CBSE Questions for Class 12 Commerce Accountancy Reconstitution Of A Partnership Firm - Admission Of A Partner Quiz 8 - MCQExams.com

Which of the following asset is compulsory to revalue at the time of admission of a new partner?
  • Stock
  • Fixed Assets
  • Investment
  • Goodwill
The correct entry for recording losses on revaluation would be:
  • Debit-Revaluation A/c, Credit-Partners Capital A/c's
  • Debit-Partners Current A/c's, Credit-Revaluation A/c
  • Debit-Partners Capital A/c's, Credit-Revaluation A/c
  • Debit-Revaluation A/c, Credit-Partners Current A/c's
On the admission of a new partner, it is believed that the assets have changed in value. to record a decrease in the value of an asset the double entry should be _____________________.
  • Debit-Asset A/c, Credit-Capital A/c
  • Debit-Asses A/c, Credit-Revaluation A/c
  • Debit-Revaluation A/c, Credit-Capital A/c
  • Debit-Revaluation A/c, Credit-Asset A/c
Sometimes, all the partners including the new partner may agree no to alter the book value of assets and liablities even when they agree to revalue them. In order to record this, ______ is opened.
  • Revaluation A/c
  • Memorandum Revaluation A/c
  • Memorandum Goodwill A/c
  • Memorandum Suspense A/c
A & B are partner for $$5:3$$. The take C and new profit sharing ratio will be $$3:2:1$$. Profit of loss in revaluation is shared by __________.
  • A,B & C in $$5:3:2$$
  • A & B in $$3:2$$
  • A & B in $$5:3$$
  • A & B in scarifying ratio
Find the goodwill from the following information:
Capital employed - Rs.$$11,00,000$$
Rate of normal return - Rs.$$10\%$$
Future Maintainable profit - Rs.$$2,00,000$$
No. of year purchase -$$3$$ years
  • Rs.$$6,00,000$$
  • Rs.$$2,70,000$$
  • Rs.$$9,00,000$$
  • Rs.$$3,70,000$$
Average profit of a firm is Rs.$$1,20,000$$. The rate of capitalization is $$12\%$$. Assets and liabilities of the firm are $$10,000$$ & Rs.$$4,25,000$$ respectively. The value of goodwill of the firm is ________________.
  • Rs.$$3,25,000$$
  • Rs.$$2,25,000$$
  • Rs.$$5,25,000$$
  • Rs.$$5,85,000$$
From the following information calculate the value of goodwill.
The adjusted forecast maintainable profit is Rs. $$40,000$$, Capital employed is Rs. $$2,00,000$$, Normal rate of return is $$15\%$$, Capitalization rate is $$20\%$$.
  • Rs. $$50,000$$
  • Rs. $$75,000$$
  • Rs. $$40,000$$
  • Rs. $$60,000$$
The following particulars are available in respect of the business carried on by a partnership firm:
Trading Results:
$$2011$$ Loss Rs. $$5,000$$
$$2012$$ Loss Rs. $$10,000$$
$$2013$$ Profit Rs. $$75,000$$
$$2014$$ Profit Rs. $$60,000$$
You are required to compute the value of goodwill on the basis of $$5$$ years purchase of average profit.
  • $$Rs.1,25,000$$
  • $$Rs.1,50,000$$
  • $$Rs.10,000$$
  • $$Rs.1,20,000$$
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
  • New profit sharing ratio
  • Old profit sharing ratio
  • Scarifying ratio
  • Capital ratio
Under annuity basis goodwill is calculated by _________________.
  • No. of years purchased multiplied with average profits
  • No. of years purchases multiplied with super profits
  • Summation of the discounted value of expected future benefits
  • Super profit divided with expected rate of return
The amount that the incoming partner pays for goodwill is known as ________________.
  • Adjusted goodwill
  • Premium for capital
  • Premium for goodwill
  • Hidden goodwill
The profits of last three years are $$Rs.42,000$$; $$Rs.39,000$$ and $$Rs.45,000$$. Find out goodwill of $$2$$ years purchase.
  • $$Rs.42,000$$
  • $$Rs.84,000$$
  • $$Rs.1,26,000$$
  • $$Rs.36,000$$
Sometimes, the value of Goodwill has to be inferred from the agreement of capitals and profit sharing ratio among the partners, it is known as _______.
  • Adjusted Gooodwill
  • Premium for capital
  • Premium for goodwill
  • Hidden Goodwill
Find the goodwll of the firm using capilatalization method from the following information:
Capital employed Rs.$$4,80,000$$
Rate of normal - $$15\%$$
Profits for the year Rs.$$90,000$$
  • Rs.$$4,20,000$$
  • Rs.$$3,11,000$$
  • Rs.$$1,20,000$$
  • Rs.$$2,20,000$$
A & B shares profit and losses equally. The admit C as an equal partner and assets were revalued as follow: Stock at Rs.$$20,000$$ (book value Rs.$$12,000$$); Machinery at Rs.$$60,000$$ (book value Rs.$$55,000$$). Find profit/loss on revaluation to be shared among A & B.
  • Profit $$6,500$$ & $$6,500$$
  • Profit $$4,000$$ & $$4,000$$
  • Profit $$2,500$$ & $$2,500$$
  • None of the above
A & B are partners sharing profits & losses in the ratio of $$3:2$$. C was admitted to the firm and to introduce a capital of Rs.$$25,000$$. The new profit sharing ratio of A,B and C will be $$3:2:1$$ respectively. C is unable to fring in cash for his share of goodwill, partners therefore, decide to raise goodwill account in the books of the firm. They further decide to calculate goodwill on the basis of C's share in the profits and the capital contribution made by him to the firm. Before admission of C capital account balance of A & B was Rs.$$44,000$$ & Rs.$$36,000$$ respectively. Total goodwill to be raised in the books of the firm will be __________.
  • Rs.$$1,50,000$$
  • Rs.$$1,00,000$$
  • Rs.$$50,000$$
  • Rs.$$45,000$$
X & Y share profits & losses in the ratio of $$2:1$$. They take Z as a partner and the new profit sharing ratio becomes $$3:2:1$$. Z brings Rs.$$4,500$$ as premium for goodwill. The full value of goodwill will be _____________.
  • $$Rs.24,000$$
  • $$Rs.27,000$$
  • $$Rs.18,000$$
  • $$Rs.4,500$$
X & Y sharing profits in the ratio of $$3:1$$. They admit Z as a partner who pays $$Rs.4,000$$ as goodwill the new profit sharing being $$2:1:1$$ among X,Y & Z respectively. The amount of goodwill will be credited to ___________.
  • X & Y as $$Rs.3,000$$ & $$Rs.1,000$$ respectively
  • X only
  • Y only
  • None of the above
Y & W were in partnership sharing profit & losses equally. They admit S as a partner and decide to share profits equally. Goodwill is valued at Rs.$$60,000$$ but is to be immediately written off. The effect of this on Y's capital would be to ___________.
  • increase it by $$Rs.10,000$$
  • increase it by $$Rs.30,000$$
  • decrease it by $$Rs.20,000$$
  • decrease it by $$Rs.10,000$$
A & B are partners having capital of Rs.$$29,000$$ & Rs.$$15,000$$. Reserve shown in balance sheet was Rs.$$10,000$$. C is admitted as a new partner introducing a capital of Rs.$$21,000$$. New parofit sharing ratio is $$5:3:2$$. Profit on revaluation of assets & liabilities were Rs.$$5,000$$. C is to bring premium for goodwill in cash. Goodwill amount being calculated on the basis of C's share in the profits and capital contributed by him. Premium for goodwill to be brought in new partner C should be ________
  • Rs.$$30,000$$
  • Rs.$$25,000$$
  • Rs.$$15,000$$
  • Rs.$$5,000$$
A & B shares profit and losses equally. The admit C as an equal partner and assets were revalued as follow:Stock at Rs.$$10,000$$ (book value Rs.$$12,000$$); Machinery at Rs.$$50,000$$ (book value Rs.$$55,000$$): Building would be appreciated by $$10\%$$ (book value Rs.$$15,000$$). Find the profit/loss on revaluation to be shared among A and B.
  • Profit $$2,750$$ & $$2,750$$
  • Loss $$2,750$$ & $$2,750$$
  • Profit $$2,500$$ & $$2,750$$
  • None of the above
A & B are partners sharing the profit in the ratio of $$3:2$$. They take C as the new partner, who is supposed to bring Rs.$$25,000$$ against capital and Rs.$$10,000$$ against goodwill. New profit sharing ratio is $$1:1:1$$. C is able to bring Rs.$$30,000$$ only. How this will be treated in the books of the firm?
  • A & B will share goodwill brought by C as Rs.$$4,000$$: Rs.$$1,000$$.
  • Goodwill not brought, will be adjusted to the extent of Rs.$$15,000$$ in old profit sharing ratio.
  • Both (A) & (B)
  • None of the above
A,B & C are in partnership sharing profits and losses in the ratio $$2:2:1$$. They want to admit D into partnership with $$1/5$$ share. D brings in Rs.$$30,000$$ as capital and Rs.$$10,000$$ as premium for goodwill. If premium money is retained in business which of the following journal entry is correct for sharing premium for goodwill?

A Capital A/c      Dr.
B Capital A/c      Dr.
C Capital A/c      Dr.
   To Premium for Goodwill A/c		$$4,000$$
$$4,000$$
$$2,000$$




$$10,000$$
Premium for Goodwill A/c      Dr.
   To A Capital A/c
   To B Capital A/c
   To C Capital A/c		$$10,000$$




$$2,000$$
$$4,000$$
$$4,000$$
Premium for Goodwill A/c      Dr.
   To A Capital A/c
   To B Capital A/c
   To C Capital A/c		$$10,000$$




$$4,000$$
$$4,000$$
$$2,000$$
Premium for Goodwill A/c      Dr.
   To A Capital A/c
   To B Capital A/c
   To C Capital A/c 		$$10,000$$




$$3,000$$
$$3,000$$
$$4,000$$
  • A
  • B
  • C
  • D
Capital employed by a partnership firm is Rs. $$1,00,000$$. Its average profit is Rs. $$20,000$$. Normal rate of return is $$15\%$$. Value of goodwill.
  • Rs. $$33,333$$
  • Rs. $$30,000$$
  • Rs. $$23,333$$
  • Rs. $$43,667$$
At the time of retirement of a partner full good will is credited to the accounts of ______________.
  • all partners
  • only retiring partner
  • only remianing partner
  • none of the above
The business of a partnership firm must be carried on by all the partners.
  • True
  • False
Goodwill is a fictitious asset. 
  • True
  • False
At the time of entry of a new partner, no money is paid towards goodwill by the new partner. It is __________.
  • Inherent goodwill
  • Middle goodwill
  • Goodwill
  • None of the above
If the amount of goodwill is less than the agreed value, the difference between the agreed value of goodwill and the amount of goodwill appearing in the books will be debited to the _______ account.
  • goodwill
  • old partners' capital
  • new partners' capital
  • old partners' current
Freight paid on purchases of goods is added to the amount of purchases. 
  • True
  • False
The correct equation for calculation of super profit method used for calculation of Goodwill is
  • Annual profit-fair returnof capitalemployed
  • Average annual profit -fair returnof capitalemployed
  • Average annual profit-current profit of the firm
  • None of the above
Under revaluation method, when no goodwill exists in the books at the time of admission of partner, __________ account is debited with its full value.
  • old partners' capital
  • goodwill
  • new partners' capital
  • cash
When the value of goodwill appearing in the books is more than the agreed value, under revaluation method., __________ account is credited
  • old partners' capital
  • old partners' current
  • goodwill
  • new partners'capital
Goodwill should be tested for value impairment at which of the following levels?
  • Each identifiable long-term asset.
  • Each reporting unit.
  • Each acquisition unit.
  • Entire business as a whole.
Choose the correct answers from the alternatives given.
A person may be admitted as a partner with the consent of ________. 
  • Majority of the partners
  • Senior partners
  • All the existing partners
  • Working partners
Choose the correct answers from the alternatives given.
A person may be admitted as a new partner ________. 
  • in accordance with a contract between the existing partners or with the consent of all the existing partners
  • in accordance with a contract between the existing partners or with the consent of all the existing partners subject to the provisions of Section 30 of the Act
  • after obtaining specific approval of the Registrar of Firms & Societies to this effect
  • by simply taking the consent of the new partner
The correct equation for calculation of super profit method used for calculation of Goodwill is
  • Annual profit-fair return of capital employed
  • Average annual profit - fair return of capital employed
  • Average annual profit- current profit of the firm
  • None of the above
Goodwill valuation is not required to be done in the following condition
  • Partnership business is being changed
  • Business is sold
  • At the time profit is being distributed among the partners at the end of financial year
  • All of the above
When the value of goodwill appearing in the books is less than the agreed value, _______________ account is credited
  • goodwill
  • old partners' capital
  • new partner's capital
  • new partner's current
Sometimes the value of _________ is not given at the time of admission of a new partner.
  • old partners' capital
  • new partners' capital
  • goodwill
  • new partners' current
At the time of entry of a new partner no money is paid toward goodwill by the new partner. It is 
  • Inherent goodwill
  • Middle goodwill
  • Goodwill
  • None of the above
__________ may be described as the aggregate of those intangible attributes of a business which contribute to its superior earning capacity over a normal return on investment.
  • Image of firm
  • Goodwill
  • Work quality
  • None of the above
Where in a partnership firm, the partners are entitled to interest on their capitals, such interest is payable _________.
  • only out of capital.
  • only out of cash brought in by incoming partner towards goodwill.
  • only out of profits of the firm.
  • none of the above.
Where a Partner has advanced any loan to the Firm and the agreement provides for interest, but does not specify any rate, the rate shall be _____.
  • 6%
  • 8%
  • 10%
  • 12%.
Choose the correct answers from the alternatives given.
An incoming partner is liable for all the acts of the firm has done ________. 
  • Before his admission
  • After his admission
  • After his retirement 
  • None of these
As a general rule, an incoming partner is not liable for the debts incurred, however, he may liable for past debts if it is agreed between.
  • The creditor and partners of the firm
  • The partners existing at the time the debt was incurred
  • The creditor and the incoming partner
  • The creditor and partners existing at the time the debt was incurred of the firm and the incoming partner
Common examples for non-profit corporations are ________________.
  • Educational corporations
  • Charitable corporations
  • Religious corporations
  • All of above
As a general rule, an incoming partner is not liable for the debts incurred _____________________.
  • After he joined the firm as a partner
  • Before he joined the firm as a partner
  • Before some other partner joins as a partner
  • None of the above
In case of transfer of Partners' Interest u/s 29, the Transferee cannot inspect the books of the Firm.
  • True
  • Partly True
  • False
  • None of the above.
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