CBSE Questions for Class 12 Commerce Accountancy Reconstitution Of A Partnership Firm - Admission Of A Partner Quiz 9 - MCQExams.com

P, Q and R as are in partnership Q dies on $$15$$th June, $$2018$$ which of the following statement is true?
  • Q's estate is not liable at all
  • Q's estate is not liable for any acts of the firm done after $$15$$th June, $$2018$$
  • Q's estate is liable for all acts up to the end of the financial year when the death occurred
  • Q's estate is liable only up to the previous financial year
Which of the following factors generally contribute to the value of goodwill of a firm?
  • Efficiency of management.
  • Risk involved in the business.
  • Location of the business.
  • All of above.
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:
  • Asset A/c      Dr
         To Revaluation A/c
  • Profit and loss A/c    Dr
         To Asset A/c
  • Revaluation A/c        Dr
          To Profit and loss A/c     
  • Revaluation A/c        Dr
          To Asset A/c
If goodwill is to be created and then immediately written off, the correct method of entering this in the accounts would be -
  • Debit - Capital A/c (Old Ratio)

    Credit - Current A/c (New ratio)
  • Debit - Capital A/c (Old Ratio)

    Credit - Capital A/c (New ratio)
  • Debit - Current A/c (New Ratio)

    Credit - Current A/c (Old ratio)
  • Debit - Capital A/c (New Ratio)

    Credit - Capital A/c (Old ratio)
When required amount of premium for goodwill is not brought in by new partner, goodwill account is created in the books of the firm by debiting goodwill account and crediting partners capital account in ______.
  • New profit sharing ratio.
  • Old profit sharing ratio.
  • Sacrificing ratio.
  • Capital ratio.
Under average 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 amount that the incoming partner pays for goodwill is known as ____________.
  • adjusted goodwill
  • premium for capital
  • premium for goodwill
  • hidden goodwill
Which of the following asset is compulsory to revalue, at the time of admission of a new partner?
  • Stock.
  • Fixed Assets.
  • Investment.
  • Goodwill.
A new partner can be admitted with the consent of -
  • Any other partner.
  • Majority partner.
  • All existing partners.
  • None of above.
Balance sheet prepared after the new partnership agreement, assets and liabilities are recorded at - 
  • Original Value.
  • Revalued Value.
  • At realizable value.
  • At current cost.
Which of the following formula is/are used for valuation of goodwill under super profit basis? 
  • Goodwill = Super profit x No. of years purchase.
  • Goodwill = Super profit x Annuity factor.
  • $$Goodwill = \frac{Super \ profit}{Capitalization \ rate} \times 100$$
  • Any of the above.
Weighted average method of calculating goodwill should be followed when -
  • Profits are uneven.
  • Profits have increasing trend.
  • Profits have decreasing trend.
  • Either (B) or (C).
P&Q are partners sharing Profits in the ratio of 2:R is admitted to the partnership with effect from 1st April on the term that he will bring Rs 20,000 as his capital for 1/4th share and pay Rs 9,000 for goodwill, half of which is to be withdrawn by P & Q. How much cash can P&Q withdraw from the firm?
  • 3,000:1,500
  • 6,000:3,000
  • NIL
  • None of the above
A, B & C are partners sharing profits and loss in the ratio 3:2:They decide to change their profit sharing ratio to 2:2:To give effect to this new profit sharing ratio, they decide to value the goodwill at Rs 30,Pass the necessary journal entry if Goodwill is not appearing in the old balance sheet and should not appear in the new balance sheet.
The profits of last three years are $$Rs.42,000$$; $$Rs.39,000$$ and $$Rs.45,000$$. Find the goodwill of $$2$$ years purchase.
  • $$Rs.42,000$$
  • $$Rs.84,000$$
  • $$Rs.1,26,000$$
  • $$Rs.36,000$$
Profits & losses for the last years are:
2011-2012Losses Rs 10,000
2012-2013Losses Rs 2,500
2013-2014Profits Rs 98,000
2014-2015Profits Rs 76,000
The average capital employed in the business is Rs 2,00,The rate of interest expected from capital invested is $$12\%$$. Calculate the value of goodwill on the basis of four years' purchase of super-profits.
  • Rs 65,500
  • Rs 40,375
  • Rs 24,000
  • Rs 16,375
Average profit of a firm is $$Rs.1,20,000$$. The rate of capitalization is $$12%$$. Assets and liabilities of the firm are $$Rs.10,00,000$$ & $$Rs.4,25,000$$ respectively. The value of goodwill of the firm is _____________.
  • $$Rs.3,25,000$$
  • $$Rs.2,25,000$$
  • $$Rs.5,25,000$$
  • $$Rs.4,25,000$$
From the following information calculate the value of goodwill.
The adjusted 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
Find the goodwill of the firm using capitalization method from the following information: 
Total Capital Employed $$Rs.8,00,000$$;
Reasonable Rate of Return $$15\%$$;
Profits for the year $$Rs.12,00,000$$.
  • $$Rs.82,00,000$$
  • $$Rs.12,00,000$$
  • $$Rs.72,00,000$$
  • $$Rs.42,00,000$$
Sometime the value of goodwill has to be inferred from the agreement of capitals and profit sharing ratio among the partners, it known as ___________.
  • Adjusted goodwill
  • Premium for capital
  • Premium for goodwill
  • Hidden goodwill
Find the goodwill of the firm using capitalization method from the following information:
Capital employed $$Rs.4,80,000$$;
Rate of normal return - $$15\%$$; 
Profits for the year $$Rs.90,000$$.
  • $$Rs.4,20,000$$
  • $$Rs.3,11,000$$
  • $$Rs.1,20,000$$
  • $$Rs.2,20,000$$
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 purchases - 3 years
  • Rs. 6,00,000
  • Rs. 2,70,000
  • Rs. 9,00,000
  • Rs. 3,70,000
H & M are partners in a firm sharing profits and losses in the ratio of 3:Their capitals are Rs 2,00,000 and Rs 1,50,000 respectively. They admit K as a new partner who will get 1/6th share in the profits of the firm. K brings in Rs 1,00,000 as his capital. It was agreed that goodwill has to be adjusted through partner's capital account. Required journal entry -
A & B are sharing profits & losses in the ratio of 3:C is coming as a new partner who pays Rs 25,000 as premium for goodwill. The profit sharing ratio among A, B & C is equal. If premium money is retained in business which of the following journal entry is correct for sharing premium for goodwill?
A & B are partners sharing profits and losses in the ratio of 3:C joins the firm for 1/3rd share, and is to pay Rs 40,000 as premium for goodwill but cannot pay anything. Goodwill already appearing in balance sheet is 1,00,Required journal entry -
X & Y sharing profits in the ratio of 3:They admit Z as a partner who pays Rs, 4,000 as goodwill the new profit sharing ratio 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
A, B & C were equal partners with goodwill Rs 1,20,000 in the balance sheet and they agreed to take D as an equal partner on the term that he should bring Rs 1,60,000 as his capital and goodwill, his share of goodwill was evaluated at Rs 60,000 and the goodwill account is to be written off before admission. What will be the treatment for goodwill?
  • Write off the goodwill of Rs 1,20,000 in old ratio.
  • Cash brought in by D for goodwill will be distributed among old partners in sacrificing ratio.
  • Both (A) & (B)
  • None of the above
A, B & C are in partnership sharing profits and losses in the ratio 2:2: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?
H & M are partners in a firm sharing profits and losses in the ratio of 3:Their capitals are Rs 90,000 and Rs 60,000 respectively. They admit K as a new partner who will get 1/6th share in the profits of the firm. K brings in Rs 37,500 as his capital. Calculate hidden goodwill?
  • Rs 37,500
  • Rs 75,000
  • Rs 56,250
  • Rs 60,000
H & M are partners in a firm sharing profits and losses in the ratio of 2:They admit K as a new partner who will get 1/6th share in the profits of the firm. Calculate new profit sharing ratio among H, M & K.
  • 10:25:7
  • 7:25:10
  • 25:10:7
  • 10:7:25
X & Y share profits and losses as 1:2.  They agree to admit Z (Who is also in business on his own) as a third partner.
At the time of admission of Z goodwill was appearing in balance sheet at Rs 14,000 which was revalued at Rs 18,Z brings the following assets into partnership:
Goodwill - Rs 6,000 Furniture - Rs 2,800 Stock - Rs 13,600
After admission of Z, goodwill appear at ............... in the balance sheet.
  • Rs 14,000
  • Rs 18,000
  • Rs 24,000
  • Rs 26,000
N & Z are partners in a firm sharing profits and losses in the ratio of 3:S joins the firm for 1/3rd share, and is to pay Rs 5,000 as premium for goodwill but cannot pay anything. As between N and Z, they decided to share profits and losses equally. It was agreed that goodwill has to be adjusted through partner's capital account. Required journal entry -
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)
N, S & Z are partners. They withdraw a fixed sum of Rs. $$2,000$$ per month as follows:
N draws at the beginning of each month, S withdraws at the middle of each month and Z withdraws at the end of each month. Rate of interest on drawings is $$8\%$$ p.a. Interest on drawings for the $$3$$ partners respectively will be.
  • $$87, 80$$ & $$73$$
  • $$1,040,$$ $$960$$ & $$880$$
  • $$880, 960$$ & $$1,040$$
  • $$867, 800$$ & $$733$$
A & B were partners sharing profits & losses in the ratio of 3:C was admitted to the firm on the following terms:
C would provide Rs 1,00,000 as a capital and pay Rs 20,000 as goodwill for his 1/3rd share in future profits. Goodwill account would not appear in the books. A, B & C would share profits equally. Which of the following journal is correct in relation to premium for goodwill Rs 20,000 brought in by new partner?
A,B & C are equal partners. C wanted to retire for which value of goodwill is considered as 90,000 The necessary journal entry to be passed at the time of retirement will be:
  • A Capital A/c Dr. 15,000

    B Capital A/c Dr. 15,000

    To C A/c 30,000
  • C Capital A/c Dr. 30,000

    To A Capital A/c 15,000

    To B Capital A/c 15,000
  • C Capital A/c Dr. 30,000

    To A Capital A/c 10,000

    To B Capital A/c 20,000
  • Premium for Good will A/c Dr. 30,000

    To A Capital A/c 10,000

    To B Capital A/c 20,000
A, B & C are equal partners. D is admitted to the firm for one-fourth share. D brings Rs 40,000 capital and Rs 10,000 being half of the premium for goodwill. The value of goodwill of the firm is ________. 
  • Rs. 20,000
  • Rs. 80,000
  • Rs. 40,000
  • None of the above
X & Y share profits & losses in the ratio of 2:They take Z as a partner and the new profit sharing ratio becomes 3:2:Z brings Rs 4,500 as premium for goodwill. the full value of goodwill will be -
  • 24,000
  • 27,000
  • 18,000
  • 4,500
A , B & C are equal partners. They decided to take D who brought in Rs 36,000 as goodwill. The new profit sharing ratio is 3:3:2:The journal entry for goodwill will be -
A & B are partners having capital of Rs 29,000 & 15,Reserve shown in balance sheet was Rs 10,C is admitted as a new partner introducing a capital of Rs 21,New profit sharing ratio is 5:3:Profit on revaluation of assets & liabilities were Rs 5,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 & C sharing profit & losses in the ratio of $$3:2:1$$. A retired and Goodwill of the firm is to be valued at $$Rs.24,000$$. 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 $$Rs.24,000$$
A & B are equal partners. they wanted to take C as a third partner and for this purpose goodwill was valued at Rs. 1,20,The journal entry for adjustment of value of goodwill through partners' capital accounts will be -
A and B are partners with capitals of Rs. 3,000 each. They admit C as a partner with 1/4th share in the profits of the firm. C brings Rs. 4,800 as his share of Capital. The Profit & Loss A/c showed a credit balance of Rs. 2,400 as on date of admission of C. The amount of goodwill is _______. 
  • Rs. 6,000
  • Rs. 19,200
  • Rs. 13,200
  • Rs. 8,400
A and B are partners with capitals of Rs 14,000 and Rs 28,000 respectively and sharing profits equally. They admitted C as their third partner with 1/4 profits of the firm on the payment of Rs 16,The amount of hidden goodwill is ____________.
  • 8,400
  • 14,000
  • 11,200
  • None of the above.
A and B are partners sharing profits and losses in the ratio of $$3: 2$$. They admit C into the partnership for $$1/4$$th share. C brings in $$Rs.6,000$$ for capital and the requisite amount of premium in cash. The goodwill of the firm is valued at $$Rs.9,600$$. Partners withdrew their share of goodwill in cash. A and B withdrew  ________. 
  • $$Rs.1,440$$ and $$Rs.960$$
  • $$Rs.960$$ and $$Rs.1,440$$
  • $$Rs.1,200$$ and $$Rs.1,200$$
  • None of these
A and B are in partnership sharing profits and losses at 3:They admit C into the firm. C is paying a premium for a one-third share of the profits. As for themselves, A and B agree to share future profits and losses equally. The goodwill of the firm is valued at Rs. 27,In this case _______. 
  • A will be credited and C will be debited with Rs. 9,000.
  • A will be credited and B will be debited with Rs. 2,250.
  • A will be credited and C will be debited with Rs. 11,250.
  • Both (a) & (b)
A and B are partners with capitals of Rs. 13,000 and Rs. 9,000 respectively. They admit C as a partner with the 1/5th share in the profits of the firm. C brings Rs. 8,000 as his capital. The amount of goodwill is _________. 
  • Rs. 40,000
  • Rs. 18,000
  • Rs. 10,00
  • None of these
A, B and C are partners sharing profits in the ratio of 4 : 3:D is admitted for the 2/9th share of profit and brings Rs.18,000 as his capital and the necessary amount for his share of goodwill. The goodwill of the firm is valued at Rs. 2,43,The new profit sharing ratio of A, B, C and D will be 3: 2: 2:The sacrificing partners withdrew half of their share of goodwill. They withdrew _________. 
  • Rs. 13,500, Rs. 13,500
  • Rs. 6,750, Rs. 6,750
  • Rs. 6,000, Rs. 4,500, Rs. 3,000
  • None of these
A and B are partners sharing profits in the ratio of $$3 : 2$$. C is admitted paying a premium with $$1/4$$th share of profit of which he acquires $$1/6$$th from A and $$1/12$$th from B. The goodwill of the firm is valued at $$Rs.20,160$$. One half of goodwill is withdrawn by the partners. A and B withdrew _________. 
  • $$Rs.1,680$$ and $$Rs.840$$
  • $$Rs.840$$ and  $$Rs.1680$$
  • $$Rs.3,360$$ and $$Rs.1680$$
  • $$Rs.2,520$$ and $$Rs.2,520$$
A, B and C are partners sharing profits and losses in the ratio of 3: 2:D is admitted. The new profit sharing ratio between A, B, C and D will be 3 : 3: 2:Goodwill of the firm is valued at Rs. 1,80,D brings his share of goodwill in cash. In this case ________. 
  • A and B will be credited with Rs. 36,000 & Rs. 6,000 respectively
  • C and D will be debited with Rs. 36,000 & Rs. 6,000 respectively
  • A will be credited and D will be debited with Rs. 36,000
  • None of these
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