Multiple Choice Questions (MCQs)
Select the correct alternative:
1. Which of the following statement is correct?
(a) Goodwill at the time of retirement of a partner is credited to remaining Partners' Capital Accounts in sacrificing ratio.
(b) Goodwill at the time of retirement of a partner is credited to remaining Partners' Capital Accounts in gaining ratio.
(c) Goodwill at the time of retirement of a partner is debited to remaining Partners' Capital Accounts in sacrificing ratio
(d) Goodwill at the time of retirement of a partner to the extent of retiring Partner's Share is debited to remaining Partners' Capital Accounts in gaining ratio.
Ans . d
2. At the time of retirement of a partner, profit (gain) on revaluation will be credited to the Capital Accounts of
(a) retiring partner.
(b) all partners in their old profit-sharing ratio.
(c) the remaining partners in their old profit-sharing ratio.
(d) the remaining partners in their new profit-sharing ratio
Ans . b
3. Increase in liability at the time of retirement of a partner is
(a) credited to Revaluation Account.
(b) debited to Revaluation Account.
(c) debited to Profit and Loss Account.
(d) debited to Profit and Loss Appropriation Account.
Ans . b
4. Increase in the value of assets at the time of retirement of a partner is
(a) credited to Revaluation Account.
(b) debited to Revaluation Account.
(c) debited to Profit and Loss Account.
(d) debited to Profit and Loss Appropriation Account.
Ans . a
5. Decrease in liabilities at the time of retirement of a partner is
(a) credited to Revaluation Account.
(b) debited to Revaluation Account.
(c) debited to Profit and Loss Account.
(d) debited to Profit and Loss Appropriation Account.
Ans . a
6. Decrease in the value of assets at the time of retirement of a partner is
(a) credited to Revaluation Account.
(b) debited to Revaluation Account.
(c) debited to Profit and Loss Account.
(d) debited to Profit and Loss Appropriation Account.
Ans. b
7. Gaining ratio is
(a) Old Profit Share less New Profit Share.
(b) Old Profit-sharing Ratio.
(c) New Profit-sharing Ratio.
(d) New Profit Share less Old Profit Share.
Ans. d
8. On the retirement of Hari from the firm of Hari, Ram and Sharma, the Balance Sheet showed a debit balance of 12,000 in the Profit and Loss Account. For calculating the amount payable to Hari, this balance will be
transferred
(a) to the credit of the Capital Accounts of Hari, Ram and Sharma equally.
(b) to the debit of the Capital Accounts of Hari, Ram and Sharma equally.
(c) to the debit of the Capital Accounts of Ram and Sharma equally.
(d) to the credit of the Capital Accounts of Ram and Sharma equally.
Ans . b
9. Amla, Bimla and Kavita were partners sharing profits and losses in the ratio of 4:3 : 1. Bimla retires and gives her share of profit to Amla for 3,600 and to Kavita for 3,000. The gaining ratio of Amla and
Kavita will be:
(a) 4:5
(b) 2:1
(c) 6:5
(d) 4:1
Ans . c
10. Srishti, Nitya and Anand were partners in a firm sharing profits and losses in the ratio of 3 : 2:1. Srishti retired from the firm selling her share of profits to Nitya and Anand in the ratio of 2 : 1. The new profit-sharing ratio between Nitya and Anand will be
(a) 3:2.
(b) 17: 11
(c) 2:1
(d) 19:11
Ans . c
11. A, B and Care partners sharing profits in the ratio of 3:2:1, C retired.New profit sharing will be
(a) 1:3
(b) 3:2
(c) 1:1
(d) None of these
Ans . b
12. A, B and Care partners sharing profits in the ratio of 3: 2:1, C retired, and new profit-sharing ratio is 3:2. Gaining ratio will be
(a) 3:2
(b) 1:2
(c) 2:1
(d) None of these
Ans . a
13. A, B and Care partners sharing profits in the ratio of 3:2:1, C retires. If A and B take the share of retiring partner equally, new profit-sharing ratio will be
(a) 7:5
(b) 3:2
(c) 1:1.
(d) None of these.
Ans . a
14. A, B and Care partners sharing profit and losses in the ratio of 2:2:1. B retired from the firm. At that time goodwill of the firm was valued at 30,000. What contribution has to be made by A and C to pay B?
(a) 20,000 and 10,000
(b) 15,000 and 15,000
(c) 8,000 and 4,000
(d) 6,000 and 6,000
Ans . c
15. A, B and C are partners in the firm, sharing profits in the ratio of 2:2: 1. Their Capital Accounts stand as 250,000, 350,000 and 25,000, respectively. B retired from the firm and balance in the General Reserve on that date was 15,000. If goodwill of the firm is 30,000 and profit on revaluation is 7,050, what amount will be transferred to B's Loan Account?
(a) 50,820
(b) 70,820
(c) 8,820
(d) None of these
Ans. b
16. Retiring partner is compensated by the continuing partners in their
(a) Gaining Ratio.
(b) Capital Ratio
(c) Sacrificing Ratio.
(d) Profit-sharing Ratio.
Ans. a
17. Accumulated profits on the retirement of a partner are
(a) credited to all Partners' Capital Accounts in old profit-sharing ratio.
(b) debited to all Partners' Capital Accounts in old profit-sharing ratio.
(c) credited to remaining Partners' Capital Accounts in new profit-sharing ratio.
(d) credited to remaining Partners' Capital Accounts in gaining ratio.
Ans . a
18. A, B and C were partners in a firm sharing profits and losses in the ratio of 5:3 : 2. C retired and his capital balance after adjustments regarding reserves, accumulated profits/losses and his share of gain on revaluation was 2,50,000. C was paid 3,22,000 including his share of goodwill. The amount credited to C's capital account, on his retirement, for goodwill will be
(a) 72,000
(b) 7,200
(c) 24,000.
(d) 36,000
Ans . a
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