Chapter 6: Retirement and Death of a Partner — Online MCQ Test
ACCOUNTANCY · CLASS 12 INTERMEDIATE 2 YEAR · Telangana State Board
Practice Chapter 6: Retirement and Death of a Partner with a free chapter-wise online MCQ test.
This chapter covers: This chapter details gaining ratio calculation goodwill treatment revaluation account partner capital accounts settlement of retiring deceased partner claims and executor account..
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Chapter 6: Retirement and Death of a Partner — Important Questions & Answers
In case of retirement of a partner, which ratio is generally used to distribute goodwill among the remaining partners?
- A. Old ratio
- B. Gaining ratio
- C. Equal ratio
- D. Sacrificing ratio
Answer: B. Gaining ratio
On retirement, goodwill related to the outgoing partner is adjusted among the remaining partners in the gaining ratio because they gain the outgoing partner's share.
On retirement, goodwill related to the outgoing partner is adjusted among the remaining partners in the gaining ratio because they gain the outgoing partner's share.
Which account is prepared to record changes in the values of assets and liabilities at the time of retirement of a partner?
- A. Profit and Loss Account
- B. Revaluation Account
- C. Trading Account
- D. Memorandum Account
Answer: B. Revaluation Account
A Revaluation Account is prepared to record increases and decreases in assets and liabilities on retirement or death of a partner.
A Revaluation Account is prepared to record increases and decreases in assets and liabilities on retirement or death of a partner.
If a partner retires and no goodwill appears in the books, the gaining partner(s) usually compensate the retiring partner by debiting their capital accounts and crediting the retiring partner's capital account. This is called:
- A. Admission of goodwill
- B. Treatment of goodwill on retirement
- C. Provision for doubtful debts
- D. Accumulated profits transfer
Answer: B. Treatment of goodwill on retirement
When goodwill is not recorded in the books, the gaining partners compensate the outgoing partner through capital account adjustments based on the gaining ratio.
When goodwill is not recorded in the books, the gaining partners compensate the outgoing partner through capital account adjustments based on the gaining ratio.
A, B and C share profits equally. B retires and A and C agree to share future profits in the ratio 3:2. What is the gaining ratio?
- A. 3:2
- B. 2:3
- C. 1:1
- D. Equal
Answer: A. 3:2
Since the old ratio was equal and the new ratio is 3:2, the gain made by A and C is in the same proportion as the new ratio.
Since the old ratio was equal and the new ratio is 3:2, the gain made by A and C is in the same proportion as the new ratio.
In a partnership firm, if the deceased partner's capital account shows a credit balance of Rs. 1,50,000 and his share of profit till date of death is Rs. 12,000, what is the amount due before interest on capital and other adjustments?
- A. Rs. 1,38,000
- B. Rs. 1,50,000
- C. Rs. 1,62,000
- D. Rs. 1,20,000
Answer: C. Rs. 1,62,000
The amount due before further adjustments is the sum of the capital balance and share of profit: Rs. 1,50,000 + Rs. 12,000 = Rs. 1,62,000.
The amount due before further adjustments is the sum of the capital balance and share of profit: Rs. 1,50,000 + Rs. 12,000 = Rs. 1,62,000.