Retirement or Death of a Partner Test

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Retirement or Death of a Partner Test - 1

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Weekly Quiz Competition

Question 1
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Which of the following is effect of the retirement of a partner?

A
The combined share of remaining partners decreases

B
The combined share of remaining partners increases

C
The combined share of remaining partners remains same

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

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.
Question 2
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M, N and H are partners without partnership deed. M wants to get retired. The profit on revaluation on the date was ` 12000.and other partners N and H want to share this in the new ratio 3:2. M wants this to be shared equally How this profit should be shared

A
8000 equally between each partner

B
6000 equally between each partner

C
4000 equally between each partner

D
3000 equally between each partner

Solution

In the absence of partnership deed profit sharing ratio will be equal. In this case, M is right; profit should be shared equally among the partners i.e. 4,000 equally among all the partners.
Question 3
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Calculation of sharing of profit up to date of death will be calculated on the basis of

A
Time basis

B
Yearly basis

C
Turnover basis

D
Both Time basis and Turnover basis

Solution

Deceased partner’s share will be calculated on the basis of:

•Time

•Turnover

Note : Read the question carefully while calculating the share of profit of deceased partner.
Question 4
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If any asset is taken over by a partner at the time of his retirement, how will you record it?

A
Revaluation Account

B
Dr. side of his capital account

C
Cr. Side of his capital account

D
Balance Sheet

Solution

Any asset taken by the partner will be shown in the debit side of his capital account. It means his capital account will be reduced by the same.

Journal Entry:

Partners Capital A/c. Dr.(Debit the Receiver)
To Assets A/c (Credit what goes out)
Question 5
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Outgoing partner is not entitled to take _______

A
Complete goodwill of the firm

B
His share of Loss on Revaluation

C
His Capital account balance

D
His share of profit for the period

Solution

Outgoing partner cannot take complete goodwill of the firm. Outgoing partner is entitled for the followings:

(i) His capital account balance

(ii) His share of profit reserves & gains etc.

(iii) Revaluation profit or loss

(iv) His share of goodwill

Note: outgoing partner is entitled for his share of goodwill only and not the complete goodwill of the firm.
Question 6
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Goodwill given in adjustments (after the balance sheet) will be ____________

A
Distributed among sacrificing partners

B
Used to adjusted the share of retiring partner

C
Distributed among the gaining partners

D
Distributed among all the partners

Solution

Goodwill given in outside the balance sheet (in adjustment) is used to calculate the share of outgoing partner only. This goodwill is self generated and should not be distributed or not to be shown in the books of accounts.
Question 7
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Unrecorded Legal charges will be:

A
Debited to the Revaluation account

B
Credited to the Revaluation account

C
Credited to the partners account

D
Will be shown in Balance Sheet

Solution

Unrecorded legal charges are the liability of the firm, so it should be recorded in the debit side of revaluation account and same should be shown in the liabilities side of the balance sheet.
Question 8
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If the retiring partner not be paid fully immediately on retirement how should his capital account be shown in subsequent Balance Sheet

A
Creditors account on liabilities side

B
His Loan account on assets side

C
His Loan account on liabilities side

D
Capital account on liabilities side

Solution

If the retiring partner not be paid fully immediately on retirement, in such a case his remaining amount will be shown in the balance sheet liabilities side by his loan account.
Question 9
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Retirement or death of a partner will create a situation for the continuing partners, which is known as:

A
Dissolution of firm

B
Liquidation

C
Both Dissolution of firm and Liquidation

D
Reconstitution of Firm

Solution

Retirement or death of a partner will create a situation for the continuing partners, which is known as Reconstitution.
Question 10
1 / -0

A, B and C are partners sharing profit in the ratio of 1/2 : 3/10 : 1/5. Calculate Gaining ratio if A retires

A
3:4

B
5:2

C
3:2

D
2:3

Solution

Gaining Ratio of B and C will be 3:2.

Proof : Gain Ratio = New Share – old share

B’s gain = 3/5 – 3/10 = 3/10

C’s gain = 2/5 -2/10 = 2/10

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Retirement or Death of a Partner Test - 1

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Retirement or Death of a Partner Test - 1

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SHARING IS CARING

Question 1

The combined share of remaining partners decreases

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

Solution

Question 2

8000 equally between each partner

6000 equally between each partner

4000 equally between each partner

3000 equally between each partner

Solution

Question 3

Time basis

Yearly basis

Turnover basis

Both Time basis and Turnover basis

Solution

Question 4

Revaluation Account

Dr. side of his capital account

Cr. Side of his capital account

Balance Sheet

Solution

Question 5

Complete goodwill of the firm

His share of Loss on Revaluation

His Capital account balance

His share of profit for the period

Solution

Question 6

Distributed among sacrificing partners

Used to adjusted the share of retiring partner

Distributed among the gaining partners

Distributed among all the partners

Solution

Question 7

Debited to the Revaluation account

Credited to the Revaluation account

Credited to the partners account

Will be shown in Balance Sheet

Solution

Question 8

Creditors account on liabilities side

His Loan account on assets side

His Loan account on liabilities side

Capital account on liabilities side

Solution

Question 9

Dissolution of firm

Liquidation

Both Dissolution of firm and Liquidation

Reconstitution of Firm

Solution

Question 10

3:4

5:2

3:2

2:3

Solution

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