Tag: accounting treatment in case of retirement of a partner

Quizzes (0) Questions (45)

Questions Related to accounting treatment in case of retirement of a partner

Multiple choice book keeping and accountancy accounting for retirement and death of partner reconstitution of partnership (retirement of partner) accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

R, J & D are the partners sharing profits in the ratio $7 : 5 : 5$. D died on $30$th June $2015$. Profit for the accounting year $2014-2015$ was $Rs.24,000$. How much share in profits for the period $1st$ April, $2015$ to $30$th June, $2015$ will be credited to D's A/c?

  1. $Rs.6,000$

  2. $Rs.1,500$

  3. $Rs.4,500$

  4. $Rs.2,000$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Profit of the accounting year 2014 - 2015 = Rs. 24000

Profit till 30th june = Rs.24000 * (3/12) = 6000
Distribution of profit among partners on the date of the death of D
R = 6000 * (7/16) = 2625
J = 6000 * (5/16) = 1875
D = 6000 * (4/16) = 1500

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

In the absence of proper agreement, representative of the deceased partner is entitled to the dead partner's share in ____________.

  1. Profits till date, good will, joint life policy, share in revalued assets and liabilities.

  2. Capital, good will, joint life policy, interest on capital, share in revalued assets and liabilities.

  3. Capital, profits till date, good will, interest on capital, share in revalued assets and liabilities.

  4. Capital, profits till date, good will, joint life policy, share in revalued assets and liabilities.
Reveal answer Fill a bubble to check yourself
B Correct answer
Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

A partner retires but the business is still being carried on 

  1. Profit sharing between the remaining partners will remain same

  2. Share proportion remains same

  3. Share proportion changes

  4. Both a & c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a partner retires, the remaining partners' profit-sharing ratio must change to account for the redistribution of the retiring partner's share.

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

Choose the correct answers from the alternatives given.
Public notice of retirement must be given ________. 

  1. only by the retiring partner only

  2. only by any partner other than retiring partner

  3. by retiring partner or any of the other partners

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

If a partner retires, without giving public notice, he  continues to be liable as a partner by holding out. If a Dormant partner retires without giving any public notice, he cannot be held liable as a partner by holding out. If no notice of retirement of a partner is given to the third parties and, if they continue to supply goods or funds to the reconstituted firm, they can either hold th old firm or the new firm liable.

Public notice regarding the retirement of the partner may be given by the retired partner or by other partner of the reconstituted firm as per section 32 (4)  of the Indian Partnership Act, 1932.

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

Choose the correct answers from the alternatives given.
A partner may retire from an existing firm ________. 

  1. with consent of all partners

  2. as per express agreement

  3. by written notice in partnership at will

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A partner can retire with the consent of all partners, per an express agreement, or by giving notice if the partnership is at will.

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

Choose the correct answers from the alternatives given.
In case of death of a partner ________. 

  1. the firm is dissolved unless otherwise agreed

  2. the estate of deceased partner is liable for any act of the firm after the date of his death if no public notice is given

  3. both (A) & (B)

  4. none of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
A partnership firm can be dissolved on happening of certain contingencies. Such contingencies are made clear in section 42, which laid down that subject to contract between the partners, a firm is dissolved
1. if constituted for a fixed term, by the expiry of that term;
2. if constituted to carry out one or more adventures or undertakings, by the completion thereof;
3. by the death of a partner; and
4. by the adjudication of a partner as an insolvent.
However, it can be provided in the partnership agreement that the firm will not be dissolved in any of the circumstances mentioned above and if such provision is made in the agreement that is considered valid.
Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

Choose the correct answers from the alternatives given.
A partner can retire on __________. 

  1. reaching the age of superannuation

  2. on the balance in the capital account reaching a certain amount

  3. in accordance with the Partnership Deed

  4. on the condition of his nominee becoming a partner
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In accordance with the Partnership Deed, a partner is said to retire when other partners continue to carry on the partnership business and that partner who retires ceases to be a partner. There are three modes of retirement of a partner, which are as follows:

1. Any partner may retire at any time with the consent of all partners.
2. When the partnership deed expressly provides for the retirement of a partner; a partner may retire according to the terms of agreement between the partners.
3. When the partnership is at will, by giving notice in writing to all the other partners of his intention to retire.

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

Choose the correct answers from the alternatives given.
In case of a partnership at will, a partner may retire by giving ________. 

  1. an oral notice to that effect to any of the working partners

  2. an oral notice to that effect to all other partners

  3. a written notice to that effect to all other partners

  4. a written notice to that effect to any of the working partners

  5. a written notice to that effect to the registrar of firms
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In a partnership, a partner may retire: With the consent of all the partners, In accordance with an express agreement by the partners, or. The partnership is at will, by giving notice in writing to all the other partners of his intention to retire.

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

Choose the correct answers from the alternatives given.
The heir of the deceased partner _______. 

  1. has a right to become a partner in the firm of the deceased partner

  2. does not have a right to become a partner in the firm of the deceased partner

  3. can become a partner in the firm of the deceased partner only if the surviving partners give their consent in this regard

  4. both (b) & (C)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The heir of a deceased partner does not have an automatic right to become a partner; they can only join if the surviving partners consent.

Multiple choice book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

A,B and C ate three partners in a partnership firm sharing profit and loss equally. C retires from the firm on 31st March.His share of profit is purchased by A and B in the ratio of 2:1,If  at the time of retirement of the value of the goodwill of the firm is valued at Rs.54,000, and the partners decides to pay goodwill to the retiring partner, what will be accounting treatment? 

  1. None of the above

  2. A A/c Dr by Rs.30,000, B A/c Dr by Rs.24,000,C's A/c credit by Rs.54,000

  3. A A/c Dr by Rs.9,000, B A/c Dr by Rs.9,000,C's A/c credit by Rs.18,000

  4. <span>A A/c Dr by Rs.18,000, B A/c Dr by Rs.24,000,C's A/c credit by Rs.34,000</span>
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

gaining ratio = new ratio-old ratio 

                       A =2/3 -1/3=1/3
                        B =1/3-1/3 =0
                   A partner is gaining partner 
goodwill of firm =54000
B's share of goodwill=54000*1/3=18000