Admission of a Partner Test

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Admission of a Partner Test - 71

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Weekly Quiz Competition

Question 1
1 / -0

When a new partner is admitted he acquires his share of profits from the old partners , this will ____ the old partner’s shares in profits:

A
Increase

B
Remain same

C
Reduce

D
No change

Solution

Old partners will sacrifice some share in favor of a new partner. In simple words, when a new partner is admitted he acquires his share of profits , this will reduce the old partner’s shares in profits.
Question 2
1 / -0

__________ means good name, good reputation earned by a firm through the hard work and honesty of its owners

A
Low Average profit

B
Revaluation Profit

C
Goodwill

D
Negative Super Profit

Solution

Goodwill means good name, good reputation earned by a firm through the hard work and honesty of its owners.
Question 3
1 / -0

A and B are partners sharing profits in the ratio of 3:2. They admitted C as a new partner for 1/5 share in the future profits of the firm. Calculate new profit sharing ratio of A, B and C

A
10:7:4

B
12:10:4

C
12:8:5

D
14:10:6

Solution

Calculation of new ratio of partners:
Old Ratio = 3:2
C is admitted for 1/5th share
Remaining share : 1 – 1/5 = 4/5
A’s new share = 3/5 × 4/5 = 12/25
B’s new share = 2/5 × 4/5 = 8/25
C’s Share 1/5 OR 5/25
New Ratio 12 : 8: 5
Question 4
1 / -0

Which of the following is not an example of Reconstitution of partnership firm?

A
Change in Existing profit sharing ratio

B
Admission of a new partner

C
Retirement/Death of a partner

D
Purchase of Assets for the business

Solution

Reconstitution on a partnership means change in the number of partners through Admission, Retirement or Death of the partners or change in the ratio of partners. Puchase of Assets will not change the constitution of the partnership.
Question 5
1 / -0

Out of the following, which is the main right of a partner?

A
Right to Share the Profits of the firm.

B
Right to share the old profits of the firm

C
Right to Say no for Goodwill

D
Right to Stop other partners for drawings

Solution

When a new partner is admitted into a partnership business. He gets following rights:.Right to share future profits of the firm
New partner is not entitled to the profits and other incomes earned by a partnership business before his admission
Question 6
1 / -0

Why new profit ratio is determined even for old partners?

A
Ratio keeps on changing in every six month

B
Change in the agreement among all partners

C
Due to change in external environment

D
No change in agreement

Solution

When a new partner is admitted the old partners sacrifice their share of profits and hence there will be a change in their old ratios. So new profit sharing ratio should be calculated for all the old partners.
Question 7
1 / -0

If new partner is unable to bring in his share of goodwill , How will you deal

A
New Partner’s A/c Dr
To Gainer Partner’s Capital A/c

B
New Partner’s Capital A/C OR Current A/C Dr.
To Sacrificing Partner’s Capital / current A/c

C
New Partner’s A/c Dr.
To Old Partner’s Capital A/c

D
New Partner’s A/c Dr.
To All Partner’s Capital A/c

Solution

New partner’s CAPTIAL A/C SHOULD BE DEBITED OR(current account should be debited IN CASE OF FIXED CAPITAL METHOD) if he is unable to bring his share of premium for goodwill in cash.
Question 8
1 / -0

Sacrifice ratio is used only for

A
Distribution of Premium for goodwill

B
Distribution of Reserve

C
Revaluation of loss

D
Revaluation profit

Solution

At the time of admission of a new partner, the main use of sacrificing ratio is to adjust the premium for goodwill brought by a new partner.
Question 9
1 / -0

Is admission of a new partner a reconstitution of partnership firm:

A
It is dissolution of firm

B
No

C
It is called merger

D
Yes

Solution

Admission of a new partner will reconstitute the partnership firm. It means it is the end of old partnership and beginning of a new partnership among the partners. It does not mean the end of the firm.
Question 10
1 / -0

Goodwill Given in the old Balance Sheet will be:

A
Written off to the old partners

B
Written off by the Sacrificing partners

C
Credited to old Partners Capital accounts

D
Distributed by Gainer partners

Solution

Goodwill existing in the old balance sheet of a partnership firm before admitting a new partner will be written off to the capital accounts of the old partners in their old profit sharing ratio.
Question 11
1 / -0

Why a new partner is admitted in the firm?

A
To increase the goodwill of the firm

B
To Increase the Capital of the firm.

C
To Increase the Number of partners

D
To Increase the Profit sharing Ratio

Solution

The main purpose of admission of a new partner is to increase the capital of the firm. When old partners feel that the capital they have employed in the business is not enough for the future growth of the business. They may admit a new partner to maintain or to build up the financial strength of the business.
Question 12
1 / -0

Ram, Ramesh and Rajesh are partners in a business sharing profits and losses in the ratio 3:2:1. Rajesh retires and both the existing partners agree to share profits in the ratio 2:1 .Later Rajesh requests the other partners that his physically challenged son should be inducted as a partner in his place. After discussing it amongst themselves both the partners, Ram and Ramesh agree to take his son as a partner. Identify the values which should have been incorporated while formulating partnership

A
Righteous behavior

B
Respect for humanity

C
Respect for law

D
Both Respect for humanity and Righteous behavior

Solution

This is the moral duty of Ram and Ramesh to admit Rajesh’s son into the partnership firm. It shows faith and trust amongst the partners for each other. By admitting Rajesh’s son they have shown righteous behavior and respect for the humanity
Question 13
1 / -0

The amount of goodwill brought in by the new partner is shared by the ____ partners in their ____ ratio

A
Gaining partner, gaining

B
All partners (including new) in new ratio

C
Sacrificing partners, sacrificing

D
All old partners in old ratio

Solution

The amount of premium for goodwill brought in by the new partner will be shared ONLY by the sacrificing partners in their sacrificing ratio.
Question 14
1 / -0

DK and SK are partners sharing profits in the ratio of 4:1. They admit PK as a new partner for 1/4th share in future profits, which he wholly acquired form DK. Find out new ratio.

A
11:4:7

B
11:4:5

C
11:5:2

D
11:3:5

Solution

Calculation of new ratio:
PK’s share = 1/4
DK’s new share will be = 4/5 – 1/4 = 11/20
SK’s new share = 1/5
New profit sharing ratio = 11:4:5
Question 15
1 / -0

How will you calculate sacrificing ratio

A
Old share in profit - New Share in profit

B
Old share in profit – Gaining Share in profit

C
Gaining share in profit - New Share in profit

D
New share in profit - Old Share in profit

Solution

Sacrificing ratio refers to that ratio in which old partners will sacrifice their share in the favour of a new partner. To calculate the sacrificing ratio new share should be deducted from the old share of the existing partners’ i.e. old ratio – new ratio.

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Re-Attempt Weekly Quiz Competition

Admission of a Partner Test - 71

Result

Admission of a Partner Test - 71

Score

-

Rank

-

SHARING IS CARING

Question 1

Increase

Remain same

Reduce

No change

Solution

Question 2

Low Average profit

Revaluation Profit

Goodwill

Negative Super Profit

Solution

Question 3

10:7:4

12:10:4

12:8:5

14:10:6

Solution

Question 4

Change in Existing profit sharing ratio

Admission of a new partner

Retirement/Death of a partner

Purchase of Assets for the business

Solution

Question 5

Right to Share the Profits of the firm.

Right to share the old profits of the firm

Right to Say no for Goodwill

Right to Stop other partners for drawings

Solution

Question 6

Ratio keeps on changing in every six month

Change in the agreement among all partners

Due to change in external environment

No change in agreement

Solution

Question 7

New Partner’s A/c Dr To Gainer Partner’s Capital A/c

New Partner’s Capital A/C OR Current A/C Dr. To Sacrificing Partner’s Capital / current A/c

New Partner’s A/c Dr. To Old Partner’s Capital A/c

New Partner’s A/c Dr. To All Partner’s Capital A/c

Solution

Question 8

Distribution of Premium for goodwill

Distribution of Reserve

Revaluation of loss

Revaluation profit

Solution

Question 9

It is dissolution of firm

No

It is called merger

Yes

Solution

Question 10

Written off to the old partners

Written off by the Sacrificing partners

Credited to old Partners Capital accounts

Distributed by Gainer partners

Solution

Question 11

To increase the goodwill of the firm

To Increase the Capital of the firm.

To Increase the Number of partners

To Increase the Profit sharing Ratio

Solution

Question 12

Righteous behavior

Respect for humanity

Respect for law

Both Respect for humanity and Righteous behavior

Solution

New Partner’s A/c Dr
To Gainer Partner’s Capital A/c

New Partner’s Capital A/C OR Current A/C Dr.
To Sacrificing Partner’s Capital / current A/c

New Partner’s A/c Dr.
To Old Partner’s Capital A/c

New Partner’s A/c Dr.
To All Partner’s Capital A/c