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Partnership Accounts MCQs
CMA INTERMEDIATE: PAPER 5 – FINANCIAL ACCOUNTING
RECONSTITUTION OF PARTNERSHIP FIRM
ADMISSION OF A PARTNER (II) - MCQ
A. State whether each of the followingstatements is true or false:
1.When a new partner is admitted, the old firm hasto be dissolved.False
2.Sacrificing ratio and old ratio will always bethesame.False
3.Difference between old ratio and new ratio iscalled sacrificingratio.True
4.Premium brought in by an incoming partner isshared by the old partners in their old profit sharing ratio.False
5.When a new partner does not bring his share ofgoodwill in cash the amount is debited to his capital account. True
6.On admission, when goodwill is written off, itis to be debited to the old partner’s capital accounts in their old profitsharing ratio.True
7.When goodwill exists in the Balance Sheet at itsfull value, the incoming partner is to bring in proportionate amount of suchgoodwill as his share of premium for goodwill.False
8.In case of admission of a partner, sacrificingratio is used to distribute premium for goodwill brought in by new partner. True
9.Revaluation account or profit and lossadjustment account is a nominal account in nature. True
10.Profit or loss on revaluation of assets andliabilities is distributed among all thepartners.False
11.Profit on revaluation is credited to oldpartner’s capital accounts in their old profit sharing ratio.True
12.Increase in the value of an asset on revaluationis debited to the revaluationaccount.False,Credited
13.Increase in the value of a liability onrevaluation is debited to the revaluation account. True
14.Unrecorded assets are credited and unrecordedliabilities are debited in revaluationaccount.True
15.Accumulated profit or loss is to be distributedamong the old partners in sacrificingratio.False, Old ratio
16.Provision made against debtors is credited todebtors account.False
17.When the altered values on revaluation are notbeing taken into accounts, a memorandum Revaluation Account is opened.True
18.Revaluation account is also known as profit andloss adjustment account. True
19.The purpose of revaluation account is toascertain the profit or loss arising on account of revaluation of assets orreassessment of liabilities.True
20.A contingent liability becoming a certainliability is debited to the Revaluation account and shown in balance sheet asliability at the time of admission of a partner.True
21.In case of admission of a partner unrecordedassets are credited to revaluation account. True
22.At the time of admission of a partner, the firmis dissolved. False
23.No new partner can be admitted into apartnership without the consent of all the existing partners. False
Multiple Choice Questions and Answers (MCQs) | ||
Financial Accounting | Corporate Accounting | |
Departmental Accounting Branch Accounting Hire Purchase and Installment System Single Entry System Royalty Accounts Not for Profit Organisation Basics of Partnership Admission of a Partner Dissolution of Firms | Issue of Shares Issue and Redemption of Debentures Bonus and Rights Shares Buy Back of Shares Redemption of Preference Shares Internal Reconstruction Accounts of Holding Companies Corporate Accounting 500 MCQs | |
Management Accounting | Chapter Wise MCQs | |
Management Accounting MCQs Marginal and Absorption Costing Budget and Budgetary Control Standard Costing Ratio Analysis Cash Flow Statement Funds Flow Statement Financial Statement and Financial Statements Analysis | 1. Auditing MCQs 2. Business Communication 3. Company Law 4. Financial Accounting 5. Indian Financial System 6. Income Tax 7. Business Laws 9. Human Resource Management | |
B. Fill in the blank with appropriateword or words:
1.Share of goodwill brought in cash by the newpartner is known aspremium for goodwill.
2.Premium for goodwill brought in by the incomingpartner is acompensationfor the loss suffered by theold partners in terms of share in profits.
3.The value of goodwill varies on the basisofprofitsof the business.
4.Revaluation account is anominalaccount.
5.Reduction in provision for bad debts willbecreditedto the Revaluation A/c.
6.Old ratio itself is thesacrificeratiounless there is a change of profit sharing ratio among the old partners.
7.Calculation of sacrificing ratio is necessarywhen the new partner brings inhis share of goodwillincash.
8.As per AS 26, onlypurchasedgoodwillwill be recorded in the books of account.
9.The ratio in which the old partners surrendertheir share profits in favour of the new partner is calledsacrificeratio.
10.When the book values of the assets andliabilities are not to be revised,memorandum revaluation accountisprepared.
11.Staff provident fund is aliability.
12.Profits or losses arise on the revaluation ofassets and liabilities are shared by theoldpartner’sinold ratio.
13.If at the time of admission the revaluation a/cshows a profit it should be creditedto old partner’s capital account in old ratio.
14.If at the time of admission the revaluation a/cshows a loss it should be debited toold partner’s capital account in oldratio.
15.Arevaluationaccountis to be opened when the values of assets and liabilities are required to bealtered.
16.Goodwill is anintangibleasset.
17.Memorandum RevaluationAccountis opened when after revaluation the values of assets and liabilities are keptunaltered.
18.When goodwill appears in the Balance Sheet atit* full value, premium brought in by the new partner iscredited toCapital Account of the new partner.
19.If the new partner brings his share of goodwillin cash it will be shared by old partners insacrifice ratio.
20.On admission, a new partner gets two rightsviz-right to assets andright to share profits.
21.Assessed value of reputation of a business isknown asgoodwill.
22.Extra earning capacity of a firm is knownasGoodwill.
23.A new partner may be admitted in a partnershipfirm with the consent ofall the existing partners.
24.The document containing terms and conditions iscalled thePartnership Deed.
25.The registration of a partnership firm isvoluntary.
26.In case of admission of a partner, the incoming partnerhas to pay his share of premium to the old partner inhis ratio ofgain.
27.Goodwill is written off in theOldratioin case of partnership after the admission of newpartner.
28.If a partner takes over a liability of the firm,the partner’s capital account iscredited.
29.If a partner takes over an asset of the firm,the partner’s capital account isdebited.
Also Read: Theory Questionson admission of a partner
C. Choose thecorrect alternative:
1. At the time of admission of a newpartner
a) Old firm has to be dissolved.
b) Old partnershiphas to be dissolved.
c) Both the old firm and partnershiphave to be dissolved.
d) Neither the firm nor thepartnership has to be dissolved.
2. When a new partner does not bringhis share of goodwill in cash, the amount of premium is debited to:
a) Premium account.
b) Cash account.
c) Capital accountof the new partner.
d) Capital account of all thepartners.
3. Premium of goodwill brought incash by a new partner on admission is shared by old partners in:
a) Sacrificingratio.
b) Capital ratio.
c) New profit sharing ratio.
d) Old profit sharing ratio.
4. Profit on revaluation of assetsand liabilities is shared by old partners in:
a) New ratio.
b) Sacrificing ratio.
c) Capital ratio.
d) Old ratio.
5. The sacrifice of the old partnersis equal to
a) Their new ratio.
b) Their old ratio.
c) New ratio-Old ratio.
d) Old ratio-Newratio.
6. Profit or loss on revaluation istransferred to partners’ capital accounts in:
a) Old ratio.
b) New ratio.
c) Equal ratio.
d) Capital ratio.
7. Premium brought in cash by the newpartner on admission is credited to
a) Premium for goodwill account.
b) Cash account.
c) Capital account of all thepartners.
d) Capital accountof the old partners.
8. At the time of admission, generalreserve is transferred to
a) Revaluation A/c
b) Old partners’capital A/c
c) New partners’ capital A/c
d) All the partners’ capital A/c
9. The balance of memorandumrevaluation account (second part), is transferred to the capital accounts ofthe partners in:
a) Capital ratio.
b) Old profit sharing ratio.
c) New profitsharing ratio.
d) Sacrificing ratio.
10. When a new partner brings inpremium, the same is credited to:
a) Cash Account.
b) Premium forGoodwill Account.
c) Capital Account
11. In case of admission of a newpartner.
a) The firm is dissolved.
b) The partnershipis dissolved.
c) Both the partnership and the firmare dissolved.
12. When a new partner is admitted, itrequires the consent of
a) All thepartners.
b) Majority of the partners.
c)Anyone of the partners.
13. In case of admission of a partnerunrecorded assets are:
a) Shown on the credit side ofrevaluation account
b) Shown as asset in balance sheet
c) All of the above (a & b)
d) None of the above
14. In case of admission of a partner,the entry for unrecorded investments will be:
a) Investment A/cdebit, revaluation A/c credit
b) Investment A/c debit, partner’scapital A/c credit
c)CashA/c debit, Revaluation A/c credit
15.Cantwo companies enter into partnership?
a)Yes
b)No
16.If atthe time of admission there is some unrecorded liability, it will be:
a)Creditedto Revaluation Account
b)Shownas liability in Balance sheet of the new firm
c)All of the above (a & b)
d)Noneof the above
Also Read: Theory Questionson admission of a partner
