Multiple choice

Consider the following statements : 1. At the time of admission of new partner undistributed profit or losses are distributed to all partners in new ratio. 2. Profit or loss on revaluation of assets and liabilities is transferred to old partner's capital account in old profit sharing ratio. 3. Goods brought in by incoming partner in cash for joining in a partnership firm is taken away by the old partner's in their new profit-sharing ratio. Which of the above statement/s is/are true ?

  1. Only 1

  2. Only 2

  3. Only 3

  4. 1,2 and 3
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Statement 1 is false because undistributed profits/losses are distributed to old partners in the old ratio. Statement 2 is true as revaluation gains/losses belong to old partners. Statement 3 is false because goodwill brought by a new partner is shared by old partners in their sacrificing ratio, not the new profit-sharing ratio.

AI explanation

Statement 1 is false because undistributed profits or losses are distributed in the old ratio, not the new ratio. Statement 2 is true as revaluation profits or losses are transferred to old partners in their old profit sharing ratio. Statement 3 is false because goods or capital brought by the incoming partner go into the firm's business, not to old partners. Only statement 2 is true.

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