Accounts Test - Chapter 1 and 3

ACCOUNTS TEST – PARTNERSHIP ACCOUNTS Max Marks: 50
Fundamentals of Partnership - MCQs

MCQ EACH QUESTIONS HAS FOUR POSSIBLE ANSWERS CHOOSE THE CORRECT ANSWER:
S (T) Means TRUE Answer
(1) An ordinary partnership business can have:
(a) Not more than 50 partners. (b) Not more than 20 partners.
(c) Any number of partners.
(d) Any number than 2 partners.
(2) A banking partnership business can have:
(a) Not more than 10 partners. (b) Not more than 20 partners.
(c) Not more than 50 partners.
(d) Any number of partners.
(3) In the absence of an agreement profit and loss are divided by partners in the ratio of:
(a) Capital (b) Equally
(c) Time devoted by each partners.
(d) None of these.
(4) In the absence of an agreement, Interest on loan advanced by the partner to the firm is allowed at the rate of:
(a) 6% (b) 5%(c) 12% (d) 9%
(5) Current accounts of the partners should be opened when the capitals are:
(a) Fluctuating(b) Fixed
(c) Either fixed or fluctuating
(d) None of these
(6) Investment in partnership is made by introducing:
(a) Cash(b) None – cash assets
(c) Cash or non – cash, Both
(d) None of these.
(7) Partnership is formed by the partners by:
(a) Written agreement (b) Oral agreement(c) Written or oral (d) None of these
(8) Any partner who investments in the business but does not take active part in the business is:
(a) Secret partner (b) Sleeping partner (c) Active Partner
(d) Nominal partner
(9) The written agreement of partnership is called:
(a) Partnership deed (b) Articles of association
(c) Memorandum of association
(d) Certificate of incorporation
(10) Under fixed capital methods, profit will be credited to:
(a) Capital Account (b) Drawings (c) Current A/c (d) Profit & Loss A/c
(11) Partnership business in Pakistan is government by partnership Act of:
(a) 1913 (b)1932 (c) 1984 (d) 1928
(12) The members of partnership firm are individually called as:
(a) Director (b) Investor(c) Partner (d) Manager
(13) The object of partnership is to:
(a) Earn profit (b) Not to earn profit(c)Welfare of members
(d)None of these
(14) Liability of partners in a partnership business is:
(a)Limited (b) Un-limited (c) Limited & unlimited (d)None of these
(15) Capital of the partners are maintained by:
(a) Fixed capital method.(b)Fluctuating capital methods.
(c) By any two above methods.
(d) None of them.
Question 16. X and Y invested Rs. 20,000 & Rs. 10,000. Interest on capital is allowed @ 6% per annum.
Profits are shared in ratio of 2 : 3. Profits for year ending 11.3.2015 is Rs. 1,500. Show allocation of profits
when partnership deed.
(a) Allows interest on capital & deed is silent on treating interest as charge.
(b) Interest is charge against profit. (4)
Question 17. A, B & C are patterns in a firm sharing profits & losses in ration of 2:3:5. Their fixed capitals
were Rs. 15,00,000, Rs.30,00,000 & Rs. 60,00,000 reactively. For the year ended 31st March 2015, interest
was credited 12% intend of 10%. Pass the necessary adjustment entry. (3)
Change In Profit Sharing Ratio Of Existing Partners- MCQs

Q.1) Which of the following is responsible for the Reconstitution of Partnership?
A. Retirement of an existing partner
B. Change in existing profit sharing ratio
C. Death of a partner
D. All of these
Q.2) What is the meaning of change in the profit sharing ratio:
A. In which all partner including the deceased partner executor partner share future profit and loss
B. Purchase of shares of profit by one partner form another partner
C. In which all partner including the retired partner share future profit and loss
D. In which all partner including the new partner share future profit and loss
Q.3) The circumstances when change in profit sharing ratio is needed:
A. All of these
B. When new partner admitted
C. When existing partner’s decide
D. When existing partner retires
Q.4) On the reconstitution of a firm change in the value of assets is called ___
A. Revaluation of assets
B. Reassessment of assets
C. Devaluation of assets
D. Reassessment of liabilities
Q.5) Any change in the relations of partners without affecting the existing of partnership firm is called
A. Reassessment
B. Retirement
C. Revaluation
D. Reconstitution
Q.6) The partner whose share has increased as a result of change is called
A. Sacrificing partner
B. Sacrificing ratio
C. Gaining partner
D. Gaining ratio
Q.7) What is gaining ratio:
A. In which profit sharing ratio of sacrificing partners increase
B. In which profit sharing ratio of sacrificing partners decrease
C. In which profit sharing ratio of gaining partners increase
D. In which profit sharing ratio of gaining partners decrease
Q.8) How sacrificing ratio is calculated
A. All of these
B. Sacrificing ratio = Old ratio – Gaining ratio
C. Sacrificing ratio = New ratio – Old ratio
D. Sacrificing ratio = Old ratio – New ratio
Q.9) Who is a sacrificing partner :
A. Whose share has decrease as a result of change
B. Whose share has increase as well as decrease as a result of change
C. Whose share has does not get affected as a result of change
D. Whose share has increase as a result of change
Q.10) Reassessment of liabilities means :
A. Only increase in the values of liabilities
B. Change in the values of liabilities
C. Change in the values of assets
D. Only decrease in the values of liabilities
Q.11) Accounting Standard ____ requires goodwill should be recorded in the books of accounts only
when some money or money’s worth is paid for it.
A. 26
B. 23
C. 27
D. 10
Q.12) An account prepared to carry out the scheme of revaluation of assets and reassessment of
liabilities :
A. Devaluation account
B. Memorandum of revaluation
C. Memorandum of valuation
D. Revaluation account
Q.13) Revaluation of assets on the reconstitution of partnership is necessary because their present
value may be different from their _____
A. Market Value
B. Net Value
C. Place Value
D. Book Value
Q.14) What adjustments are required when existing partners decide to change their profit-sharing
ratio:
A. Reserves
B. Accumulated profits
C. Goodwill
D. All of above
Q.15) The purpose of revaluation account is to ascertain the
A. Reassessment
B. None
C. Both A and B
D. Revaluation Profit/Loss
Question 16. X,Y and Z share profits as 5 : 3 : 2. They decide to share their future profits as 4 : 3 : 3 with
effect from April 1, 2019,. On this date the following revaluations have taken place:
Book Value (Rs.) Revised Value (Rs.)
Investments 22,000 25,000
Plant and Machinery 25,000 20,000
Land and Building 40,000 50,000

Outstanding Expenses 5,600 6,000
Sundry Debtors 60,000 50,000
Trade Creditors 70,000 60,000
Pass necessary adjustment entry to be made because of the above changes in the values of assets
and liabilities. However old values will continue in the books. (3)
Ques 17. X and Y are partners in a firm sharing profits in the ratio of 3 : 2. They decided to share
future profits equally. On the date of change in the profit-sharing ratio, the Profit and Loss Account
showed a debit balance of Rs 50,000. Pass the necessary Journal entry for the distribution of the
balance in the Profit and Loss Account immediately before the change in the profit-sharing ratio. (2)
Ques 18 . Anant, Gulab and Khushbu were partners in a firm sharing profits in the ratio of 5 : 3 : 2. From 1st
April, 2014, they decided to share the profits equally. For this purpose, the goodwill of the firm was valued
at 2,40,000.
Pass necessary journal entry for the treatment of goodwill on change in the profit sharing ratio of
Anant, Gulab and Khushbu. (3)
Ques 19. Ram, Shyam and Hari were in partnership sharing profits in the ratio of 3 : 2 : 1. The Balance
Sheet as at 31.3.2013 was as follows : (5)
BALANCE SHEET as at 31.3.2013
Liabilities (Rs) Assets (Rs)
Bills Payable 20,000 Cash 40,000
Creditors 20,000 Bills Receivable 5,000
General Reserve 30,000 Debtors 15,000
Capitals Stock 50,000

Ram 50,000 Furniture 20,000
Shyam 30,000 Machinery 30,000
Hari 25,000 1,05,000 Goodwill 15,000
1,75,000 1,75,000
On 1.4.2013 partners decided to share profits equally. For this purpose it was further agreed that.
1. Goodwill of the firm should be valued at Rs 30,000.
2. Furniture and Machinery is to be revalued at Rs 25,000 and Rs 35,000 respectively.
3. Value of Stock is to be reduced by Rs 4,000.
You are required to give necessary journal entries to give effect to the above arrangement and
prepare Revaluation Account, Partners’ Capital Accounts and Balance Sheet of the firm after
reconstitution.

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ACCOUNTS TEST – PARTNERSHIP ACCOUNTS Max Marks: 50

Fundamentals of Partnership - MCQs

Change In Profit Sharing Ratio Of Existing Partners- MCQs

Book Value (Rs.) Revised Value (Rs.)

Investments 22,000 25,000

Plant and Machinery 25,000 20,000

Land and Building 40,000 50,000

Sundry Debtors 60,000 50,000

Trade Creditors 70,000 60,000

BALANCE SHEET as at 31.3.2013

Liabilities (Rs) Assets (Rs)

Bills Payable 20,000 Cash 40,000

Creditors 20,000 Bills Receivable 5,000

General Reserve 30,000 Debtors 15,000

Capitals Stock 50,000

Shyam 30,000 Machinery 30,000

Hari 25,000 1,05,000 Goodwill 15,000

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