Admission of a Partner Test

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Admission of a Partner Test - 4

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Question 1
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 2
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 3
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 4
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 5
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.
Question 6
1 / -0

Admission of a partner is one of the mode of reconstituting the firm under which

A
Old partnership ended and new one between all partner(excluding old partner) comes into existence

B
Old partnership ended and new one between all partner(including new partner) comes into existence

C
Old partnership ended and new one between all partner(excluding new partner) comes into existence

D
New partnership ended and old one between all partner(including new partner) comes into existence

Solution

Admission of a partner is one of the methods of reconstitution of a firm. It means, it is the end of old partnership and beginning of a new partnership between all the partners including the new partner.
Question 7
1 / -0

According to Section 30 of Partnership Act 1932:

A
A Minor can be admitted as a partner by the consent of all partners for the time being.

B
New partner will inspect the books of accounts

C
New partner is allowed to share old profits

D
New partner will bring capital and goodwill in cash

Solution

As per the law a minor cannot be admitted in any contracts. But with the consent of all the existing partners as per section 30 of the partnership act a minor an be admitted into a partnership firm as a partner for the time being.
Question 8
1 / -0

New profit sharing ratio means

A
All partner(excluding old) share future profit and losses

B
Two partner(including new) share future profit and losses

C
All partner(including new) share future profit and losses in this new ratio

D
Partners will share future profits equally

Solution

New profit sharing ratio is fixed after the admission of the new partner. It is the ratio in which all the partners including the new partner share profits. It is the ratio of the reconstituted firm.
Question 9
1 / -0

Amount brought by a new partner for his share in goodwill is known as _____

A
Premium

B
Will

C
Profit

D
Discount

Solution

When a new partners is admitted into the partnership he brings some amount in cash as his capital and some amount for his share in goodwill. The amount he brings for the share of goodwill is known as premium for goodwill.
Question 10
1 / -0

At the time of admission of a new partner, the new partner acquires his share from the old partners in the:

A
Sacrificing ratio

B
New Ratio

C
Old ratio

D
Gaining Ratio

Solution

When a new partner is admitted, old partners will sacrifice some share in favor of new partner, the share they sacrifice in favor of new partner is known as sacrifice share or sacrificing ratio of the old partners.
Question 11
1 / -0

Section ____ of the Indian Partnership Act provides that a new partner shall not be inducted into a firm without the consent of all existing partners

A
31

B
32

C
33

D
30

Solution

Section 31 of the Indian Partnership Act provides that a new partner shall not be inducted into a firm without the consent of all existing partners.The consent of all the existing partners is required for admission of a new partner.
Question 12
1 / -0

A and B are partners in a firm sharing profits in the ratio of 2 : 1. They admit C as a new partner for 1/5 share. New Ratio will be 8:4:3. Sacrificing ratio will be:

A
2 : 1

B
1 : 2

C
3 : 5

D
1 : 7

Solution

If C is admitted for 1/5th share then 1-1/5= 4/5th share is available for A and B which they share in the ratio of 2:1. So the new profit sharing ratio for A is = 4/5*2/3=8/15
For B new profit sharing ratio is 4/5*1/3=4/15. So New ratio is 8:4:3.
Sacrificing ratio= Old ratio- new ratio. For A Sacrificing ratio = 2/3-8/15=2/15 and For B Sacrificing ratio = 1/3-4/15 = 1/15.
Question 13
1 / -0

A and B are partners in a firm sharing profits in the ratio of 5 : 3. They admit C as a new partner for 1/5 share. New Ratio will be 3 : 1 : 1. Sacrificing ratio will be:

A
1 : 2

B
5 : 3

C
2 : 1

D
1 : 7

Solution

OLD RATIO OF A AND B 5 : 3
NEW RATIO OF A , B AND C IS 3 : 1: 1
SACRIFICING RATIO OF A = 5/8-3/5 = 1 /40
SACRIFICING RATIO OF B = 3 / 8 - 1 / 5 = 7 / 40
SACRIFICING RATIO OF A AND B = 1 : 7
Question 14
1 / -0

A and B are partners in a firm sharing profits in the ratio of 4 : 3. They admit C as a new partner. New Ratio will be 2 : 3 : 1. Sacrificing ratio will be:

A
4 : 3

B
2 : 3

C
Only B is Sacrificing

D
Only A is sacrificing

Solution

Calculation of sacrificing ratio of partners:
Old Ratio = 4:3
New Ratio = 2:3:1
Sacrificing Ratio = A : 4/7 – 2/6 = 10/42
B : 3/7 – 3/6 = 3/42 Gain
Question 15
1 / -0

A and B are partners in a firm sharing profits in the ratio of 3 : 2. They admit C as a new partner for 1/4 share. New Ratio of A and B will be 2 : 1 . Sacrificing ratio will be:

A
2 : 3

B
2 : 1

C
1 : 1

D
3 : 2

Solution

Calculation of sacrificing ratio of partners:
Old Ratio = 3:2
New Ratio of A and B = 2:1
New Ratio of A, B and C will be : 1 – 1/4 = 3/4
A’s new share = 2/3 × 3/4 = 6/12
B’s new share = 1/3 × 3/4 = 3/12
C’s Share 1/4 OR 3/12
New Ratio 6 : 3: 3 OR 2:1:1
Sacrificing Ratio = A : 3/5 – 2/4 = 2/20
B : 2/5 – 1/4 = 3/20
Question 16
1 / -0

A and B are partners in a firm sharing profits in the ratio of 5 : 3. They admit C as a new partner for 1/7 share. New Ratio will be 4 : 2 : 1. Sacrificing ratio will be:

A
4 : 2

B
3 : 5

C
5 : 3

D
3 : 2

Solution

Calculation of sacrificing ratio of partners:
Old Ratio = 5:3
New Ratio = 4:2:1
Sacrificing Ratio = A : 5/8 – 4/7 = 3/56
B : 3/8 – 2/7 = 5/56
Question 17
1 / -0

A and B are partners in a firm sharing profits in the ratio of 2 : 1. They admit C as a new partner for 1/5 share. New Ratio of A and B will be 1 : 2. Sacrificing ratio will be:

A
Sacrificing ratio 3 : 5

B
Sacrificing ratio 2 : 1

C
Sacrificing ratio 1 : 1

D
A’s Sacrifice 6/15 and B’s Gain 3/15

Solution

Calculation of sacrificing ratio of partners:
Old Ratio = 2:1
New Ratio of A and B = 1:2
New Ratio of A, B and C will be : 1 – 1/5 = 4/5
A’s new share = 1/3 × 4/5 = 4/15
B’s new share = 2/3 × 4/5 = 8/15
C’s Share 1/5 OR 3/15
New Ratio 4 : 8: 3
Sacrificing Ratio = A : 2/3 – 4/15= 6/15
B : 1/3 – 8/15 = 3/15 Gain
Question 18
1 / -0

According to section 31(1) of _____ new partner can be admitted only with consent of all existing partners

A
Cooperatives

B
Joint Hindu Family

C
Companies Act 1956

D
Partnership Act, 1932

Solution

When there is no proper guidelines or when there is no partnership deed or when partnership deed is silent on the issue of admission of a new partner. In such a case all provisions of the Partnership Act, 1932 will be applicable according to which a new partner can be admitted into the partnership only with the consent of all existing partners.
Question 19
1 / -0

The incoming partner cannot acquire his share of profits :

A
From the old partners in some agreed ratio

B
From the old partners in their new profit sharing ratio

C
From the old partners in their old profit sharing ratio

D
From one or more partners (not from all partners)

Solution

A new partner can acquire his share of profits from the old partners in their old profit sharing ratio or from one partner or from the old partners equally. But he cannot acquire his share of profit from the old partners in the new profit sharing ratio because new profit sharing ratio is fixed only after the admission of the new partner.
Question 20
1 / -0

Premium brought by the new partner will be shared by the existing partners in:

A
Gain Ratio

B
Old Ratio

C
New Ratio

D
Sacrificing Ratio

Solution

When a new partner is admitted into the partnership firm, he brings some amount of premium for goodwill which will be shared/distributed by the sacrificing partners in their sacrificing ratio

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Re-Attempt Weekly Quiz Competition

Admission of a Partner Test - 4

Result

Admission of a Partner Test - 4

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SHARING IS CARING

Question 1

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 2

Distribution of Premium for goodwill

Distribution of Reserve

Revaluation of loss

Revaluation profit

Solution

Question 3

Written off to the old partners

Written off by the Sacrificing partners

Credited to old Partners Capital accounts

Distributed by Gainer partners

Solution

Question 4

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 5

Old share in profit - New Share in profit

Old share in profit – Gaining Share in profit

Gaining share in profit - New Share in profit

New share in profit - Old Share in profit

Solution

Question 6

Old partnership ended and new one between all partner(excluding old partner) comes into existence

Old partnership ended and new one between all partner(including new partner) comes into existence

Old partnership ended and new one between all partner(excluding new partner) comes into existence

New partnership ended and old one between all partner(including new partner) comes into existence

Solution

Question 7

A Minor can be admitted as a partner by the consent of all partners for the time being.

New partner will inspect the books of accounts

New partner is allowed to share old profits

New partner will bring capital and goodwill in cash

Solution

Question 8

All partner(excluding old) share future profit and losses

Two partner(including new) share future profit and losses

All partner(including new) share future profit and losses in this new ratio

Partners will share future profits equally

Solution

Question 9

Premium

Will

Profit

Discount

Solution

Question 10

Sacrificing ratio

New Ratio

Old ratio

Gaining Ratio

Solution

Question 11

31

32

33

30

Solution

Question 12

2 : 1

1 : 2

3 : 5

1 : 7

Solution