Chapter Exam

Chapter 4 ACCOUNTANCY : Admission of a Partner — Online MCQ Test

Q: Which account is prepared to record the changes in the value of assets and liabilities at the time of admission?

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.

Q: If the revaluation account shows a credit balance, it indicates:

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.

Q: A, B and C share profits in 3:2:1. D is admitted for 1/6th share. What is the new profit sharing ratio?

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.

Q: 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?

Answer: B. 1/8 — C takes 1/4th share equally, meaning 1/2 of 1/4th is taken from A, which is 1/8th.

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 for Andhra State Board CLASS 12 INTER II YEAR ACCOUNTANCY. 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.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 4 ACCOUNTANCY : Admission of a Partner — Important Questions & Answers (FAQ)

Frequently asked questions from Andhra State Board CLASS 12 INTER II YEAR ACCOUNTANCY — Chapter 4 ACCOUNTANCY : Admission of a Partner, with answers and explanations. These are sample questions; the exam has its own separate question set.

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.

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.

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, B and C share profits in 3:2:1. D is admitted for 1/6th share. What is the new profit sharing ratio?