Most important MCQS Class 12th Accountancy
Most important MCQs
CH – 3 CHANGE IN PROFIT SHARING RATIO
A. Multiple Choice Questions (MCQs)
1. Any change in the relationship of existing partners which results in an
end of the existing agreement and enforces making of new· agreement is
called:
(a) Revaluation of partnership
(b) Reconstitution of partnership
(c) Realisation of partnership
(d) None of the above
Answer: (b)
2. The ratio in which a partner surrenders his share in favour of a partner is
known as:
(a) New profit-sharing ratio
(b) Sacrificing Ratio
(c) Gaining Ratio
(d) Capital Ratio
Answer: (b)
3. The ratio in which a partner receives a rise in his share of profits is known as:
(a) New Ratio
(b) Sacrificing Ratio
(c) Capital Ratio
(d) Gaining Ratio
Answer: (d)
4. Reserves and accumulated profits are transferred to partners ' capital
accounts at the time of reconstitution in:
(a) Old profit-sharing ratio
(b) Sacrificing Ratio
(c) Gaining ratio
(d) New profit-sharing ratio
Answer: (a)
5. Increase and decrease in the value of assets and liabilities are recorded
through:
(a) Partners' Capital Account
(b) Revaluation Account
(c) Profit and Loss Appropriation Ne
(d) Balance Sheet
Answer: (b)
6. In which of the following case, revaluation account is debited?
(a) Increase in value of asset
(b) Decrease in value of asset
(c) Decrease in value of liability
(d) No change in value of assets.
Answer: (b)
7. In which of the following cases, revaluation account is credited?
(a) Decrease in value of liability
(b) Increase in value of liability
(c) Decrease in value of asset
(d) No change in value of liability
Answer: (a)
8. Partner's capital account is credited when there is
(a) Profit on revaluation
(b) transfer of general reserve
(c) transfer of accumulated profits
(d) All of the above
Answer: (d)
9. Sacrificing ratio is the difference between :
(a) New ratio and old ratio
(b) Old ratio and new ratio
(c) New ratio and gaining ratio
(d) Old ratio and gaining ratio
Answer: (b)
10. A and B are partners in a firm sharing profits in the ratio of 3 : 2. They decided
to share future profits equally. Calculate A’s gain or sacrifice
(a) 2/10 (sacrifice)
(b) 5/10 (gain)
(c) 1/10 (Gain)
(d) 1/10 (Sacrifice)
Answer: (d)
11. In case of change in profit-sharing ratio, the gaining partner must compensate
the sacrificing partners by paying the proportional amount of
(a) capital
( b) cash
(c) goodwill
(d) none of the above
Answer: (c)
12. In case of change in profit-sharing ratio, the accumulated profits are
distributed to the partners in
(a) new ratio
(b) old ratio
(c) sacrificing ratio
(d) equal ratio
Answer: (b)
13 R; S and T sharing profits and losses in the ratio of 1:2:3, decided to share
future profit and losses equally. They also decided to adjust the following
accumulated profits, losses and reserves without affecting their book figures,
by passing a single adjustment entry:
General Reserve 40000
Profit and Loss A/c 30000
Share .Issue expenses 10000
The necessary .adjustment entry will be:
(a) Dr. R and Cr. T by < I 0,000
(b) Dr. T and Cr. R by < 10,000
(c) Dr. S and Cr. R by < 10,000
(d) Dr.R and Cr. S by < 10,000
Answer: (a)
14. U V and W are partners sharing profits in the ration of 2:3:5. They also decide
to record the effect of the following revaluations and reassessments without
affecting the book values of assets and liabilities by passing a single
adjustment entry:
Book Value (Rs) Revised Value (Rs)
Land and Building 3,00,000 3,50,000
Furniture 1,50,000 1,00,000
Sundry Creditors 60,000 20,000
Outstanding Salaries 10,000 15,000
The single adjustment entry will
(a) Dr. W and Cr. U by 10,500
(b) Dr. U and Cr. W by Rs. 10,500
(c) Dr. V and Cr. U by Rs. 10,500
(d) Dr. W and Cr. V by Rs. 10,500
Answer: (b)
15. X,Y and Z are partners sharing profits and losses in the ratio of 5:3:2.They
decide to share the future profits in the ratio of 3:2:1. Workmen compensation
reserve appearing in the balance sheet on the date if no information is
available for the same will be:
a) Distributed among the partners in old profit sharing ratio
b) Distributed among the partners in new profit sharing ratio
c) Distributed among the partners in capital ratio
d)Carried forward to new balance sheet without any adjustment
Answer: (a)
16.A,B and C were are partners in a firm sharing profits in the ratio of 3:4:1 .They
decided to share profits equally w.e.f from 1 .4.2019. On that date the profit
and loss account showed the credit balance of 96,000.instead of closing the
profit and loss account ,it was decided to record an adjustment entry reflecting
the change in profit sharing ratio .In the journal entry:
a) Dr. A by 4,000; Dr. B by 16,000; Cr C by 20,000
b) Cr. A by 4,000; Cr. B by 16,000; Dr C by 20,000
c) Cr. A by 16,000; Cr. B by 4,000; Dr C by 20,000
d) Dr. A by 16,000; Dr. B by 4,000; Cr C by 20,000
Answer: (b)
Fill up the Blank-
17. ……..should compensate …………..in the case of reconstitution of the firm.
:
Answer : Gaining, sacrifice
18.Increase in the value of assets and decrease in the value of liabilities result in
……..for the existing partners and should be ……….to P/L Adjustment a/c
Answer: Gain , credited
State whether True or False
19.A partnership is reconstituted due to change in profit sharing ratio
Answer: True
20. A,B and C are sharing profits in the ratio of 3:2:1. They decided to share equally
in future .B’s has neither sacrificed nor gained .
Answer: True
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