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Partnership Capital Adjustment and Retirement/Death

Accounting treatment for partner capital adjustments, retirement, and death including revaluation, goodwill, profit sharing ratio changes, and settlement of claims

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Questions

Question 1 Multiple Choice (Single Answer)

On the death of a partner, credit balance of Profit and Loss Account appearing in, the Balance sheet, should be credited to the Capital Accounts of ______________ .

  1. all partners including the deceased partner in their profit-sharing ratio
  2. the remaining partners in the new profit-sharing ratio
  3. neither the deceased partner nor the remaining partners.
  4. None of these
Question 2 Multiple Choice (Single Answer)

At the time of retirement or death of a partner, the remaining partners decide to adjust their capital contributions in their _________.

  1. old profit sharing ratio
  2. profit sharing ratio
  3. new profit sharing ratio
  4. both a and c
Question 3 Multiple Choice (Single Answer)

 New profit sharing ratio is calculated at the time of _________ .

  1. Admission of a partner
  2. Retirement of a partner
  3. Death of a partner
  4. All of the above
Question 4 Multiple Choice (Single Answer)

When is a claim of retiring partner transferred to Loan account which accounts it is credited to?

  1. Retiring Partner Loan A/c
  2. Cash A/c
  3. Bank Loan A/c
  4. None of the above
Question 5 Multiple Choice (Single Answer)

Cash paid on settlement of retiring partners claim is credited to _____.

  1. Cash A/c
  2. Partners Capital A/c
  3. Retiring Partner Capital A/c
  4. None of the above
Question 6 Multiple Choice (Single Answer)

The deceased partner's capital account is debited with his share of the following amounts:

  1. Drawings
  2. Interest on drawings from the beginning of the year to the date of death
  3. Loss on revaluation of assets and liabilities
  4. All of these
Question 7 Multiple Choice (Single Answer)

At the time of final payment to retiring partner, which of the following adjustment/s is/are necessary in the capital accounts ?

  1. Transfer of goodwill
  2. Transfer of profit or loss on revaluation
  3. Transfer of reserve
  4. All of the above
Question 8 Multiple Choice (Single Answer)

On the date of retirement of a partner Furniture Sundry debtors and provisions bad debtors stand in the books of A/c at Rs.50,000,Rs 45000, and Rs 4500 respectively. The  partner decided to revalue assets as under furniture to be  reduced to 85 % ,provision for bad debts to be brought to 20% of sundry debtors. The entry for revaluation of furniture in trade will be _______________.

  1. revaluation A/c Dr. Rs.4250,to furniture by Rs.4250
  2. profit and loss A/c Dr. Rs.5000, stock in trade credit by Rs.5000
  3. partners Capital A/c Dr. Rs 7500 to revaluations A/c 7500
  4. revaluation A/c Dr. Rs.7500, furniture Cr .Rs.7500
Question 9 Multiple Choice (Single Answer)

On retirement or death of a partner the existing profit and loss a/c and Reserve a/c is transferred to ____________.

  1. debt side of all partners capital a/c
  2. credit side of all partners capital a/c
  3. debit side of remaining partners capital a/c
  4. credit side of remaining partnership capital a/c
Question 10 Multiple Choice (Single Answer)

At the death of a partner following entries can be made:

  1. Transfer all balance from capital account of partner to loan account.
  2. Pay cash immediately from his capital account.
  3. Transfer all balance from capital account of partner to partner's executions account.
  4. Both B & C
Question 11 Multiple Choice (Single Answer)

What balance does a Partners Current Account has?

  1. Debit balance.
  2. Credit balance.
  3. Either (a) or (b).
  4. None of these.
Question 12 Multiple Choice (Single Answer)

X, Y and Z are partners in a firm. At the time of division of profit for the year there was dispute among the partners. Profits before interest on partners capital and loan was Rs. 6,000 and.Y determined interest @ 24% p.a. on his loan of Rs. 80,000. There was no agreement on this point. Calculate the amount payable to X, Y and Z respectively.

  1. Rs. 2,000 to each partner.
  2. Loss of Rs. 4,400 for X and Z and Y will take home Rs. 14,800.
  3. Rs. 400 for X, Rs. 5,200 for Y and Rs. 400 for Z.
  4. Rs. 2;400 to each partner.
Question 13 Multiple Choice (Single Answer)

In normal trading circumstances, which of the following would not be found in a partner's capital accounts? 

  1. Profits on revaluation.
  2. Losses on dissolution.
  3. Goodwill
  4. Drawings.
Question 14 Multiple Choice (Single Answer)

____________ A/c is debited when amount of capital is to be brought in by the partner.

  1. Partners' capital
  2. Partners' current
  3. Cash/bank
  4. None of the above
Question 15 Multiple Choice (Single Answer)

_____________ A/c is to be credited for amount of capital to be brought in by the partner.

  1. Cash/Bank
  2. Partners' Capital
  3. Partners' Current
  4. None of the above
Question 16 Multiple Choice (Single Answer)

What is the journal entry for excess capital withdrawn by the partner?

  1. Cash/Bank A/c Dr.

    To Partners' Capital A/c
  2. Partners' Capital A/c Dr.

    To Cash/Bank A/c
  3. Partners' Capital A/c Dr.

    T\o Partners' Current A/c
  4. Partners' Current A/c Dr.

    To Partners' Capital A/c
Question 17 Multiple Choice (Single Answer)

$A, B$ and $C$ are partners sharing profits in the ratio of $2 : 2 : 1$. $C$ retired. The new profit-sharing ratio between $A$ and $B$ will be :

  1. $2:1$
  2. $1:1$
  3. $3:1$
  4. <span>$8:1$</span>
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