Multiple Choice Questions (MCQs)
Select the correct alternative:
1. Any change in the relationship of existing partners which results in an end of the existing agreement and enforces making of a new agreement is called
(a) Revaluation of Partnership
(b) Reconstitution of Partnership.
(c) Realisation of Partnership.
(d) None of these
Ans . b
2. If the existing profit-sharing ratio among A, B and C of 3:2:1 is changed to 1:2:3, then i the partner(s) whose share will be unaffected is /are
(a) A.
(b) B.
(c) C.
(d) A and C.
Ans . b
3. X and Y shared profits and losses in the ratio of 3 : 2. With effect from 1st April, 2021, they agreed to share profits equally. Goodwill of the firm was valued at $ 60,000. The adjustment entry will be
(a) Dr. Y's Capital A/c and Cr. X's Capital A/c by * 6,000.
(b) Dr. X's Capital A/c and Cr. Y's Capital A/c by * 6,000.
(c) Dr. X's Capital A/c and Cr. Y's Capital A/c by * 600.
(d) Dr. Y's Capital A/c and Cr. X's Capital A/c by 600.
Ans. a
4. A, B and Care partners sharing profits in the ratio of 5:3:2. They decided to share future profits in the ratio of 2:3:5. What will be the accounting treatment of Workmen Compensation Reserve appearing
in the Balance Sheet on that date when no other information is available for the same?
(a) Distributed among partners in their capital ratio.
(b) Distributed among partners in their new profit-sharing ratio.
(c) Distributed among partners in their old profit-sharing ratio.
(d) Carried forward to new Balance Sheet.
Ans . c
5. The ratio in which one or more partners of the firm forego, i.e., sacrifice their share of profits in favour of one or more partners of the firm is known as
(a) Sacrificing Ratio.
(b) Gaining Ratio.
(C) No change in ratio.
(d) Either (a) or (b).
Ans. a
6. Avya, Divya and Kavya were equal partners. They decided to change the profit-sharing ratio to 4:3:2. For this purpose, the goodwill of the firm was valued at $90,000.
The Journal entry for the treatment of Goodwill on change in profit-sharing ratio will be:
(a) Kavya's Capital A/C...Dr. 10,000
To Avya's Capital A/C 10,000
(b) Divya's Capital A/C ... Dr. 10,000
To Avya's Capital Alc 10,000
(c) Avya's Capital A/C ...Dr. 90,000
To Kavya's Capital A/C 90,000
(d) Avya's Capital A/C ...Dr. 10,000
To Kavya's Capital A/C 10,000
Ans . d
7. Which of the following does not result into reconstitution of a firm?
(a) Dissolution of partnership firm.
(b) Dissolution of partnership.
(c) Change in profit-sharing-ratio of existing partners.
(d) Death of partner.
Ans . a
8. Assets are revalued and liabilities are reassessed at the time of change in profit-sharing ratio so that
(a) assets and liabilities are shown at their present values.
(b) gaining partner is not put to an advantage and sacrificing partner is not put to disadvantage and Vice versa.
(c) Both (a) and (b).
(d) Assets and liabilities are shown at their market values.
Ans . b
9. Raju and Gaurav were partners in a firm sharing profits and losses in the ratio of 2:1. With effect from 1st January, 2021, they decided to share profits and losses equally. Individual partner's gain or sacrifice
due to change in the ratio will be
(a) Gain by Raju 1/6, Sacrifice by Gaurav 1/6.
(b) Sacrifice by Raju 1/6, Gain by Gaurav 1/6.
(c) Gain by Raju 1/2, Sacrifice by Gaurav 1/2.
(d) Sacrifice by Raju 1/2, Gain by Gaurav 1/2.
Ans . b
10. Raman and Rajan were partners in a firm sharing profits or losses in the ratio of 3 : 1. With effect from 1st January, 2021, they agreed to share profits in the ratio of 2 : 1. Due to change in profit-sharing ratio,
Rajan's gain or sacrifice will be.
(a) Gain 1/12.
(b) Sacrifice 1/12.
(c) Gain 2/60.
(d) Sacrifice 3/60.
Ans . a
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