Chapter Exam

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

Q: In case of retirement of a partner, which ratio is generally used to distribute goodwill among the remaining partners?

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.

Q: Which account is prepared to record changes in the values of assets and liabilities at the time of retirement of a partner?

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.

Q: 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:

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.

Q: 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?

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.

Q: 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?

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.

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 for Telangana State Board CLASS 12 INTERMEDIATE 2 YEAR ACCOUNTANCY. 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.. AI-generated questions from basic to board-exam level, with instant results and explanations.

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

Frequently asked questions from Telangana State Board CLASS 12 INTERMEDIATE 2 YEAR ACCOUNTANCY — Chapter 6: Retirement and Death of a Partner, with answers and explanations. These are sample questions; the exam has its own separate question set.

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.

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.

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.

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.

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.

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