MCQs for Accountancy Class 12 with Answers Chapter 4 Reconstitution of a Partnership Firm Retirement/Death of a Partner

Students of class 12 Accountancy should refer to MCQ Questions Class 12 Accountancy Reconstitution of a Partnership Firm Retirement/Death of a Partner with answers provided here which is an important chapter in Class 12 Accountancy NCERT textbook. These Multiple Choice Questions have been prepared based on the latest CBSE and NCERT syllabus and examination guidelines for Class 12 Accounts. The following MCQs can help you to practice and get better marks in the upcoming class 12 accountancy examination

Question: Gaining Ratio’ means :
(A) Old Ratio – New Ratio
(B) New Ratio – Old Ratio
(C) Old Ratio – Sacrificing Ratio
(D) New Ratio – Sacrificing Ratio

Answer

B

Question. In the absence of any information regarding the acquisition of share in profit of the retiring / deceased partner by the remaining partners. It is assumed that they will acquires his/her shares :
(a) Old Profit Sharing ratio
(b) New Profit Sharing ratio
(c) Equal Ratio
(d) None of these

Answer

(a) Old Profit Sharing ratio.

Question An account operated to ascertain the loss or gain at the time of death of a Partner is called
(a) Realisation Account
(b) Executors Account
(c) Revaluation Account
(d) Deceased Partners capital account

Answer

C

Question: On retirement of a partner, goodwill will be credited to the Capital Account of:
(A) Retiring Partner
(B) Remaining Partners
(C) All Partners
(D) None of the Above

Answer

A

Question: P, Q and R are partners sharing profits in the ratio of 5 : 4 : 3. Q retires and P and R decide to share future profits equally. Gaining Ratio will be :
(A) 5 : 3
(B) 1 : 1
(C) 1 : 3
(D) 3 : 1

Answer

C

Question  A, B and C are partners in a firm sharing profits and losses in the ratio of 2:2:1. On March, 31, 2018 C died. Accounts are closed on December 31st every year. The sales for the year 2017 was Rs. 6,00,000 and the profits were Rs. 60,000. The sales for the period for the period January 1, 2018 to March 31st 2018 were Rs.2,00,000. The share of deceased Partner in the current year’s profit on the basis of sales is
(a) Rs.20,000
(b) Rs. 8,000
(c) Rs. 3,000
(d) Rs. 4,000

Answer

D

Question.. On retirement / death of a partner, the retiring / deceased Partner’s capital account will be credited with:
(a) his / her share of goodwill
(b) Goodwill of the firm
(c) Shares of goodwill of remaining Partners
(d) None of these

Answer

(a) his / her share of goodwill.

Question: A, B and C share profits and losses of the firm equally. B retires from business and his share is purchased by A and C in the ratio of 2 : 3. New profit sharing ratio between A and C respectively would be :
(A) 01 : 01
(B) 02 : 02
(C) 07 : 08
(D) 03 : 05

Answer

C

Question: P, Q and R are partners sharing profits in the ratio of 4 : 3 : 2. Q retires and his share was taken up by P and R in the ratio 3 : 2. New profit sharing ratio will be :
(A) 16 : 29
(B) 29 : 16
(C) 3 : 2
(D) 2 : 3

Answer

Question. A, B and C are Partners Sharing Profit in the ratio of 2 : 2 : 1. C retired. The new Profit Sharing ratio between A and B will be :
(a) 2 : 1
(b) 1 : 1
(c) 3 : 1
(d) 4 : 1 A

Answer

(b) 1 : 1

Question: A, B and C are partners sharing profit or loss in the ratio of 2 : 3 : 4. A retires and after A’s retirement B and C agreed to share profit or loss in the ratio of 3 : 4 in future. Their gaining ratio will be :
(A) 2 : 3
(B) 4 : 3
(C) 3 : 4
(D) 1 : 1

Answer

C

Question  A, B and C were partners sharing profits and losses in the ratio of 2:2:1. Books are closed on 31st March every year. C died on November 5, 2018. Under the Partnership deed the executors of the deceased partner are entitled to his share of profit to the date of death calculated on the basis of last year’s profit. Profit for the year ended 31st March, 2018 was Rs. 2,14,000. C’s share of profit will be
(a) Rs.28,000
(b) Rs.32,000
(c) Rs.28,800
(d) Rs.48,000

Answer

C

Question: X, Y and Z were partners in a firm sharing profits in the ratio of 3 : 2 : 1. X retired and the new profit sharing ratio between Yand Z will be 5 : 4. On Xs retirement the goodwill of the firm was valued at ₹54,000. Journal entry will be :
(A) Y’s Capital A/c Dr. 24,000 Z’s Capital A/c Dr. 30,000 To X’s Capital A/c 54,000
(B) Y’s Capital A/c Dr. 15,000 Z’s Capital A/c Dr. 12,000 To X’s Capital A/c 27,000
(C) Y’s Capital A/c Dr. 12,000 Z’s Capital A/c Dr. 15,000 To X’s Capital A/c 27,000
(D) X’s Capital A/c Dr. 27,000 To Y’s Capital A/c 12,000 To Z’s Capital A/c 15,000

Answer

C

Question. The old profit sharing ratio among Rajendra, Satish and Tejpal were 2 : 2 : 1. The new profit sharing ratio after Satish’s retirement is 3 : 2. The gaining ratio is :
(a) 3 : 2
(b) 2 : 1
(c) 1 : 1
(d) 2 : 2 A

Answer

(c) 1 : 1

Question: P, Q and R were partners sharing profits in the ratio of their Capital ‘ contribution which were ₹6,00,000; ₹4,00,000 and ₹5,00,000 respectively. Their books are closed on 31st March every year. P dies on 24th August, 2018. Under the partnership deed, deceased partner is entitled to his share of profit/loss to the date of death based on the average profits of preceding three years. Profits were 2015 ₹50,000; 2016 ₹1,20,000 (Loss); 2017 ₹30,000 and 2018 ₹60,000. P’s share of profit/loss will be :
(A) ₹3,200
(B) ₹6,400
(C) ₹12,000
(D) ₹4,800

Answer

D

Question  On death of a Partner, the remaining partner(s) who have gained due to change in profit sharing ratio should compensate the
(a) Deceased partner only
(b)  Remaining partners (who have sacrificed) as well as deceased partner
(c) Remaining partners only (who have sacrificed)
(d) None of the above

Answer

B

Question.. On the death of a partner, his share in the profits of the firm till the date of his death is transferred to the :
(a) Debit of Profit & Loss Account.
(b) Credit of Profit & Loss Account.
(c) Debit of Profit & Loss Suspense Account.
(d) Credit of Profit & Loss Suspense Account.

Answer

(c) Debit of the Profit and Loss Suspense Account 

Question: A, B and C are partners sharing profits in the ratio of 5 : 2 : 1. If the new ratio on the retirement of A is 3 : 2, what will be the gaining ratio?
(A) 11: 14
(B) 3 : 2
(C) 2 : 3
(D) 14:11

Answer

D

Question: What treatment is made of accumulated profits and losses on the retirement of a partner?
(A) Credited to all partner’s capital accounts in old ratio.
(B) Debited to all partner’s capital accounts in old ratio.
(C) Credited to remaining partner’s capital accounts in new ratio.
(D) Credited to remaining partner’s capital accounts in gaining ratio.

Answer

A

Question  Which account is opened to transfer deceased  partner’s  share of profit to his capital account
(a) P&L Adjustment account
(b) P&L Appropriation account
(c) P&L Suspense account
(d) None of the above

Answer

C

Question.. According to the Partnership Act, 1932, the interest payable to the deceased partner on the amount left by him will be :
(a) 6% p.a.
(b) 10% p.a.
(c) 12% p.a.
(d) 16% p.a. A

Answer

(a) 6% p.a.

Question: Retiring partner is compensated for parting with the firm’s future profits in favour of remaining partners. The remaining partners contribute to such compensation amount in
A) Gaining Ratio
B) Capital Ratio
C) Sacrificing Ratio
D) Profit-Sharing Ratio

Answer

A

Question: A, B, and C are partners in a company sharing profit and loss in the ratio of 2:2:2. On March 31, 2018, C died. Accounts are closed on December 31st every year. The sale for the year 2017 was ₹6,00,000 and profits were ₹60,000. The sales for the period from Jan 1, 2018, to March 31, 2018, were ₹2,00,000. The share of the deceased partner in the current year’s profits on the basis of sale is
A) ₹20,000
B) ₹8,000
C) ₹3,000
D) ₹4,000

Answer

D

Question  Kiran, umesh and Aditya were in Partnership firm. Suddenly on October 31,2018, Kiran died. Amount payable to her on that date amounted to Rs. 1,05,000. Rs. 5000 was paid immediately and balance was paid in 4 equal annual instalments along with interest @ 12% p.a.starting from 31st October 2019. Calculate the interest due as on 31st March, 2019. Financial year was followed as accounting year by the firm.
(a) Rs. 2,500
(b) Rs.3,000
(c) Rs.4,500
(d) Rs. 3,750 

Answer

C

Question.. 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 :
(a) 3 : 2
(b) 5 : 3
(c) 5 : 2
(d) None of these

Answer

(b) 5 : 3

Question: A, B, and C share profits and losses of the company equally. B retires form business and his share is purchased by A and C in the ratio of 2:3. New profit sharing ratio between A and C respectively would be
A) 1:1
B) 2:2
C) 7:8
D) 3:5

Answer

C

Question: On retirement of a partner, his capital account will be credited with
A) His/her share of goodwill.
B) His share in reserves and surplus.
C) His share of profit in revaluation
D) All of the above

Answer

D

Question. At the time of retirement of a partner, profit on revaluation will be credited to the capital accounts of :
(a) Retiring Partner
(b) All partners, in the old profit sharing ratio
(c) The remaining partners in their old profit sharing ratio
(d) The remaining partners in their new profit sharing ratio.

Answer

(d) All partners, in the old profit sharing ratio.

Question  Karan, Aman and Girish were Partners with capitals of Rs. 3,00,000’; Rs.2,50,000 and Rs.2,00,000 respectively as on 31st March, 2018. Aman died, partners decided to pay the entire amount to Aman’s Executor but they only had Rs.50,000 cash and rest of the amount was to be brought in by Karan and Girish in such a way that their future capital will be equal. Calculate the amount to be brought in by Karan and Girish.
(a) Rs.50,000 by Karan and Rs.1,50,000 by Girish
(b) Rs.50,000 by Girish and Rs.1,50,000 by Karan
(c) Rs.25,000 by Karan and Rs.1,25,000 by Girish
(d) Rs.25,000 by Girish and Rs.1,25,000 by Karan

Answer

A

Question: According to the partnership Act, (Sec. 37) the interest payable to the deceased partner on the amount left by him will be:
A) 6% p.a.
B) 10% p.a.
C) The Bank rate.
D) None of the above.

Answer

A

Question: On retirement, the value of goodwill is credited to:
A) All partners.
B) Continuing partners.
C) Retiring partner.
D) None of the above.

Answer

C

Question. Retiring Partner’s share of goodwill is debited to remaining partners in their :
(a) Capital Ratio
(b) Gaining Ratio
(c) New Profit Sharing Ratio
(d) None of these 

Answer

(b) Gaining Ratio.

Question: At the time of retirement of a partner, profit on revaluation will be credited to:
A)Capital Account of retiring partner
B)Capital Account of remaining partners
C)Capital Account of all partners

Answer

C

Question: A, B and C are partners sharing profits in the ratio of 5 : 2 : 1. If the new ratio on the retirement of A is 3 :2, what will be the gaining ratio?
(A) 11: 14
(B) 3 : 2
(C) 2 : 3
(D) 14 : 11

Answer

D

Question. Gobind, Hari and Pratap are partners. On retirement of Gobind, the goodwill already appears in the Balance Sheet at ` 24,000. The goodwill will be written-off :
(a) by debiting all partners’ capital accounts in their old profit sharing ratio.
(b) by debiting remaining partners’ capital accounts in their new profit sharing ratio.
(c) by debiting retiring partners’ capital accounts from his share of goodwill.
(d) None of these C

Answer

(a) by debiting all partners’ capital accounts in their old profit sharing ratio.

Question: On retirement of a partner, goodwill will be credited to the Capital Account of:
(A) Retiring Partner
(B) Remaining Partners
(C) All Partners
(D) None of the Above

Answer

A

Question: A, B and C are partners sharing profits and losses in the ratio of 3 : 2 :1. On 1.3.2016 C died. The average profits of the firm for last four years were ₹ 72,000 Books are closed on 31st December. C’s share of profit till the date of his death will be:
(A) ₹ 2,000
(B) ₹ 12,000
(C) ₹ 1,400
(D) ₹ 24,000

Answer

A

Question. Chaman, Raman and Suman are partners sharing profit in the ratio of 5 : 3 : 2. Raman retires, the new profit sharing ratio between Chaman and Suman will be 1 : 1. The goodwill of the firm is valued at 1,00,000 Raman’s share of goodwill will be adjusted :
(a) by debiting Chaman’s Capital account and Suman’s Capital Account with 15,000 each.
(b) by debiting Chaman’s Capital account and Suman’s Capital Account with 21,429 and 8,571 respectively.
(c) by debiting only Suman’s Capital Account with 30,000.
(d) by debiting Raman’s Capital account with 30,000. A

Answer

(c) by debiting only Suman’s Capital Account with ` 30,000.

Question: Revaluation Account is prepared at the time of …………
(A) Admission of a partner
(B) Retirement of a partner
(C) Death of a partner
(D) All of the above

Answer

D

Question: A, B and C are partners sharing profits in the ratio of 3 : 2 : 1. They had a Joint Life Policy of ₹ 3,00,000. Surrender value of JLP in Balance Sheet is ₹ 90,000. C dies what is share of each partner in JLP ?
(A) ₹ 1,05,000 ; ₹ 70,000; ₹ 35,000
(B) ₹ 45,000 ; ₹ 30,000; ₹ 15,000
(C) ₹ 1,50,000 ; ₹ 1,00,000 ; ₹ 50,000
(D) ₹ 1,95,000 ; ₹ 1,30,000 ; ₹ 65,000

Answer

C

Question. On retirement / death of a partner, the remaining Partner(s) who have gained due to change in profit sharing ratio should compensate the :
(a) Retiring partners only
(b) Remaining partners (who have sacrificed) as well as retiring Partners
(c) Remaining partners only [who have sacrificed]
(d) None of these

Answer

(b) Remaining partners (who have sacrificed) as well as retiring Partners.

Question: On death of a partner, his excutor is paid the profits of the deceased partner for the relevant period. This payment is recorded in Profit & Loss A/c :
(A) Adjustment
(B) Appropriation
(C) Suspense
(D) Reserve

Answer

C

Question: On the retirement of a partner, full amount of goodwill may be credited to the capital accounts of:
(A) Retiring partners
(B) Remaining partners
(C) All partners
(D) None of these

Answer

C

Question. On the retirement of Hari from the firm of ‘Hari, Ram and Sharma’ the Balance Sheet showed a debit balance ` 12,000 in the profit and loss account. For calculating the amount payable to Hari this balance will be transferred :
(a) to the credit of the Capital accounts of Hari, Ram and Sharma equally
(b) to the debit of the Capital accounts of Hari, Ram and Sharma equally
(c) to the debit of the Capital accounts of Ram and Sharma equally
(d) to the credit of the Capital accounts of Ram and Sharma equally.

Answer

(b) To the debit side of the Capital accounts of Hari, Ram and Sharma equally.

Question: How unrecorded assets are treated at the time of retriement of a partner ?
(A) Credited to Revaluation Account
(B) Credited to Capital Account of Retiring Partner
(C) Debited to Revaluation Account
(D) Credited to Partner’s Capital Accounts

Answer

A

Question: A, B are C are sharing profits in the ratio of (\frac{1}{2}: \frac{1}{3} \div \frac{1}{6}) C retired. Gaining ratio will be :
(A) 2 : 1
(B) 2 : 3
(C) 3 : 2
(D) 1 : 2

Answer

C

Question. In the event of death of a partner, the amount of General Reserve is transferred to Partners’ Capital Accounts in the :
(a) New Profit Sharing Ratio
(b) Old Profit Sharing Ratio
(c) Capital Ratio
(d) None of these 
Ans. (b) Old Profit Sharing Ratio.

Answer

Question: The ratio in which the continuing partners acquire the outgoing partners share is called
(A) Gaining Ratio
(B) New Profit sharing ratio
(C) Old Profit sharing ratio
(D) None of the options

Answer

A

Question: At the time of retirement of a partner, if goodwill appears in the balance sheet, it must be written off, the capital accounts of all partners are debited in
(A) None of the options
(B) The new profit sharing ratio
(C) The capital ratio
(D) The old profit sharing ratio

Answer

D

Question: On the admission of a new partner, increase in the value of assets is debited to
(A) Profit & Loss Account
(B) Revaluation A/c
(C) Assets Account
(D) None of the options

Answer

C

Question: A, B and C are partners in the firm, if D is admitted as a new partner
(A) Old partnership is reconstitute
(B) Old firm is dissolved
(C) Both
(D) None of the options

Answer

A

Question: Revaluation account or Profit & loss adjustment account is
(A) Personal Account
(B) Real Account
(C) Nominal Account
(D) None of the options

Answer

C

Question.Name the account which is opened to credit the share of profit of the deceased partner, till the time of his death in his Capital Account. OR Name the account which is opened to transfer the share of profit of the deceased partner in the year of his death.

Answer

Profit & Loss Suspense A/c.

Question. In which ratio do the remaining partners acquire the share of profit of the retiring partner?

Answer

Gaining ratio.

Question. At the time of retirement of a partner, state the condition when there is no need to compute the gaining ratio.

Answer

When the continuing partners decide to share profits in the existing ratio.

Question. Jamuna, Ganga and Krishna are partners in a firm. Krishna retired from the firm. After making adjustments for Reserves and Revaluation of Assets and Liabilities, the balance in Krishna’s Capital Account was ` 1,20,000. Jamuna and Ganga paid ` 1,80,000 in full settlement to Krishna. Identify the item for which Jamuna and Ganga paid ` 60,000 more to Krishna.

Answer

. Share for Goodwill.

Question. Give the formula for calculating gaining share of a partner in a partnership firm.

Answer

Gaining Share = New Share – Old Share.

Question. Why heirs of the deceased partner are entitled to a share of Goodwill of the firm.

Answer

Deceased partner has also contributed in earning that goodwill.

MCQs-for-Accountancy-Class-12-with-Answers-Chapter-4-Reconstitution-of-a-Partnership-Firm-RetirementDeath-of-a-Partner.jpg

We hope the above multiple choice questions for Class 12 Accountancy for Chapter 4 Reconstitution of a Partnership Firm Retirement/Death of a Partner provided above with answers based on the latest syllabus and examination guidelines issued by CBSE, NCERT and KVS are really useful for you. Reconstitution of a Partnership Firm Retirement/Death of a Partner is an important chapter in Class 12 as it provides very strong understanding about this topic. Students should go through the answers provided for the MCQs after they have themselves solved the questions. All MCQs have been provided with four options for the students to solve. These questions are really useful for benefit of class 12 commerce students. Please go though these and let us know if you have any feedback in the comments section.