PPSAVANI CFE

Date : 15-10-2024 STD 12 Commerce Accountancy Total Marks : 80

Accounting for Partnership Firms

SECTION A

* Choose The Right Answer From The Given Options.[1 Marks Each] [17]

1. XYZ Associates a partnership firm intends to apply a part of its property for
benevolent purpose.Is it permissible under the partnership Act.
a. Not at all
b. Permissible without any restriction
c. Yes subject to contract between the partners to this effect
d. Yes with the approval of Registrar of firms
2. Registration of a partnership firm can be affected _______.
a. Just after commencement of business
b. As soon as partnership deed is ready
c. Any time during continuation of the business
d. Within six months of entering into an agreement
3. Which Act of Companies incorporated the 'Principle of Limited Liability'?
a. The Companies Act, 1850
b. The Companies Act, 1857
c. The Companies Act, 1936
d. The Companies Act, 1956
4. Indian Partnership Act, 1932 is substantially based on __________.
a. Hindu law.
b. English law.
c. Muslim law.
d. Company law.
5. Partnership Act, 1932 is not applicable to which of these type of prtnerships
______________.
a. At will
b. Fixed term
c. Particular
d. Limited liabilty
6. When goodwill is to be after the admission of a partner in which ratio it is
transferred to capital account of the partners?
a. Sacrificing ratio

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 b. Equally
c. New profit sharing ratio
d. Old profit sharing ratio
7. The capitalised value attached to the differential profit capacity of a business
is called _________.
a. Asset
b. Goodwill
c. Trademark
d. Copyright
8. XYZ are three partners. On death of X, his son A is admitted into the
partnership. This is a case of __________.
a. Dissolution of firm
b. Dissolution of partnership
c. Extension of partnership
d. Reformation of partnership
9. what are accumulated profits?
a. Profits not transferred to profit & loss
b. Profits not transferred to Reserve
c. Profits not transferred to capital accounts
d. Profits not transferred to cash accounts
10. ___________ cannot be admitted as a partner in a firm.
a. Miner
b. Person of unsound mind
c. Widower
d. Bachelor
11. Piyush, Karan and Aarush were partners sharing profits in the ratio of 5 : 3 :

2. Piyush retired on 31st March, 2019. Balance in this Capital Account after all
adjustments except goodwill was ₹ 7,10,000, but he was paid ₹ 8,00,000
including his share of goodwill. The amount credited to his Capital Account on
account of goodwill was:
a. ₹ 45,000
b. ₹ 27,000
c. ₹ 90,000
d. ₹ 18,000
12. Abhishek, Rajat and Vivek are partners sharing profits in the ratio of 5 : 3 : 2.
If Vivek retires, the New Profit Sharing Ratio between Abhishek and Rajat will
be:

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 a. 3 : 2.
b. 5 : 3.
c. 5 : 2.
d. None of these.
13. At the dime of firm’s dissolution, Balance of General Reserve shown in the
Balance Sheet is credited to :
a. Realisation Account
b. Creditors’ Account
c. Partners’ Capital Accounts
d. Profit & Loss Account
14. Tick the Correct Answer. On dissolution of a firm, bank overdraft is
transferred to:
a. Cash Account.
b. Bank Account.
c. Realisation Aaccount.
d. Partner’s capital Account.
15. On dissolution of a firm, amount realised from an unrecorded asset is
credited to:
a. Partners’ Capital Accounts
b. Cash Account
c. Realisation Account
d. Revaluation Account
16. Cash balance shown in the Balance Sheet is shown on dissolution of firm in :
a. Realisation Account
b. Cash Account
c. Capital Account
d. None of the Account
17. On dissolution of a firm, a partner paid 1,500 Rs. for firm’s realisation
expenses. Which account will be Credited?
a. Realisation Account
b. Profit & Loss A/c
c. Cash Account
d. Capital Account of the Partner

* MCQ [3]

18. Assertion (A) :

At the time of admission of a partner. Goodwill appearing in the existing balance

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 sheet, will be Debited to old partners capital/current account in their old profit
sharing ratio.
Reason (R):
Premium for goodwill brought by new partner will be credited to only sacrificing
partners capital/current account.
Choose the Correct Option from the following:
(A) Assertion and Reason both are correct and Reason is the correct explanation of
assertion
(B) Assertion and Reason both are correct but Reason is not correct explanation of
assertion
(C) Both Assertion and Reason are not correct
(D) Only Assertion is correct

19. Assertion (A) :

A new partner can be admitted, if it is agreed in the partnership deed but in the
absence of partnership deed, a new partner can be admitted only if all the
partners agree to admit that partner.
Reason (R) :
Section 31 of the Indian Partnership Act, 1932 will be applicable.
Choose the Correct Option from the following:
(A) Assertion and Reason both are correct in view of Introduction of a new partner
(B) Assertion and Reason both are correct but Reason is not correct explanation of
assertion
(C) Both Assertion and Reason are not correct
(D) Only Assertion is correct

20. Assertion (A):

At the time of admission of a new partner, if any outstanding liability (given in
balance sheet) is paid by the firm, it will not be shown in the Revaluation
Account.
Reason (R) :
Revaluation Account is prepared to revalue the assets and to reassess the
liabilities.
Choose the Correct Option from the following:
(A) Assertion and Reason both are correct and Reason is the correct explanation of
assertion
(B) Assertion and Reason both are correct but Reason is not correct explanation of
assertion
(C) Both Assertion and Reason are not correct
(D) Only Assertion is correct

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 [18]
* questions of 3 marks each.

21. State any three circumstances other than (i) admission of a new partner; (ii)
retirement of a partner and (iii) death of a partner, when need for valuation
of goodwill of a firm may arise.
22. Pass entries in the firm's journal for the following on admission of a partner:
i. Machinery be depreciated by ₹ 16,000 and Building be appreciated
by ₹₹ 40,000.
ii. A provision be created for Doubtful Debts @ 5% of Debtors amounting
to ₹ 80,000.
iii. Provision for warranty claims be increased by ₹ 12,000.
23. A and B are partners sharing profits in the ratio of 3 : 2. C is admitted as a
partner. The new profit-sharing ratio among A, B and C is 4 : 3 : 2. Find out
the sacrificing ratio?
24. Bhuwan and Shivam were partners in a firm sharing profits in the ratio of 3 :
2. Their capitals were ₹ 50,000 and ₹ 75,000 respectively. They admitted Atul
on 1st April, 2018 as a new partner for 1

4
th share in the future profits. Atul
brought ₹ 75,000 as his capital. Calculate the value of goodwill of the firm
and record necessary journal entries for the above transactions on Atul's
admission.
25. Why should assets and liabilities be revalued on the reconstitution of a
partnership firm? Explain briefly giving examples.
26. X, Y and Z are partners in a firm sharing profits in 3 : 2 : 1 the firm closes its
books on 31st march evers year. Y died on 12th june, 2018 on. Y's death the
goodwill of the firm was valued at ₹ 1,20,000. Y's share in the profits of the
firm till the date of death from the last balance sheet was to be calculeted on
the basis of previous year's profit which was ₹ 3,00,000 fill in the missing
figures in the following journal entries:

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 * questions of 4 marks each. [12]

27. (Change in Profit-sharing Ratio and Admission: Treatment of General

Reseroes). X and Y are partners in a firm sharing profits and losses in the
ratio of 5 : 2. On 31st March, 2018, their Balance Sheet showed General.
Reserve of ₹ 3,50,000 on date date! they decided to admit Z as a new
partner and the new profit-sharing ratio will be 5 : 3 : 2. Give necessary
Journal entries in the books of the firm under the following circumstances:
i. When they want to transfer the General Reserve to their Capital
Accounts.
ii. When they don't want to transfer general: reserve to their Capital
Accounts but prefer to record an adjustment entry for the same.
28. Vikas, Gagan and Momita were partners in a firm sharing profits in the ratio
of 2 : 2 : 1. The firm closes its books on 31st March every year. On 30th
September, 2014 Momita died. According to the provisions of partnership
deed the legal representatives of a deceased partner are entitled for the
following in the event of his/her death:
i. Capital as per the last Balance Sheet.
ii. Interest on capital at 6% p.a. till the date of her death.
iii. Her share of profit to the date of death calculated on the basis of
average profits of last four years.
iv. Her share of goodwill to be determined on the basis of three years
purchase of the average profits of last four years. The profits of last
four years were:
Year Profit
₹
2010-2011 30,000
 2011-2012 50,000
2012-2013 40,000
2013-2014 60,000
The balance in Momita’s capital account on 31-3-2014 was ₹ 60,000 and she
had withdrawn ₹ 10,000 till the date of her death. Interest on her drawings
were ₹ 300. Prepare Momita’s Capital Account to be presented to her
executors.
29. Pass necessary journal entries to record the following unrecorded assets and
liabilities in the books of Paras and Priya:
a. There was an old furniture in the firm which had been written off
completely in the books. This was sold for ₹ 3,000.
b. Ashish, an old customer whose account for ₹ 1,000 was written off as
bad in the previous year, paid 60%, of the amount.
c. Paras agreed to takeover the firm's goodwill (not recorded in the
books of the firm), at a valuation of ₹ 30,000.
d. There was an old typewriter which had been written off completely
from the books. It was estimated to realise ₹ 400. It was taken by
Priya at an estimated price/ less 25%.
e. There were 100 shares of ₹ 10 each in Star Limited acquired at a cost
of ₹ 2,000 which had been written off completely from the books.
These shares are valued @ ₹ 6 each and divided among the partners
in their profit sharing ratio.

* questions of 6 marks each. [30]

30. P, Q and R are in a partnership and as at 1st April, 2017 their respective
capitals were: ₹ 40,000, ₹ 30,000 and ₹ 30,000. Q is entitled to a salary of ₹
6,000 and R ₹ 4,000 p.a. payable before division of profits. Interest is allowed
on capital @ 5% p.a. and is not charged on drawings. Of the divisible profits, P
is entitled to 50% of the first ₹ 10,000, Q to 30% and R to 20%, rest of the
profit are shared equally. Profits for the year ended 31st March, 2018, after
debiting partners' salaries but before charging interest on capital was ₹
21,000 and the partners had drawn ₹ 10,000 each on account of salaries,
interest and profit. Prepare Profit and Loss Appropriation Account for the
year ended 31st March, 2018 showing the distribution of profit and the
Capital Accounts of the partners.
31. Om, Ram and Shanti were partners in a firm sharing profits in the ratio of 3 :

2 : 1. On 1st April 2014 their Balance Sheet was as follows:

 On the
above date Hanuman was admitted on the following terms:
i. He will bring ₹ 1,00,000 for his capital and will get 1/10th share in the
profits.
ii. He will bring necessary cash for his share of goodwill premium. The
goodwill of the firm was valued at ₹ 3,00,000.
iii. A liability of ₹ 18,000 will be created against bills receivables
discounted.
iv. The value of stock and furniture will be reduced by 20%.
v. The value of land and building will be increased by 10%.
vi. Capital accounts of the partners will be adjusted on the basis of
Hanuman's capital in their profit sharing ratio by opening current
accounts.
Prepare Revaluation Account and Partners' Capital Accounts.
32. Sanjana and Alok were partners in a firm sharing profits and losses in the

ratio 3 : 2. On 31st March, 2018 their Balance Sheet was as follows:

On
1st April, 2018, they admitted Nidhi as a new partner for 14th14th share in
the profits on the following terms:
 a. Goodwill of the firm was valued at ₹ 4,00,000 and Nidhi brought the
necessary amount in cash for her share of goodwill premium, half of
which was withdrawn by the old partners.
b. Stock was to be increased by 20% and furniture was to be reduced to
90%.
c. Investments were to be valued at ₹ 3,00,000. Alok took over
investments at this value.
d. Nidhi brought ₹ 3,00,000 as her capital and the capitals of Sanjana
and Alok were adjusted in the new profit sharing ratio.
Prepare Revaluation Account, Partners Capital Accounts and the Balance
Sheet of the reconstituted firm on Nidhi’s admission.
33. Sameer, Yasmin and Saloni were partners in a firm sharing profits and losses
in the ratio of 4 : 3 : 3. On 31.3.2016, their Balance Sheet was as follows:

On the
above date, Sameer retired and it was agreed that:
i. Debtors of ₹ 4,000 will be written off as bad debts and a provision of
5% on debtors for bad and doubtful debts will be maintained.
ii. An unrecorded creditor of ₹ 20,000 will be recorded.
iii. Patents will be completely written off and 5% depreciation will be
charged on stock, machinery and building.
iv. Yasmin and Saloni will share future profits in the ratio of 3 : 2.
v. Goodwill of the firm on Sameer’s retirement was valued at ₹ 5,40,000.
Pass necessary journal entries for the above transactions in the books of the
firm on Sameer’s retirement.
34. Pass necessary journal entries on the dissolution of a partnership firm in the
following cases:
i. Dissolution expenses were ₹ 800.
ii. Dissolution expenses ₹ 800 were paid by Prabhu, a partner.
iii. Geeta, a partner, was appointed to look after the dissolution work, for
which she was allowed a remuneration of ₹ 10,000. Geeta agreed to
bear the dissolution expenses. Actual dissolution expenses ₹ 9,500
were paid by Geeta.
iv. Janki, a partner, agreed to look after the dissolution work for a
commission of ₹ 5,000. Janki agreed to bear the dissolution expenses.
Actual dissolution expenses ₹ 5,500 were paid by Mohan, another
partner, on behalf of Janki. 67/1 12
v. A partner, Kavita, agreed to look after the dissolution process for a
commission of ₹ 9,000. She also agreed to bear the dissolution
expenses. Kavita took over furniture of ₹ 9,000 for her commission.
Furniture had already been transferred to realisation account.
vi. A debtor, Ravinder, for ₹ 19,000 agreed to pay the dissolution
expenses which were ₹ 18,000 in full settlement of his debt.
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