Commerce Accountancy · Quantitative Aptitude

Partnership Accounting

170 Questions

Partnership accounting involves calculating profit and loss sharing ratios among business partners. It covers topics like interest on capital, joint life policies, and capital balances. These questions are a staple in commerce exams and test core accountancy principles.

Profit sharing ratiosInterest on capitalJoint venture accountingCapital balance calculationsPartner retirement policies

Partnership Accounting Questions

Multiple choice

A and B, who are carrying a business and sharing 3 : 2 ratio, decided to admit C as partner for 1/10th share. C brings Rs. 10,000 as his share of premium and the new ratio becomes 5 : 4 : 1. The entry for dividing premium will be to

  1. debit premium account and credit A's capital by Rs. 10,000

  2. debit premium account and credit B's capital by Rs. 10,000

  3. debit C and credit B's capital by Rs. 10,000

  4. debit C and credit A's capital by Rs. 10,000

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Since only A has made the sacrifice, so only his capital will be credited.

Multiple choice

A and B are co-venturers. A purchased goods worth Rs. 1,25,000 and spent Rs. 5,000 as commission and Rs. 30,000 as carriage. The goods are sent to B. B sells 4/5th of the goods and takes the remaining at direct cost. Find the value of goods taken by him.

  1. Rs. 32,000

  2. Rs. 26,000

  3. Rs. 31,000

  4. Rs. 7,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Direct cost of goods = 1/5th of (1, 25, 000 + 5, 000 + 30, 000) = Rs. 32, 000 If any of the above mentioned amounts is not taken, the answer will be other options.

Multiple choice

Directions: The question below consists of a question & three statements given below it. You have to decide whether the data provided in the statements are sufficient to answer the question.

How much did Sohil get as profit at the year-end in the business done by Animesh, Sohil & Akhilesh? (A) Akhilesh invested Rs.8000/- for nine months, his profit was 3/2 times that of Sohil's & his investment was 4 times that of Animesh. (B) Animesh & Sohil invested for one year & in the proportion 1:2 respectively. (C) The three together got Rs.1000/- as profit at the year end.

  1. Only A & B together are sufficient

  2. Only A & C together are sufficient

  3. A, B & C together are not sufficient

  4. A, B & C together are not necessary

  5. None of these
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

The profit of three gathered statement A & B will be in the ratio of Animesh  : Sohil        : Akhilesh 2x12=24 : 4x12=48  : 8x9=72      1       :      2         :   3 Profit = Rs.1000 Sohil's profit = Rs.1000 x 2 / 6 So all the three statements are needed.

Multiple choice

C is a new partner in a firm consisting of partners A and B. He adds Rs. 150,000 as his 1/4th share in profits. The capitals of other partners are to be adjusted on the basis of C's contribution and profit share. Find the amount to be added by A and B, if their initial capital amounts were Rs. 180,000 and Rs. 200,000, respectively.

  1. Rs. 25,000 and Rs. 45,000

  2. Rs. 45,000 and Rs. 25,000

  3. Rs. 20,000 and Nil

  4. Rs. 70,000 and Rs. 50,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

C's capital = Rs. 1,50,000 Thus, the capital of new firm = 1,50,000 x 4/1 = Rs. 6,00,000 divided in a new ratio in which A and B will contribute 6,00,000 - 1,50,000, i.e. Rs. 4,50,000 equally. Thus, they will contribute another Rs. 45,000 and Rs. 25,000, respectively. 

Multiple choice book keeping and accountancy admission of a new partner accounting treatment of admission of a partner partnership accounts: admission of a new partner reconstitution of partnership

A and B are two partners sharing profit and loss equally. Their capital A/c stood at Rs.30,000 and Rs.25,000 respectively on 31st March, 2013. On 1st April C is admitted for 1/3rd share of profit for which he brings Rs.12,000 as his share of goodwill. On the date of his admission, stock was appreciated by Rs.11,000 and provisions for bad debts also increased by Rs.2,000. Old partners decided that C's capital should be in accordance with his share of profit sharing ratio, what adjustment will be done to make their capital in proportion to their profit sharing ratio?

  1. A to bring Rs.2500, B to be refunded Rs.2500

  2. A to be refunded Rs.2500, B to bring Rs.2500

  3. A to bring Rs.5500, B to be refunded Rs.5500

  4. A to be refunded Rs.5500, B to bring Rs.5500
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

After adjusting for revaluation (stock +11,000, provision -2,000, net +9,000) and goodwill, the new capital balances are calculated. To make capitals proportional to the new 1:1:1 ratio, adjustments are made between partners.

Multiple choice book keeping and accountancy admission of a new partner accounting treatment of admission of a partner partnership accounts: admission of a new partner reconstitution of partnership

X and Y are partners sharing profit in the ratio of 1: 1. They admit Z for 1/5th share who contributed 25,000 for his share of goodwill. The total value of the goodwill of the firm will be:

  1. 25,000

  2. 50,000

  3. 1,00,000

  4. 1,25,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If Z brings 25,000 for a 1/5th share of goodwill, the total value of the firm's goodwill is calculated as 25,000 / (1/5) = 125,000.

Multiple choice book keeping and accountancy admission of a new partner accounting treatment of admission of a partner partnership accounts: admission of a new partner reconstitution of partnership

R admitted as a new partner for one-fourth share of future profits, fails to bring in cash of 5,000 towards goodwill but the existing (old) partners S and T, sharing profits in the ratio of 3 : 2, raise the goodwill account at its full value. Therefore the partners will be credited for goodwill as:

  1. S - 3000, T - 2000, R - Nil

  2. S - 9000, T - 6000, R - 5000

  3. S - 12000, T - 8000, R - Nil

  4. S - 2250, T - 1500, R - 1250
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When goodwill is raised at full value, the total goodwill is calculated based on the new partner's share. If R's 1/4 share is 5,000, total goodwill is 20,000. This is credited to old partners in their profit-sharing ratio (3:2). 3/5 of 20,000 = 12,000 and 2/5 of 20,000 = 8,000.

Multiple choice book keeping and accountancy admission of a new partner accounting treatment of admission of a partner partnership accounts: admission of a new partner reconstitution of partnership

A and B are partners sharing the profit in the ratio $3:2$. 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?

  1. A and B will share goodwill bought by C as $4,000:1,000$.
  2. Goodwill will be raised to Rs. $15,000$ in old profit sharing ratio.

  3. Both a and b.

  4. None of these.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When a new partner brings goodwill, it is shared by old partners in their sacrificing ratio. If the goodwill is not fully brought in cash, the remaining amount is adjusted through the new partner's current account, and the goodwill can be raised in the books if required by the partnership agreement.

Multiple choice book keeping and accountancy admission of a new partner accounting treatment of admission of a partner partnership accounts: admission of a new partner reconstitution of partnership

Capital accounts of partner A & B are Rs.$30,000$ & Rs.$16,000$. They admitted C on the following conditions.
 -That C brings in Rs.$10,000$ as his capital for $1/4$th share in profits.
 -That a goodwill account be raised in the books of the firm at Rs.$15,000$
 -Profit on revaluation of assets & liabilities was Rs.$2,100$.
 -That the capital accounts of the partners be readjusted on the basis of their profit sharing ratio and any additional amount be debited or credited to their current accounts.
 -General reserve appearing in balance sheet at the time of admission of C was Rs.$6,000$.
To give effect to above current account of A & B  will be ________________.

  1. Debited by Rs.$25,400$ & Rs.$13,700$
  2. Credited by Rs.$20,500$ & Rs.$10,300$
  3. Credited by Rs.$26,550$ & Rs.$12,550$
  4. Debited by Rs.$20,500$ & Rs.$10,300$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

After adjusting for revaluation profit, general reserve, and the raised goodwill, the total capital of the new firm is determined. The partners' capital accounts are then adjusted to the new profit sharing ratio, and the difference is transferred to their current accounts.

Multiple choice book keeping and accountancy admission of a new partner accounting treatment of admission of a partner partnership accounts: admission of a new partner reconstitution of partnership

H & M are partners in a firm sharing profits and losses in the ratio of 2:5. 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.

  1. 10:25:7

  2. 7:25:10

  3. 25:10:7

  4. 10:7:25
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

K gets 1/6th share. The remaining share for H and M is 5/6. This is divided in their old ratio of 2:5. H's new share = (2/7) * (5/6) = 10/42. M's new share = (5/7) * (5/6) = 25/42. K's share = 1/6 = 7/42. The ratio is 10:25:7.

Multiple choice book keeping and accountancy admission of a new partner accounting treatment of admission of a partner partnership accounts: admission of a new partner reconstitution of partnership

Capital accounts of partner A & B are Rs 30,000 & Rs 16,000, They admitted C on the following conditions.
  - That C brings in Rs 10,000 as his capital for 1/4th share in profits.
  - That a goodwill account be raised in the books of the firm at Rs 15,000.
  - Profit on revaluation of assets & liabilities was Rs. 2,100
  - That the capital accounts of the partners be readjusted on the basis of their profit sharing ratio and any additional amount be debited or credited to their current accounts.
  - General reserve appearing in balance sheet at the time of admission of C was Rs 6,000.
To give effect to above current account of A & B will be ......... 

  1. Debited by Rs 25,400 & Rs 13,700

  2. Credited by Rs 20,500 & Rs 10,300

  3. Credited by Rs 26,550 & Rs 12,550

  4. Debited by Rs 20,500 & Rs 10,300
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This is a duplicate of question 400702. The calculation involves adjusting capital accounts for revaluation, reserves, and goodwill, then balancing against the new profit sharing ratio.

Multiple choice book keeping and accountancy admission of a new partner accounting treatment of admission of a partner partnership accounts: admission of a new partner reconstitution of partnership

A and B are partners of firm sharing profits in the ratio of 3:2 C was admitted for the 1/5th share of profit machinery would be appreciated by 105 ( book value Rs 80,000) and the building would be depreciated by 205 (Rs 2,00,000) unrecorded debtors of Rs. 1,250 would be bought to book and Creditor of Rs. 27,500 died and need not to pay anything . what will be the profit/loss in revaluation?

  1. Loss Rs. 28,000

  2. Loss Rs 40,000

  3. Profit Rs 28,000

  4. Profits Rs 40,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice book keeping and accountancy admission of a new partner accounting treatment of admission of a partner partnership accounts: admission of a new partner reconstitution of partnership

Amit and anil are partners sharing profits in the ratio of 5:3 with a capital of Rs. 2,50,000 and Rs. 200,000. Atul was admitted and would pay Rs. 10,000 as capital and Rs. 16,000 as goodwill for 1/5th profit find the balance of capital accounts after the admission of atul ________.

  1. 2,60,00:2,06,000:50,000

  2. 2,20,500:1,82,000:66,000

  3. 2,92,500:2,25,500:50,000

  4. 2,823,500:2,19,500:66,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

After admitting Atul, the capital accounts are updated by adding the new capital brought in and distributing the goodwill among the old partners in their sacrificing ratio (5:3).

Multiple choice elements of book keeping and accountancy accounting from incomplete records ascertaining profit or loss from incomplete records meaning and preparation of statement of profit meaning of incomplete records, reasons for incompleteness and its limitations preparation of final accounts from incomplete records preparation of statement of affairs introduction to single entry system and difference between single entry and double entry system meaning and featuresof incomplete records

If opening capital is $Rs.80,000$, closing capital is $Rs.1,80,000$, withdrawals are $Rs.10,000$ and additional capital brought in the business is Rs. $20,000$, then the profit will be________.

  1. $Rs.90,000$
  2. $Rs.1,10,000$
  3. $Rs.70,000$
  4. $Rs.1,50,000$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

        Closing Capital                         1,80,000

Add: Drawings                                    10,000
Less: Additional Capital                   (20,000)
_________________             __
 Adjusted Capital                              1,70,000 
Less: Opening Capital                      (80,000)
______________             _____
Profit during the year                        90,000