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

Balances of A Band C sharing profits and losses in proportionate to their capitals, stood as follows: Capital Accounts: A Rs. 4,00,000; B Rs. 6,00,000 and C Rs. 4.00,000. A desired to retire from the B and C share the future profits; equally, Goodwill of the entire firm be valued at Rs. 2,80,000 and no Goodwill account being raised is _______.

  1. credit partner's capital account with old profit sharing ratio for Rs. 2,80,000

  2. credit partner's capital account with new profit sharing ratio for Rs. 2,80,000

  3. credit A's account with Rs. 80,000 and debit B's capital account with Rs. 20,000 and C's capital account with Rs. 60,000.

  4. credit partner's capital account with gaining ratio for Rs. 2,80,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Multiple choice

A and B are sharing profits in the ratio of 3: 1. According to their partnership deed, on reconstitution of a firm, "goodwill is to be valued at two and a half years purchase of the average profits of the last three completed years." The profits were: Year I Rs. 20,000, Year II. Rs. 30,000, Year III Rs. 40,000, Year IV Rs. 50,000, Year V Rs. 60,000. C is admitted for 1/5th share in profits at end of Year VI. The amount which 'C' will be required to bring by way of his share of goodwill will be ________.

  1. Rs. 20,000

  2. Rs. 25,000

  3. Rs. 30,000

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice

When $A$ and $B$, sharing profits and losses in the ratio of $3:2$, admit $C$ as a partner giving him $1/5^{th}$ share of profits. This will given by $A$ and $B$ __________ .

  1. Equally

  2. In the ratio of their profits.

  3. In the ratio of their capitals.

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

C's 1/5 share must be surrendered by A and B in the same ratio as their existing profit-sharing ratio. Since A and B share profits in the ratio 3:2, they contribute to C's share in that same ratio, which is the ratio of their profits.

Multiple choice

Verma and Sharma are partners in a firm sharing profits and losses in the ratio of $5:3$. They admitted Ghosh as a new partner for $1/5^{th}$ share of profits. Ghosh is to bring in $Rs. 20,000$ as capital and $Rs. 4,000$ as his share of goodwill premium. Give the necessary Journal entries, when goodwill is paid privately.

  1. Cash A/c             Dr.      4000     To Goodwill A/c               4000

  2. Goodwill A/c      Dr.       4000      To Cash A/c                    4000

  3. Goodwill  A/c             Dr.      4000           To Verma's Caital A/c      2500           To Sharma's Capital A/c  1500

  4. No entry is required.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When goodwill is paid privately by a new partner, it does not pass through the firm's books. Therefore, no journal entry is required in the firm's books for the premium for goodwill.

Multiple choice

Ramesh and Suresh are partners sharing profits in the firm in the ratio of 2 : 3 Goodwill appears in the books of firm at Rs 10,000. Rahim joins the firm for 1/5 share of profits. His share of Goodwill is estimated to be Rs 15,000. The old partners account will be credited with Goodwill by:

  1. Rs 50,000

  2. Rs 40,000

  3. Rs 75,000

  4. Rs 65,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Rahim brings 15,000 for 1/5 share, implying the total firm goodwill is 75,000. Since the existing goodwill is 10,000, the adjustment for the new partner's share relative to the old partners' ratio (2:3) is calculated based on the premium brought in. The total credit to old partners is the value of the goodwill brought by the new partner.

Multiple choice

The capital of B and D are Rs,60,000 and Rs.30,000 respectively with the profit sharing ratio 3 : 1.The new ratio , admissible after 01.04.2006 is 5 : 3. The goodwill is valued Rs.40,000 as on that date. Amount payable by a gaining partner to a scarifying partner will be (without opening Goodwill A/c) _____________.

  1. B will pay to D Rs.5,000

  2. D will pay to B Rs.5,000

  3. B will pay to D Rs.40,000

  4. D will pay to B Rs.40,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Old ratio B:D = 3:1. New ratio B:D = 5:3. B's sacrifice = 3/4 - 5/8 = 6/8 - 5/8 = 1/8. D's gain = 3/8 - 1/4 = 3/8 - 2/8 = 1/8. Goodwill = 40,000. D pays B = 1/8 * 40,000 = 5,000.

Multiple choice

A and B were partners in a joint venture sharing profits and losses in the proportion of 4/5th and l/5th respectively. A supplies goods to the value ofRs. 55,000 and incurs expenses amounting to Rs. 400, B supplies goods to the Value of Rs. 14,500 and his expenses amount to Rs. 300. B sells goods On behalf of the joint venture and realizes Rs. 92,000. B is entitled to a commission of 5 per cent of on sales. What will be the profit on venture ?

  1. Rs. 17,200

  2. Rs. 17,000

  3. Rs. 18,000

  4. Rs. 18,200
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Total costs = 55000 + 400 + 14500 + 300 = 70200. Sales = 92000. Commission = 5% of 92000 = 4600. Profit = Sales - Costs - Commission = 92000 - 70200 - 4600 = 17200.

Multiple choice

Deepak, Farukh and Lilly were partners in a firm sharing profits in the ratio of $3 : 2 : 1$. On $28.2.2015$ Farukh retired from the firm. On Farukh's retirement there was a balance of $Rs 12,000$ in Workmen's Compensation Reserve which was no more required. On Farukh's retirement this amount will be:

  1. Debited to the capital accounts of the partners in their profit sharing ratio.

  2. Credited to the capital accounts of the partners in their profit sharing ratio.

  3. Credited to the capital accounts of Deepak and Lilly in their profit sharing ratio.

  4. Credited to the capital account of Farukh.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Workmen's Compensation Reserve is a liability created out of profits. Upon retirement, any unutilized balance in this reserve is distributed among all partners in their old profit-sharing ratio.

Multiple choice

A, B and C are partners sharing profits in the ratio of 3 : 2 : 3, their capitals on 30th June, 2014 are A Rs. 10,000, B Rs. 5,000 and C Rs. 6,000 (Dr.). C becomes insolvent and loss due to his insolvency will be shared by A and B in:

  1. equal ratio

  2. the ratio of 3 : 2

  3. the ratio of 2 : 1

  4. the ratio of 1 : 2
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to the Garner vs Murray rule, solvent partners bear the loss of an insolvent partner in their capital ratio. The capital ratio of A and B is 10000:5000, which simplifies to 2:1.

Multiple choice

A, B and C are partners in a business sharing in the ratio of 5 : 3 : 2. B retires from the firm and his share was taken up by A and C in the ratio of 2 : 1. What is the new profit sharing ratio of the partners?

  1. 5 : 2

  2. 4 : 3

  3. 7 : 3

  4. 6 : 5
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

B's share of 3/10 is divided between A and C in a 2:1 ratio. A gets (2/3) * (3/10) = 2/10, and C gets (1/3) * (3/10) = 1/10. New share for A = 5/10 + 2/10 = 7/10; new share for C = 2/10 + 1/10 = 3/10. The new ratio is 7:3.

Multiple choice

Nikita & Riya are partners in 'cake it' firm. they admited komal as new partner with the guarantee of Rs.50,000 profit. the firm earned profit of Rs.2,00,000. profit sharing ratio of Nikita,Riya & Komal is 3:5:2. state the amount of Komal's profit____________.

  1. Rs.10,000

  2. Rs.40,000

  3. Rs.50,000

  4. Rs.20,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Komal's share is 2/10 of the total profit. Total profit = 2,00,000. Komal's share = 2/10 * 2,00,000 = 40,000. However, she is guaranteed 50,000. Since 40,000 < 50,000, the firm must pay her the guaranteed amount of 50,000.

Multiple choice

X,Y and Z are three partners in a firm. They are sharing profit and loss in the ratio of 2:2:1. Y retires from the firm on 31st March. The firm decided not to raise goodwill A/c in the books of a/c. What entry will be made for the treatment of goodwill at the time of retirement of Y?

  1. Debit X and Z ,Credit Y (for share of Y in the gaining ratio)

  2. Goodwill A/c Dr, Credit Y's Capital A/c

  3. Goodwill A/c Dr,Credit X,Y and Z Capital A/c

  4. Goodwill A/c Dr. Credit X and Z A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When a partner retires and goodwill is not raised, the retiring partner's share of goodwill is adjusted by debiting the remaining partners in their gaining ratio and crediting the retiring partner's capital account.

Multiple choice

A,B and C are three partner sharing profit and loss 3:2:1 A dies on 30th June, 2012, If the total profit for the year ending 31st march ,2013 amounted to Rs. 30,000. What would be the share of profit to be credited to A's A/c ?

  1. Rs.3750

  2. Rs.5000

  3. Rs.8000

  4. Rs.5500
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A's profit share is 3/6 of the annual profit, since the partners share profits in the ratio 3:2:1. A was entitled to profit for three months, so the amount is 30000 × 3/6 × 3/12 = Rs. 3750.

Multiple choice

X and Y are sharing profits in the ratio of 2: 1. They admitted Z into the firm with 1/4 shares in profits for which he brings 15,000 as his share of capital. The partners decide to have their capitals according to the new profit sharing ratio. As a result, the adjusted capital of Y will be:

  1. 10,000

  2. 15,000

  3. 16,000

  4. 24,000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Z's share = 1/4, capital = 15,000. Total capital = 15,000 * 4 = 60,000. Remaining share = 3/4. X and Y share in 2:1. X's capital = 60,000 * (3/4) * (2/3) = 30,000. Y's capital = 60,000 * (3/4) * (1/3) = 15,000.