Chapter Exam

Unit 6: Retirement and Death of a Partner — Online MCQ Test

Q: What is the ratio in which the continuing partners acquire the share of the retired partner called?

Answer: A. Gaining ratio — The gaining ratio shows how the continuing partners gain the outgoing partner’s share. It is used to adjust goodwill and other reconstitution items.

Q: If the ratio of old profit-sharing is 5:3:2 and partner B retires, the gaining ratio is generally calculated by comparing:

Answer: A. Old ratio and new ratio of continuing partners — The gaining ratio is the difference between the old profit-sharing ratio and the new profit-sharing ratio of the continuing partners.

Q: A, B and C share profits in the ratio 2:3:5. B retires. A and C decide to share future profits equally. What is the gaining ratio of A and C?

Answer: A. 1:1 — B’s share of 3/10 is gained equally by A and C, so each gains 3/20. Hence, the gaining ratio is 1:1.

ACCOUNTANCY · CLASS 12th · Tamil Nadu State Board

Practice Unit 6: Retirement and Death of a Partner with a free chapter-wise online MCQ test for Tamil Nadu State Board CLASS 12th ACCOUNTANCY. This chapter covers: Focusing on the reconstitution of a firm when an existing partner leaves or passes away this unit covers the calculation of the gaining ratio and new profit-sharing ratio. It expla.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Unit 6: Retirement and Death of a Partner — Important Questions & Answers (FAQ)

Frequently asked questions from Tamil Nadu State Board CLASS 12th ACCOUNTANCY — Unit 6: Retirement and Death of a Partner, with answers and explanations. These are sample questions; the exam has its own separate question set.

What is the ratio in which the continuing partners acquire the share of the retired partner called?

A. Gaining ratio ✓
B. Old profit-sharing ratio
C. Sacrificing ratio
D. Current ratio

Answer: A. Gaining ratio
The gaining ratio shows how the continuing partners gain the outgoing partner’s share. It is used to adjust goodwill and other reconstitution items.

Which of the following is transferred to the retiring partner’s capital account at the time of retirement?

A. Only current year profit
B. Share of goodwill, reserves, and revaluation profit/loss ✓
C. Only cash balance
D. Only loan amount from outsiders

Answer: B. Share of goodwill, reserves, and revaluation profit/loss
At retirement, the partner’s account is adjusted for goodwill, accumulated reserves, revaluation of assets and liabilities, and his share of profits or losses.

If the ratio of old profit-sharing is 5:3:2 and partner B retires, the gaining ratio is generally calculated by comparing:

A. Old ratio and new ratio of continuing partners ✓
B. Capital ratio and cash ratio
C. Opening balance and closing balance
D. Revaluation profit and loss

Answer: A. Old ratio and new ratio of continuing partners
The gaining ratio is the difference between the old profit-sharing ratio and the new profit-sharing ratio of the continuing partners.

A, B and C share profits in the ratio 2:3:5. B retires. A and C decide to share future profits equally. What is the gaining ratio of A and C?

A. 1:1 ✓
B. 2:5
C. 3:5
D. 2:3

Answer: A. 1:1
B’s share of 3/10 is gained equally by A and C, so each gains 3/20. Hence, the gaining ratio is 1:1.

A partner retires and the firm continues. Which of the following is the most appropriate treatment for accumulated profits and reserves?

A. They are distributed among all partners in old ratio
B. They are ignored because the firm continues
C. They are transferred to partners’ capital accounts in old profit-sharing ratio ✓
D. They are transferred only to the remaining partners in gaining ratio

Answer: C. They are transferred to partners’ capital accounts in old profit-sharing ratio
Accumulated profits and reserves belong to all partners up to the date of reconstitution and are usually distributed in the old profit-sharing ratio.