Chapter 4 ACCOUNTANCY : Admission of a Partner — Online MCQ Test
ACCOUNTANCY · CLASS 12 INTER II YEAR · Andhra State Board
Practice Chapter 4 ACCOUNTANCY : Admission of a Partner with a free chapter-wise online MCQ test.
This chapter covers: This chapter details revaluation of assets and liabilities accounting treatment of goodwill sacrifice ratio adjustment of capital accounts and new profit sharing ratios upon partne....
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Chapter 4 ACCOUNTANCY : Admission of a Partner — Important Questions & Answers
What is the primary reason for calculating a new profit-sharing ratio upon the admission of a new partner?
- A. To determine the value of goodwill
- B. To distribute the profit among all partners including the new one
- C. To revalue assets and liabilities
- D. To calculate the sacrificing ratio only
Answer: B. To distribute the profit among all partners including the new one
A new ratio is required because the incoming partner acquires a share of profits from the existing partners, changing the profit distribution structure.
A new ratio is required because the incoming partner acquires a share of profits from the existing partners, changing the profit distribution structure.
Which account is prepared to record the changes in the value of assets and liabilities at the time of admission?
- A. Profit and Loss Appropriation Account
- B. Revaluation Account
- C. Realization Account
- D. Capital Account
Answer: B. Revaluation Account
Revaluation account is used to adjust the book values of assets and liabilities to their current market values upon the entry of a new partner.
Revaluation account is used to adjust the book values of assets and liabilities to their current market values upon the entry of a new partner.
If the revaluation account shows a credit balance, it indicates:
- A. A net loss
- B. A net profit
- C. Decrease in liabilities
- D. Increase in assets
Answer: B. A net profit
A credit balance in the revaluation account means the total gain from increase in assets/decrease in liabilities exceeds the losses.
A credit balance in the revaluation account means the total gain from increase in assets/decrease in liabilities exceeds the losses.
A, B and C share profits in 3:2:1. D is admitted for 1/6th share. What is the new profit sharing ratio?
- A. 3:2:1:1
- B. 3:2:1:2
- C. 1:1:1:1
- D. 4:3:2:1
Answer: A. 3:2:1:1
After giving 1/6th to D, the remaining 5/6th is shared in 3:2:1, resulting in a 3:2:1:1 ratio.
After giving 1/6th to D, the remaining 5/6th is shared in 3:2:1, resulting in a 3:2:1:1 ratio.
If A and B share profits 2:1 and admit C for 1/4th share which he acquires equally from A and B, what is the sacrifice of A?
- A. 1/4
- B. 1/8
- C. 1/12
- D. 3/8
Answer: B. 1/8
C takes 1/4th share equally, meaning 1/2 of 1/4th is taken from A, which is 1/8th.
C takes 1/4th share equally, meaning 1/2 of 1/4th is taken from A, which is 1/8th.