1/6) and (1/3)
= (6/12), (2/12) and (4/12)
= 6 : 2 : 4 or 3 : 1 : 2
Question 8
1 / -0

X and Y are partners in the ratio of $$2 : 1$$. Z joins the firm for $$1/4$$ shares. The new profit sharing ratio is _________.

A
$$3 : 1 : 1$$

B
$$3 : 1 : 2$$

C
$$2 : 1 : 1$$

D
$$2 : 1 : 2$$

Solution

Old ratio (X and Y) = 2 : 1
Z is admitted for 1/4 share
Let the combined share of profit for all partners after Z's admission = 1
Combined share of X and Y after Z's admission = 1 - Z's share
= 1 - (1/4)
= 3/4
New ratio = Old ratio * Combined share of X and Y
X's new share = (2/3) * (3/4)
= 2/4
Y's new share = (1/3) * (3/4)
= 1/4
Z's share = 1/4
Therefore, new share of X, Y and Z = (2/4), (1/4) and (1/4)
= 2 : 1 : 1
Question 9
1 / -0

X and Y are partners sharing profits in the ratio of 7 : 3. Z is admitted for 3/7 share in the profit. The new profit sharing ratio of the partners will be ______________.

A
14:6:15

B
7:6:7

C
7:3:3

D
5:3:3

Solution
Question 10
1 / -0

An increase in the value of fixed asset is referred to as _________.

A
depreciation

B
appreciation

C
market capitalization

D
reverse depreciation

Solution

Appreciation is an increase in the recorded value of an asset. In other words, appreciation is the opposite of depreciation.
Appreciation can occur with both tangible and intangible assets. For example, it is common for trademarks to increase in value due to a rise in brand recognition.

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Retirement or Death of a partner Test - 31

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Retirement or Death of a partner Test - 31

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SHARING IS CARING

Question 1

$$3 : 2$$

$$1 : 1$$

$$11 : 7$$

$$2 : 1$$

Solution

Question 2

the firm is able to earn more than the normal return on the capital invested

the firm is quite odd in the industry

the firm is the market leader in terms of turnover

the investment made by the firm is quite large

Solution

Question 3

$$6 : 2 : 2$$

$$4 : 1 : 1$$

$$3 : 2 :2$$

None of these

Solution

Question 4

old ratio minus new ratio

new ratio minus old ratio

old ratio plus new ratio

old ratio/ New ratio

Solution

Question 5

$$5 : 4 : 3 : 2$$

$$6 : 5 : 3 : 2$$

$$4 : 3 : 2 : 1$$

None of these

Solution

Question 6

$$Rs.82,00,000$$

$$Rs.12,00,000$$

$$Rs.72,00,000$$

$$Rs.42,00,000$$

Solution

Question 7

$$3 : 1 : 2$$

$$3 : 2 : 1$$

$$6 : 5 : 4$$

$$4 : 1 : 3$$

Solution

Question 8

$$3 : 1 : 1$$

$$3 : 1 : 2$$

$$2 : 1 : 1$$

$$2 : 1 : 2$$

Solution

Question 9

14:6:15

7:6:7

7:3:3

5:3:3

Solution

Question 10

depreciation

appreciation

market capitalization

reverse depreciation

Solution

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