CBSE Questions for Class 12 Commerce Accountancy Reconstitution Of A Partnership Firm - Admission Of A Partner Quiz 11 - MCQExams.com

Tick the correct answer.
______ is an intangible asset.
  • Goodwill
  • Stock
  • Building
  • Cash
X, Y, Z were partners sharing profits in ratio 5:3:Goodwill does not appear in books, but it is agreed to be worth Rs 1,00,000 X retires from the firm and Y and Z decide to share future profits equally. X's share of goodwill will be debited to Y's and Zs capital A/c in a ratio:
  • $$\dfrac{1}{2}:\dfrac{1}{2}$$
  • 2 : 3
  • 3 : 2
  • None
A partner in a firm _____________________.
  • Cannot transfer his share to an outsider
  • Can transfer his share to an outsider with the consent of majority partners
  • Can transfer his share to an outsider without the consent of any other partners
  • Can transfer his share to an outsider with the consent of all other partners
$$X$$ and $$Y$$ shared profits and losses in the ratio of $$3:2$$ with effect from $$1^{st}$$April,2018 they agreed to share profits equally. The goodwill of the firm was valued at $$Rs. 60,000$$. The necessary single adjustment entry will be :
  •  Dr. $$Y$$ and Cr. $$X$$ with $$Rs. 6,000$$.
  •  Dr. $$X$$ and Cr. $$Y$$ with $$Rs. 6,000$$.
  • Dr. $$X$$ and Cr. with $$Rs. 600$$.
  • Dr. $$Y$$ and Cr. $$X$$ with $$Rs. 600$$.
When a new partner brings cash for goodwill, the amount is credited to the __________ .
  • Premium for Goodwill Account
  • Capital Account of the new partner
  • Cash Account
  • None of the above
According to Section $$37$$ of the Indian Partnership Act, 1932, the interest payable to the representative of deceased partner on the amount left by him will be ______________ .
  • $$6\%p.a$$
  • $$10\%p.a$$
  • The Bank Rate
  • None of these
Verma and Sharma are partners in a firm sharing profits and losses in the ratio of $$5:3$$. They admitted Ghosh as a new partner for $$1/5^{th}$$ share of profits. Ghosh is to bring in $$Rs. 20,000$$ as capital and $$Rs. 4,000$$ as his share of goodwill premium. Give the necessary Journal entries, when goodwill is paid privately.
  • Cash A/c             Dr.      4000
         To Goodwill A/c               4000
  • Goodwill A/c      Dr.       4000
          To Cash A/c                    4000
  • Goodwill  A/c             Dr.      4000
               To Verma's Caital A/c      2500
               To Sharma's Capital A/c  1500
  • No entry is required.
The optimum point is an ________ size of a firm.
  • Ideal
  • Average
  • Over
  • Extra
Project which is started by firm for increasing sales is classified as _______________.
  • new expansion project
  • old expanded project
  • firm borrowing project
  • product line selection
Goodwill means ____________.
  • good name or reputation of the business
  • it is an intangible real asset
  • the capacity of a business to earn profits in future
  • All the Above
The formula of capitalisation method is ___________.
  • $$\dfrac {Profit (adjusted)}{100}$$
  • $$\dfrac {\text {Total Profit}}{\text {Adjusted Profit}}$$
  • $$\dfrac {\text {Adjusted Profit}}{\text {Total Profit}}\times 100$$
  • $$\dfrac {Profit (Adjusted)}{\text {Normal rate of Return}}\times 100$$
An example of an intangible asset is:
  • Goodwill
  • Debit balance of Profit and Loss Account
  • Preliminary expenses
  • Deferred revenue expenditure
According to the value of goodwill, the type of customers may be divided into ________________.
  • Cats, dogs and mice
  • Cats and mice
  • Dogs and mice
  • Dogs and horses
Under the memorandum revaluation method ___________.
  • the new partner does not bring cash for his share of goodwill
  • the new partner brings cash for his share of goodwill
  • goodwill is raised in the books, and then is immediately written off
  • None of the Above
A admitted as a new partner for 1/ 4 share of future profits, fails to bring in cash of Rs. 5,000 towards goodwill but the existing (old) partners B and C sharing profits in the ratio of 3 : 2 raise goodwill account at its full value. Therefore, partners will be credited for goodwill as:
  • B = Rs. 3,000, C = Rs. 2,000, A = Nil
  • B = Rs. 9,000, C = Rs. 6,000, A = Rs. 5,000
  • B = Rs. 12,000, C = Rs. 8,000, A = Nil
  • B = Rs. 2,250, C = Rs. 1,500, A = Rs. 1,250
Sadhu, Mahatma and Fakir are equal partners. Fakir wanted to retire for which value of goodwill is considered as Rs. 6,00,The necessary journal entry will be:
  • Sadhu's capital A/c Dr. Rs. 1,00,000, Mahatma's capital A/c Dr. Rs. 1,00,000, To Fakir's capital A/c Rs. 2,00,000
  • Fakir's capital A/c Dr. 2,00,000, To Sadhu's capital A/c Rs. 1,00,000, To Mahatma's capital A/c Rs. 1,00,000
  • Sadhu's capital A/c Dr. Rs. 3,00,000, Mahatma's capital A/c Dr. Rs. 3,00,000, To Fakir's capital A/c Rs. 6,00,000
  • None of the above
Goodwill is recorded in the books when:
  • Super profit is earned by the enterprise.
  • Money or money's worth is paid for acquiring goodwill.
  • Management of the enterprise decides to record goodwill.
  • Any of the above.
Ram and Shyam are partners in a firm with capital of Rs 4,80,000 and Rs 3,10,000, respectively. They admitted Ganesh as a partner with l/4th share of profit. Ganesh brings Rs 3,00,000 as his capital. Ganesh's share of goodwill will be __________.
  • $$Rs.1,10,000$$
  • $$Rs.27,500$$
  • $$Rs.17,500$$
  • $$Rs.70,000$$
Capital employed in a business is Rs. 1,50,Profits are Rs. 50,000 and the normal rate of profit is 20%. The amount of goodwill as per Capitalisation Method would be:
  • Rs. 1,00,000
  • Rs. 1,50,000
  • Rs. 2,00,000
  • Rs. 3,00,000
___________ method is followed when the new partner does not bring in his share of goodwill in cash. 
  • Premium
  • Revaluation
  • Reconstruction
  • Both a and b
The need for valuation of goodwill arises at the time of _______ of a business.
  • purchase
  • sale
  • agreement
  • closure
If the business is centrally located or is at a place having heavy customer traffic, then the goodwill tends to be ______.
  • low
  • high
  • same
  • medium
The important methods of valuation of goodwill are:
  • Average Profits Method
  • Super Profits Method
  • Capitalisation Method
  • All  of the above
P and Q are two partners sharing profit and loss equally. P draws Rs. 4,000 at the end of each month for 6 months whereas Q draws Rs. 2,000 at the beginning of each month for six months. Assuming that interest on drawing is to be charged @ 5% p.a interest on drawing of P will be ____________.
  • Rs. 350
  • Rs. 280
  • Rs. 289
  • Rs. 310
Under super profit basis, goodwill is calculated by:
  • No. of years purchased multiplied with average profits
  • No. of years purchased multiplied with super profits
  • Summation of the discounted value of expected future benefits
  • Super profit divided with expected rate of return
The reputation of a business expressed in terms of money.
  • Capital
  • Income
  • Goodwill
  • Copy rights
Under average profit basis, goodwill is calculated by: 
  • No. of years purchased multiplied with past average profits
  • No. of years purchased multiplied with past super profits
  • Summation of the discounted value of expected future benefits
  • Super profit divided with expected rate of return
The following is not a mode of reconstitution of a partnership firm.
  • New profit sharing ratio
  • Admission of a new partner
  • Changes in the profit sharing ratio among the existing partners
  • Death of a partner
Excess of actual profit over normal profit is called
  • Normal profit
  • Super profit
  • Capitalized profit
  • All of the above
Consequent upon admission of a new partner in a firm the value of the goodwill is valued at Rs.60,But there exists a goodwill account in the balance sheet which stood at Rs.48,000 what would be treatment of goodwill at the time of admission of a new partner if the firm follows revaluation method of goodwill?
  • Debit goodwill A/c by Rs.12,000
  • Debit goodwill A/c by Rs.48,000
  • Debit goodwill A/c by Rs.60,000
  • Credit goodwill A/c by Rs.12,000
When the purchasing company decides to compensate the selling company on the basis of the agreed value of assets and liabilities, the method of calculating purchase consideration is _______________.
  • Net payment method
  • Net assets method
  • Lump sum method
  • Intrinsic value method
A and B were equal partners in a firm. On $$1-1-2001$$, they admitted C on the following conditions: C should bring $$Rs. 20,000$$ as capital, and  $$Rs. 10,000$$ as goodwill. In future A, B and C would share profits and losses in the ratio of  $$2 : 1 : 2$$. A and B will share the goodwill in the ratio of _________. 
  • $$1 : 1$$
  • $$3 : 1$$
  • $$1 : 3$$
  • $$2 : 1$$
Admission of new partner necessitates ___________.
  • Valuation of goodwill
  • Distribution of existing profit/reserve amongst old partners
  • Re-determination of profit sharing ratio
  • All the above
X & Associates is a partnership firm, it intends to revalue its goodwill, average profit for the past five years is Rs. 11,000 per annum and goodwill is being valued 3 years purchase of average profit. What would be the value of the goodwill of the firm?
  • Rs.33,000
  • Rs.11,000
  • Rs.35,000
  • Rs.25,000
At the time of admission when goodwill account is not being opened in the books of account, credit is given to the old partner in what ratio? 
  • Old profit sharing ratio
  • New profit sharing ratio
  • Sacrificing ratio
  • Equally
A and B are partners with capitals of Rs.20,000 and Rs.40,000 respectively and sharing profits equally. They admitted C as their third partner for one-fourth share for all-purpose on payment of Rs.24,The amount of hidden goodwill is ________. 
  • $$Rs.12,000$$
  • $$Rs.2,000$$
  • Rs.16,000
  • None of these
ABC Associates has decided to value the goodwill of the firm using capitalisation method. Find the goodwill of the firm if capital employed of the firm is $$Rs.24,00,000$$. Reasonable return on capital is $$12.5$$% and current years profit is $$Rs.8,00,000$$.
  • $$Rs.64,00,000$$
  • $$Rs.40,00,000$$
  • $$Rs.24,00,000$$
  • $$Rs.56,00,000$$
X and Y are two partners in  firm having share capital of Rs.10,000 and Rs.15,000 respectively. Z is admitted for 1/3 share of profit for which he is to bring Rs.15,000 for his share of capital. What is the goodwill of the firm?
  • $$Rs.10,000$$
  • $$Rs.9,000$$
  • $$Rs.5,000$$
  • $$Rs.11,000$$
A, B & C are partners sharing profits in the ratio 2:2:On retirement of B, goodwill was valued as $$Rs.60,000$$. Find the contribution of A and C to compensate B. 
  • $$Rs.24,000$$ and $$Rs.20,000$$.
  • $$Rs.16,000$$ and $$Rs.8,000$$.
  • They will not contribute anything.
  • Information is insufficient for any comment.
R, J & D are the partners sharing profits in the ratio $$7 : 5 : 4$$. D died on $$30$$th June $$2015$$. It was decided to value the good will on the basis of $$3$$ year's purchase of last $$5$$ years average profits. If the profits are $$Rs.29,600$$; $$Rs.28,700$$; $$Rs.28,900$$; $$Rs.24,000$$ & $$Rs.26,800$$. What will be D's share of good will?
  • $$Rs.20,700$$.
  • $$Rs.27,600$$.
  • $$Rs.82,800$$.
  • $$Rs.27,000$$.
In which of the following case the need for the valuation of goodwill in a firm may arise?
(I) Admission of new partner
(II) While changing profit sharing ratio
(III) Retirement of partner
(IV) Death of partner
Select the correct answer from the options given below-
  • (I) & (III) only
  • (I), (III) & (IV)
  • (I), (II) & (III) only
  • All (I) to (IV)
Increase in liability at the time of retirement of partner is _______.
  • debited to goodwill account
  • debited to profit & loss account
  • debited to revaluation account
  • credited to revaluation account
R, J & D are the partners sharing profits in the ratio $$7 : 5 : 4$$. D died on $$30$$th June $$2015$$. Profit for the accounting year $$2014-2015$$ was $$Rs.24,000$$. How much share in profits for the period $$1st$$ April, $$2015$$ to $$30$$th June, $$2015$$ will be credited to D's A/c?
  • $$Rs.6,000$$
  • $$Rs.1,500$$
  • $$Rs.4,500$$
  • $$Rs.2,000$$
A, B & C sharing profits & losses in the ratio of 3:2:A retired and Goodwill of the firm is to be valued at Rs. 24,What will be the treatment for goodwill?
  • Credited to Revaluation A/c at Rs. 24,000.
  • Adjusted through Partners Capital A/c's in gaining/sacrificing ratio.
  • Only A's Capital A/c credited with Rs. 12,000.
  • Only A's capital account credited with Rs. 24,000.
Decrease in assets at the time of retirement of partner is _________.
  • debited to Goodwill A/c
  • debited to Profit & Loss A/c
  • debited to Revaluation A/c
  • credited to Revaluation A/c
Increase in assets at the time of retirement of partner is _______.
  • debited to Goodwill A/c
  • debited to Profit & Loss A/c
  • debited to Revaluation A/c
  • credited to Revaluation A/c
Decrease in liability at the time of retirement of partner is ________.
  • debited to Goodwill A/c
  • debited to Profit & Loss A/c
  • debited to Revaluation A/c
  • credited to Revaluation A/c
If three partners A, B & C are sharing profits as $$5 : 3 : 2$$, then on the death of a partner A, how much B & C will pay to A's executor on account of good will. Good will is to be calculated on the basis of $$2$$ years purchase of last $$3$$ years average profits. Profits for last three years are : $$Rs.3,29,000$$; $$Rs.3,46,000$$ and $$Rs.4,05,000$$.
  • $$Rs.2,16,000$$ & $$Rs.1,42,000$$
  • $$Rs.2,44,000$$ & $$Rs.2,16,000$$
  • $$Rs.3,60,000$$ & $$Rs.3,60,000$$
  • $$Rs.2,16,000$$ & $$Rs.1,44,000$$
When required amount for premium for goodwill is not brought in by new partner, goodwill account is raised in the books of the firm by debiting goodwill account and crediting partners capital account in old profit sharing ratio and written off in ______ if it agreed not show goodwill in the books of the firm OR ALTERNATIVELY premium for goodwill should be adjusted through partners capital account by debiting new partners share of goodwill to his account and crediting old partners capital accounts in _________.
  • new profit sharing ratio, sacrificing ratio
  • old profit sharing ratio, sacarificing ratio
  • sacrificing ratio, new profit sharing ratio
  • capital ratio, new profit sharing ratio
A firm of X,Y & Z has a total capital investment of Rs.$$3,60,000$$. The firm earned net profit during the last four years as Rs.$$56,000$$, Rs.$$64,000$$, Rs.$$96,000$$ and Rs.$$80,000$$. The fair return on the net capital employed is $$15\%$$. Value of goodwill if it is based on $$3$$ years purchase of the average super profits of past $$4$$years.
  • Rs.$$37,500$$
  • Rs.$$50,000$$
  • Rs.$$60,000$$
  • Rs.$$40,000$$
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