Quantitative Aptitude

Partnership

842 Questions
All Capital changes, admission, and withdrawal 249 Compound partnership and time-weighted capital 186 Absolute profit or percentage difference to ratio 126 Simple partnership 100 Working and sleeping partners 79 Retirement and gaining ratio 63 Interest on capital and fixed allowances 39

Partnership Questions

Multiple choice

Ansh and Vansh enter into a joint venture to sell a consignment of biscuits sharing profits and losses equally. Ansh provides biscuits from stock amounting to Rs. 10,000. He pays expenses amounting to Rs. 1,000. Vansh incurs further expenses on carriage Rs. 1,000. He receives cash for sales Rs. 15,000. He also takes over goods to the value of Rs. 2,000. Profit on venture will be

  1. Rs. 3,000

  2. Rs. 5,000

  3. Rs. 6,000

  4. Rs. 3,500
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Total investment: Ansh's goods (Rs. 10,000) + Ansh's expenses (Rs. 1,000) + Vansh's expenses (Rs. 1,000) = Rs. 12,000. Total proceeds: Cash sales (Rs. 15,000) + goods taken by Vansh (Rs. 2,000) = Rs. 17,000. Profit = Rs. 17,000 - Rs. 12,000 = Rs. 5,000. Since profits are shared equally, each partner gets Rs. 2,500, but the question asks for total profit on venture.

Multiple choice

Anny and Bunny enter into a joint venture sharing profit and losses in the ratio 1 : 1. Anny purchased goods costing Rs. 20,000. Bunny sold the goods for Rs. 25,000. Anny is entitled to get 1% commission on purchase and Bunny is entitled to get 5% commission on sales. The profit on venture will be

  1. Rs. 3,550

  2. Rs. 3,600

  3. Rs. 3,400

  4. Rs. 3,800
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Sales = Rs. 25,000. Cost of goods = Rs. 20,000. Anny's commission on purchase = 1% of Rs. 20,000 = Rs. 200. Bunny's commission on sales = 5% of Rs. 25,000 = Rs. 1,250. Total commissions = Rs. 1,450. Profit = Rs. 25,000 - Rs. 20,000 - Rs. 1,450 = Rs. 3,550. Profit is shared equally, but the question asks for total profit on venture.

Multiple choice

Manu and Hanu are partners. Manu contributed Rs. 1,00,000 on April 1 while Hanu contributed Rs. 50,000 on August 1 and Rs. 1, 00,000 on December 1. The profits on March 31 are to be divided in their capital contribution ratio. Calculate profit sharing ratio.

  1. 3 : 2

  2. 2 : 3

  3. 1 : 1

  4. 2 : 1
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This is the correct answer. Capital contribution on monthly basis of Manu = 1,00,000 * 12 = 12, 00,000 while that of Hanu (50,000 * 8 + 1,00,000 * 4) = 8, 00,000. Thus, profit ratio will be 12, 00,000 : 8, 00,000, i.e. 3 : 2.

Multiple choice

In partnership between A, B and C, A's capital is Rs. 5000. If in a profit of Rs. 1000, A's share is Rs. 400 and C's share is Rs. 200, what is B's capital?

  1. Rs. 8000

  2. Rs. 2500

  3. Rs. 5000

  4. Rs. 10,000

  5. Rs. 6000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let B's capital is x and C's capital is y Therefore, A's profit=5000*1000/(5000+x+y) 400=5000*1000/(5000+x+y) ---(i) C's profit=y*1000/(5000+x+y) 200=y*1000/(5000+x+y) -----(ii) (i) /(ii) gives 2=5000/y y=Rs2500 Therefore, x=5,000 It is the correct answer.

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 admitted C as a partner by giving him assurance for his profits not to be less than Rs. 1,00,000 in any year. The profit ratio was decided as 5 : 3 : 2. The profits for the year amounted to Rs. 4,00,000. What will be the share of B?

  1. Rs. 1,12,500

  2. Rs. 1,87,500

  3. Rs. 2,00,000

  4. Rs. 1,10,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

As C is to be given a minimum of Rs.1,00,000, the profit being insufficient, so he will get Rs. 1,00,000 and the rest of Rs. 3,00,000 will be divided among A and B in 5 : 3. Thus, A's share = Rs.1,87,500 B's share = Rs. 1,12,500

Multiple choice

A and B are partners sharing in 3 : 2 having capital of Rs. 50,000 each. C is a new partner who is required to bring his share of capital of Rs. 1,00,000. If the capital of old partners is to be adjusted according to the contribution of C, what amount should be brought by A?

  1. Rs. 30,000

  2. Rs. 50,000

  3. Rs. 3,00,000

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

Total capital of new firm should be 1,00,000 * 3/1, i.e. Rs. 3,00,000 which should be shared by A, B and C according to their ratio. Thus, A should have capital of Rs. 1,20,000 and he should bring 1,20,000 - 50,000, i.e. Rs. 70,000.

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

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

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).