BLUE BELLS MODEL SCHOOL

SESSION – 2024-25
ACCOUNTANCY PROJECT WORK
One specific project based on financial statement analysis of a company covering
any two aspects from the following:
1. Comparative and common size financial statements
2. Accounting Ratios
3. Segment Reports
4. Cash Flow Statements
You are required to select ONE Company and collect the information related to:
1. The company – Introduction, Board of directors, About company etc.
2. Print outs of financial statements comprising – Consolidated Statement of
Profit & Loss, Consolidated Balance sheet and Consolidated Cash Flow
Statement

ASSIGNMENT
SUBJECT- ACCOUNTANCY (055)CLASS - XII

PART-A
CHAPTER - 1 (FUNDAMENTALS OF PARTNERSHIP)
Q1. In case of fixed capitals, partners will have
a. credit balances in their Capital Accounts
b. debit balances in their Capital Accounts
c. may have credit or debit balances in their Capital Accounts
d. credit balance or nil balance in their Capital Accounts
Q2. A and B are partners in a firm. They are entitled to interest on their capitals but the net profit was
not sufficient for this interest, then the net profit will be distributed among partners in :
a. agreed ratio b. profit sharing ratio
c. capital ratio d. equally
Q3. Calculate interest on drawings of Siddhant@10% p.a. for the year ended 31st March, 2021, if he
withdrew Rs. 60,000 in the beginning of each quarter.
a. Rs. 15,000 b. Rs. 18,000
c. Rs. 9,000 d. Rs. 12,000
Q4. X, Y and Z are partners in a firm sharing profits and losses in the ratio of 6:4:1. X guaranteed a profit
of Rs. 15,000 to Z. The net profit for the year ending 31st March, 2019 was Rs. 99,000. X's share in
the profit of the firm will be -
a. Rs. 30,000 b. Rs. 15,000
c. Rs. 48,000 d. Rs. 45,000
Q5. Read the following statements : Assertion (A) and Reason (R). Choose one of the correct
alternatives given below :
Assertion (A) : It is considered desirable to have a partnership agreement in writing.
Reason (R) : It helps in settling any disputes with regard to the terms of partnership and acts as
an evidence in the court of law.
a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
b. Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of
Assertion (A).
c. Assertion (A) is true but Reason (R) is false.
d. Assertion (A) is false but Reason (R) is true.
Q6. In the absence of the Partnership Deed, Interest on Capital is .

Q7. X, Y, Z are partners with Rs. 1,000, Rs. 2,000, Rs. 3,000 capital respectively. profits are to be divided
equally. Interest on capital to be provided @20% p.a. Net profit is Rs. 900. is X's share of profit.
Q8. E, F and G are partners sharing profits in the ratio of 3:3:2. As per the partnership agreement G is to
get a minimum amount of Rs. 80,000 as his share of profits every year and any deficiency on this
account is to be personally borne by E. The net profit for the year ended 31st March, 2020
amounted to Rs. 3,12,000. In this case, was amount of deficiency borne by E.
Q9. In case of fixed capital, interest on capital is shown on the credit side of account.
Q10. Amit and Nitin are partners without any agreement. Amit has given a loan of Rs. 5,00,000 to the
firm. At the end of year firm incurred a loss interest would be paid on Amit's loan.
Case Based Questions :
Q11. Read the following case study and answer the given questions :
Seema, Tanuja and Arpit were partners in a firm trading in garments. They were sharing profits
in the ratio of 5:3:2. Their fixed capitals on 1st Arpil, 2020 were Rs. 3,00,000, Rs. 4,00,000 and Rs.
8,00,000 respectively. After the flood in Uttarakhand, all partners decided to help the flood victims
personally. For this, Seema withdrew Rs. 2,00,000 from her capital on 1st January, 2021 and
provided a mobile medical van in the flood affected area.
The Partnership Deed provides for charging interest on drawings @ 6% per annum. Interest on
capital was allowed @ 10%.
i. Interest on Seema's Capital will be -
a. Rs. 30,000 b. Rs. 40,000
c. Rs. 50,000 d. Rs. 80,000
ii. Interest on Tanuja's drawings will be -
a. Rs. 650 b. Rs. 780
c. Rs. 1,440 d. Rs. 720
iii. In the absence of partnership Deed, profit of a firm is divided among the partners -
a. in the ratio of capital b. equally
c. in the ratio of time devoted d. according of the managerial abilities of partners
iv. Interest on capital and drawings will be transferred to account.
a. Capital b. Current
c. Both a and b d. None of these
Q12. Distinguish between Fixed and Fluctuating Capitals.
Q13. State any four essential features or characteristics of partnership.
Q14. Surjit and Permjit are partners. Surjit's Capital is Rs. 1,00,000 and Permjit's Capital is Rs.60,000.
Interest on capital is payable @ 6% p.a. Surjit is to get salary of Rs. 3,000 per month. Net Profit for
the year is Rs. 80,000. Prepare Profit and Loss Appropriation Account.
Q15. A, B and C were partners in a firm. On 1st April, 2018, their capital stood at Rs. 4,00,000; Rs.
3,00,000 and Rs. 2,00,000 respectively. As per the provisions of the Partnership Deed.
i. A was entitled to a salary of Rs. 5,000 per month.
ii. Partners were entitled to interest on capital @ 10% p.a.
The net profit for the year ended 31st March 2019, Rs. 3,00,000 was divided among the partners without
providing for the above items. Showing your working clearly, pass an adjustment entryto rectify the
above error.
Q16. A, B and C were partners in a firm having capitals of Rs. 50,000; Rs.50,000 and Rs. 1,00,000
respectively. Their current account balances were A : Rs. 10,000; B: Rs. 5,000 and C: Rs. 2,000 (Dr.).
According to the Partnership deed the partners were entitled to an interest on capital @ 10% p.a.
C being the working partner was also entitled to a salary of Rs. 12,000 p.a. The profits were to be
shared as :
i. The first Rs. 20,000 in the proportion to their capitals.
ii. Next Rs. 30,000 in the ratio of 5:3:2.
iii. Remaining profits to be shared equally.
The firm made a profit of Rs. 1,72,000 before charging any of the above items. Prepare the Profits
and Loss Appropriation Account and pass the necessary Journal entry for the appropriation of
profits.
Q17. The partners of a firm distributed the profits for the year ended 31st march, 2017, Rs. 90,000 in the
ratio of 3:2:1 without providing for the following adjustments -
i. A and B were entitled to a salary of Rs. 1,500 each p.a.
ii. B was entitled to a commission of Rs. 4,500.
iii. B and C guaranteed a minimum profit of Rs. 35,000 p.a. to A.
iv. Profits were to be shared in the ratio of 3:3:2.
Pass the necessary journal for the above adjustments in the books of the firm.
Q18. Capital Accounts of A and B stood at Rs. 4,00,000 and Rs. 3,00,000 respectively after necessary
adjustments in respect of the drawings and the net profit for the year ended 31st March, 2019. It
was subsequently noticed that 5% p.a. interest on capital and also drawings were not taken into
account in arriving at the distributable profit. The drawings of the partners had been : A Rs. 12,000
drawn at the end of each quarter and B - Rs. 18,000 drawn at the end of each half year. The profit
for the year as adjusted amounted to Rs. 2,00,000. The partners share profits in the ratio of 3:2.
You are required to pass Journal entries and show Adjusted Capital Accounts of the partners.
Q19. Lata and Mamta are partners with capitals of Rs. 3,00,000 and Rs. 2,00,000 respectively sharing
profits as Lata 70% and Mamta 30%. During the year ended 31st March 2021 they earned a profit
of Rs. 2,26,440 before allowing interest on partner's loan. The terms of partnership are as follows:
i. Interest on Capital is to allowed @ 7% p.a
ii. Lata to get a salary of Rs. 2,500 per month.
iii. Interest on Mamta's Loan account of Rs. 80,000 for the whole year.
iv. Interest on Drawings of partners at 8% per annum. Drawing being Lata Rs. 36,000 and
Mamta Rs. 48,000.
v. 1/10th of the distributable profit should be transferred to General Reserve. Show the
distribution of profits.

CHAPTER - 2 (GOODWILL - NATURE AND VALUATION)

Q1. Excess amount that a firm gets over and above the market value of assets at the time of sale of its
business is -
a. profit b. super profit
c. reserve d. goodwill
Q2. On average profit basis, goodwill is calculated by -
a. no. of years purchased multiplied with average profits
b. no. of years purchased multiplied with super profits
c. summation of the discounted value of expected future benefits
d. super profit divided with expected rate of return
Q3. A firm earns Rs. 1,10,000. The normal rate of return is 10%. The assets of the firm amounted to
Rs. 1,00,000 and liabilities Rs. 1,00,000. Value of goodwill by capitalisation of average actual profits
will be -
a. Rs. 2,00,000 b. Rs. 10,000
c. Rs. 5,000 d. Rs. 1,00,000
Q4. Goodwill of the firm is Rs. 1,07,500. Find the number of year's purchased if the average profits
are Rs. 43,000
a. 1 b. 2
c. 1.5 d. 2.5
Q5. Read the following statements : Assertion (A) and Reason (R). Choose one of the correct
alternatives given below :
Assertion (A) : Goodwill is considered as an intangible assets but not a fictitious asset.
Reason (R) : Goodwill can neither be seen and touched nor it can be purchased or sold with any
other asset.
a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
b. Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of
Assertion (A).
c. Assertion (A) is true but Reason (R) is false.
d. Assertion (A) is false but Reason (R) is true.
Q6. Capital employed by a partnership firm is Rs. 5,00,000. Its average profit is Rs. 60,000. The
normal rate of return is similar type of business is 10%. The amount of super profit is .
Q7. Goodwill helps in earning than normal profit.
Q8. Goodwill, Patents, Trademarks are example of Assets.
Q9. method is based on the assumption that a new business will not be able to earn
profits during the initial years as compared to an established business.

Case Based Questions :

Q.10 Read the following case study and answer the given questions :
Tony and Rony started a partnership firm, TR CDs to manufacture music CDs way back in 1990.
Now since the music CDs are out of business, they plan to sell the business to one of the major
content production houses in Mumbai. For the purpose of selling business, they reached to there
accountant to calculate the goodwill and other financial advice. He suggested that since the CDs are
very less in demand, their goodwill value will be hampered. nonetheless, the framework for
goodwill calculation was decided as follows 'The goodwill be valued at 4 years' purchase of super
profits. The following financial information was obtained at the end of this transaction.
• Assets Rs. 8,000
• Creditors Rs. 1,000
• Normal rate of return 10%
• Goodwill of the firm Rs. 1,000
i. Which factor affecting the goodwill was highlighted by accountant?
a. Efficiency of management b. Nature of business
c. Market situation d. Special advantages
ii. Under Super Profit method, goodwill is calculated by
a. Number of the years' Purchase × Average Profit
b. Number of years' Purchase × Super Profit
c. Super Profit ÷ Normal Rate of Return
d. Super Profit – Normal Profit
iii. What is the super profit of business?
a. Rs. 250 b. Rs. 1,000
c. Rs. 500 d. Rs. 1,250
iv. What is the average profit of business?
a. Rs. 450 b. Rs. 750
c. Rs. 700 d. Rs. 950
Q11. What is goodwill? What are the factors that effect the value of goodwill?
Q12. How does 'Nature of Business' affect the value of goodwill of the firm?
Q13. A earns Rs. 1,20,000 as its annual profits, the rates of normal profit being 10%. The assets of the
firm amounted to Rs. 14,40,000 and liabilities to Rs. 4,80,000. Find out the value of goodwill by
capitalisation method.
Q14. Neelam and Suman had a firm in which they had invested Rs. 50,000. On an average, the profits
were Rs. 16,000. The normal rate of return in the industry is 15%. Goodwill is to be valued at four
years' purchase of profits in excess of profits @15% on the money invested. Calculate the value of
goodwill.
Q15. From the following particulars, calculate value of goodwill of a firm by applying Capitalisation of
Average Profit Method :

i. Profits of last five consecutive years ending 31st March are :

2021 - Rs. 54,000; 2020 - Rs. 42,000; 2019 - Rs. 39,000; 2018 - Rs. 67,000 and 2017- Rs.
59,000.
ii. Capitalisation rate 20%
iii. Net assets of the firm Rs. 2,00,000.
Q16. X and Y are partners sharing profits in the ratio of 3:2. They decided to admit Z as a partner from
1st April, 2021 on the following terms :
i. Z will be given 2/5th share of the profit.
ii. Goodwill of the firm will be valued at two years' purchase of three years' normal average
profit of the firm.
Profits of the previous three years ended 31st March, were
2021 - Profit Rs. 30,000 (after debiting loss of stock by fire Rs. 40,000)
2020- Loss Rs. 80,000 (includes voluntary retirement compensation paid Rs. 1,10,000.
2019 - Profit Rs. 1,10,000 (including a gain (profit) of Rs. 30,000 on the sale of fixed assets).
Calculate the value of goodwill.
Q17. A business has earned average profit of Rs. 8,00,000 during the last few years and the normal rate
of return in similar business is 10%. Find value of goodwill by :
i. Capitalisation of Super Profit Method; and
ii. Super Profit method if the goodwill is valued at 3 years' purchase of super profit. Assets of
the business were Rs. 80,00,000 and its external liabilities Rs. 14,40,000.
Q18. On 1st April, 2020 an existing firm had assets of Rs. 75,000 including cash of Rs. 5,000. Its creditors
amounted to Rs. 5,000 on that date. The firm had a Reserve of Rs. 10,000 while Partners' Capital
Accounts showed a balance of Rs. 60,000. If Normal Rate of Return is 20% and goodwill of the firm
is valued at Rs. 24,000 at four year's purchase of super profit, find average profit per year of the
existing firm.
CHAPTER - 2 (CHANGE IN PROFIT SHARING RATIO)
Q1. Any change in the retationship of existing partners which result in an end of the existing agreement
and enforces making of a new agreement is called :
a. revaluation of partnership b. reconstitution of partnership
c. realisation of partnership d. None of the above
Q2. A, B and C are partners sharing profits in the ratio of 5:3:2. They decided to share future profits in
the ratio of 2:3:5. What will be the accounting treatment of Workmen Compensation Reserve
appearing in the balance sheet on that date when no other information is available for the same?
a. distributed among partners in their capital ratio
b. distributed among partners in their new profit sharing ratio
c. distributed among partners in their old profit sharing ratio
d. carried forward to new balance sheet
Q3. Raman and Rajan were partner in a firm sharing profits or losses in the ratio of 3:1. With effect
from 1st January, 2020, they agreed to share profits in the ratio of 2:1. Due to change in profit -
sharing ratio, Rajan's gain or sacrifice will be :
a. gain 1/12 b. sacrifice 1/12
c. gain 2/60 d. sacrifice 3/60
Q4. At the time of change in profit sharing ratio, a debtor whose dues of Rs . 20,000 were written - off
as bad debts, paid Rs. 15,000 in full settlement. Journalise :
a. Bad Debts A/c Dr. 5,000
To Revaluation A/c 5,000
b. Revaluation A/c Dr. 5,000
To Bad Debts A/c 5,000
c. Bad Debts Recovered A/c Dr. 5,000
To Revaluation A/c 5,000
d. None of these
Q5. The ratio in which one or more partners of the firm forego, i.e. sacrifice their share of profits in
favour of one or more partners of the firm is known as :
a. sacrificing ratio b. gaining ratio
c. no change in ratio d. either a or b
Q6. Revaluation Account is a Account.
Q7. In the event of change in profit sharing ratio, general reserve existing in the blance sheet is
transferred to capital accounts of partners in their .
Q8. Ramesh, Mahesh and Suresh are partners in a firm sharing profits in 3:3:2 ratio. They decide to share
profits equally w.e.f. April 1, 2021. On that date, the Profit and Loss Account shows the credit
balance of Rs. 60,000. They decide that Profit and Loss Account will remain as it is. You are required
to fill up the following journal entry :
Date Particulars L.F. Dr. (Rs.) Cr. (Rs.)
2021 April 1 Dr.
To Ramesh's Capital A/c 2,500
To Mahesh's Capital A/c 2,500
(Adjustment made for credit
balance of Profit and Loss
Account due to change in profit
sharing ratio)
Q9. If the existing profit sharing ratio among A, B and C of 3:2:1 is changed to 1:2:3, then the
partners(s) whose share will be unaffected is/are .
Q10. Assets which physically exist but not shown in the Balance Sheet are .
Case Based Questions :
Q11. Read the following hypothetical text and answer the given questions :
Bhavya and Naman were partners in a firm carrying on a tiffin service in Hyderabad. Bhavya
noticed that a lot of food is left at the end of the day. To avoid wastage, she suggested that it can
be distributed to the needy; Naman wanted that it should be mixed with the food being served
the next day. Naman then gives a proposal that if his share in the profit increased, he will not mind
free distribution of left over food. Bhavya happily agreed. So, they decided to change their profit
sharing ratio 1:2 with immediate effect. On that date revaluation of assets andreassessment of
liabilities was carried out that resulted into a gain of Rs. 18,000. On that date the goodwill of the
firm was valued at Rs. 1,20,000.
i. Sacrificing share equals to -
a. Old Share - New Share b. New Share - Old Share
c. Old Share + New Share d. New Share + Old Share
ii. Sacrifice / Gain of Bhavya and Naman will be -
a. Bhavya sacrifice 1/6, Naman gains 1/6
b. Bhavya gain 1/6, Naman Sacrifice 1/6
c. Only Bhavya gains 1/6
d. Only Naman Sacrifice 1/6
iii. At the time of change in profit sharing ratio, gaining partner capital account is and
sacrificing
a. credited, debited b. debited, credited
c. increased, decreased d. decreased, increased
iv. Any change in the relationship of existing partners which result is an end of the existing
agreement and enforces making of a new agreement is called :
a. Revaluation of Partnership b. Reconstitution of Partnership
c. Realisation of Partnership d. None of these
Q12. Why is Revaluation Account prepared? Draw an imaginary Revaluation Account.
Q13. X, Y and Z who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to share future
profits and losses in the ratio of 2 : 3 : 5. Give the journal entry to distribute 'Workmen
Compensation Reserve of Rs. 1,20,000 at the time of change in profit-sharing ratio, when there is
a claim of Rs. 80,000 against it.
Q14. X, Y and Z are sharing profits and losses in the ratio of 5 : 3 : 2. With effect from 1st April, 2019,
they decide to share profits and losses equally. Calculate each partner's gain or sacrifice due to
the change in ratio.
Q15. X and Y are partners in a firm sharing profits and losses in the ratio of 3 : 2. With effect from 1stApril,
2019, they decided to share future profits equally. On the date of change in the profit- sharing ratio,
the Profit and Loss Account showed a credit balance of Rs. 1,50,000.
Record 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.
Q16. X, Y and Z who are sharing profits in the ratio of 5 : 3 : 2, decide to share profits in the ratio of 2
:3:5 with effect from 1st April, 2019. Workmen Compensation Reserve appears at Rs. 1,20,000 in
the Balance Sheet as at 31st March, 2019 and Workmen Compensation Claim is estimated at Rs.
1,50,000. Pass Journal entries for the accounting treatment of Workmen Compensation Reserve.
Q17. Agam and Nigam are partners in a firm, sharing profits and losses in the ratio of 3:2. On 31st March,
2018 their Balance Sheet was as under :
BALANCE SHEET OF AGAM AND NIGAM
as at 31st March, 2018
Particulars Amt. (Rs) Assets Amt. (Rs.)
Sundry Creditors 13,800 Furniture 16,000
General Reserve 23,400 Land and Building 56,000
Investment Fluctuation Fund 20,000 Investments 30,000
Agam's Capital 50,000 Trade Receivables 18,500
Nigam's Capital 40,000 Cash in Hand 26,700
1,47,200 1,47,200
The partners have decided to change their profit sharing ratio to 1:1 with immediate effect. For
the purpose, they decided that :
i. Investments to be valued at Rs. 20,000.
ii. General Reserve not to be distributed between the partners.
You are required to pass necessary Journal entries in the books of the firm. Show workings.
Q18. Anil, Manvi and Payal were partners in a firm sharing profit ratio is 5:3:2. Their Balance sheet as
at 31st March, 2021 stood as follows :
Liabilities Amt. (Rs) Assets Amt. (Rs.)
Capital A/cs: Land and Building 2,60,000
Anil 3,50,000 Machinery 3,50,000
Manvi 3,50,000 Stock 90,000
Payal 3,00,000 9,00,000 Bills Receivables 70,000
General Reserve 20,000 Sundry Debtors 1,00,000
Workmen Compensation 30,000 Cash in hand 25,000
Reserve
Sundry Creditors 50,000 Cash at bank 1,05,000
10,00,000 10,00,000
They decided to share profits and losses in the ratio of 2:2:1. from 1st April 2021. They agreed
that :
i. Land and Building be appreciated by 10%.
ii. Machinery be reduced by 15%.
iii. Stock be increased to Rs. 1,00,000.
iv. Provision for doubtful debt be created @ 5% on Sundry Debtor.
v. A creditors of Rs. 5,000 is not to claim the dues.
vi. A claim on account of Workmen Compensation is Rs. 10,000.
vii. An expense of Rs. 2,000 was paid by the firm.
Pass the Journal entries and prepare Revaluation Account.
Q19. X, Y and Z are partners sharing profits in the ratio of 5:3:2. They decided to share the profits in
the ratio of 2:3:5. Starting 1st April, 2019 they decided to adjust the following accumulated profits,
losses and reserves without affecting their book values, by passing an adjustment entry.
Book Values Rs.
Profit and Loss Account 15,000
General Reserve 60,000
Advertising Suspense Account 30,000
CHAPTER - 3 (ADMISSION OF A PARTNER)
Q1. Revaluation account or Profit and Loss Adjustment Account is a/an :
a. real account b. personal account
c. nominal account d. asset account
Q2. X and Y are partners sharing profits in the ratio of 3:2. Z is admitted as a partner. Calculate
sacrificing ratio if new profit sharing ratio is 9:7:4.
a. 3:1 b. 3:2
c. 1:3 d. 9:7
Q3. X and Y are partners in a firm with capital of RS. 1,80,000 and Rs. 2,00,000. Z was admitted for
1/3rd share in profits and brings Rs. 3,40,000 as capital, calculate the amount of goodwill :
a. Rs. 2,40,000 b. Rs. 1,00,000
c. Rs. 1,50,000 d. Rs. 30,000
Q4. Read the following statements : Assertion (A) and Reason (R). Choose one of the correct
alternatives given below :
Assertion (A) : Profit or Loss on Revaluation is not transferred to incoming partner's capital
account.
Reason (R) : Profit or Loss on Revaluation at the time of admission of a partner belongs to pre
admission period and thus belongs to old partners.
a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
b. Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of
Assertion (A).
c. Assertion (A) is true but Reason (R) is false.
d. Assertion (A) is false but Reason (R) is true.
Q5. According to Section 31(1) of the Indian Partnership Act, 1932, "A person can be admitted as a
new partner only with the unless otherwise agreed upon."
Q6. At the time of admission, if the profit sharing ratio among the old partners does not change, then
sacrificing ratio will be .
Q7. Goodwill existing in the books is written -off at the time of admission of a partner, it is
transferred to partner's capital accounts in their .
Q8. Decrease in the value of assets at the time of admission of a partner is debited to .
Q9. When the new partner brings cash or goodwill, the amount is credited to .
Case Based Questions :
Q10. Read the following case study and answer the given questions :
Rahul and Modi are two partners into a firm sharing profits equally. On 1st January, 2020, they
decided to admit Vikas as a new partner into the firm for 1/5th share. Vikas brings Rs. 10,00,000
for his share to capital and premium of goodwill in cash. Half goodwill is withdrew by the old
partners Goodwill of the firm is valued on the basis of one year purchase of profits or losses of
proceeding last 3 years. Profits of last four years are Rs. 6,00,000 in 2016, Rs. 7,00,000 in 2017, Rs.
8,00,000 in 2018 and Rs. 15,00,000 in 2019.
i. Which of the following is a right of Vikas?
a. share profits of firm b. share assets in the firm
c. inspect books of account d. all of the above
ii. What was the value of goodwill of the firm?
a. Rs. 7,00,000 b. Rs. 8,00,000
c. Rs. 9,00,000 d. Rs. 10,00,000
iii. What was the amount of capital brought by Vikas?
a. Rs. 2,00,000 b. Rs. 8,00,000
c. Rs. 10,00,000 d. can't be determined
iv. What was the goodwill share given to Modi?
a. Rs. 1,00,000 b. Rs. 2,00,000
c. Rs. 4,00,000 d. can't be determined
Q11. Give four circumstances in which the sacrificing ratio is applied.
Q12. State the need for treatment of goodwill on admission of a partner.
Q13. X, Y and Z were partners in a firm sharing profits in the ratio of 3:2:1. They admitted W as a new
partner for 1/8th share in the profits, which he acquired 1/16th from Y and 1/16th from Z
Calculate the new profit - sharing ratio of X, Y, Z, W.
Q14. A and B are partners sharing profits and losses in the ratio of 2:1. They take C as a partner for 1/5th
share. The Goodwill Account appears in the books at its full value Rs. 15,000. C is to pay
proportionate amount as premium for goodwill which he pays to A and B privately. Pass necessary
entries.
Q15. At the time of admission of a partner Suresh, Assets and liabilities of Ramesh and Naresh were
revalued as follows :
i. A Provision for Doubtful Debts @ 10% was made on Sundry Debtors Rs. 50,000.
ii. Creditors were written back by Rs. 5,000.
iii. Building was appreciated by 20% (Book Value of Building Rs. 2,00,000).
iv. Unrecorded Investments were valued at Rs. 15,000.
v. A Provision of Rs. 2,000 was made for an Outstanding Bill for repairs.
vi. Unrecorded Liability towards suppliers was Rs. 3,000. Pass necessary Journal entries.
Q16. Garima and Shweta are partners in a firm sharing profits in the ratio of 3:2. Their Balance sheet
as at 31st March, 2021 was as follows :
Liabilities Amount Assets Amount
(Rs.) (Rs.)
Outstanding Rent 13,000 Cash 10,000
Creditors 20,000 Sundry Debtors 80,000
Workmen Less : Provision for Doubtful
Compensation Reserve 5,600 Debts 4,000 76,000
Capital A/cs : Garima 50,000 Stock 20,000
Shweta 60,000 1,10,000 Profit and Loss A/c 4,000
Machinery 38,600
1,48,600 1,48,600
On 1st April, 2021, they admitted Samir as a partner for 1/6th share on the following terms :
i. Samir brings in Rs. 40,000 as his share of Capital but he is unable to bring any amount for
Goodwill.
ii. Claim on account of Workmen Compensation is Rs. 3,000.
iii. To write off Bad Debts of Rs. 6,000.
iv. Creditors are to be paid Rs. 2,000 more.
v. There being a claim against the firm for damages, liabilities to the extent of Rs. 2,000 should
be created.
vi. Outstanding rent be brought down to Rs. 11,200.
vii. Goodwill is valued at 1.5 years' purchase of the Average Profits for the last 3 years
amounted to Rs. 10,000; Rs. 20,000 and Rs. 30,000.
Pass Journal entries, prepare Partner's Capital Accounts and Opening Balance Sheet.
Q17. Raman and Rohit were partners in a firm sharing profits and losses in the ratio of 2:1. On 31st
March, 2018, their Balance Sheet was as follows :
BALANCE SHEET OF RAMAN AND ROHIT as at 31st March, 2018
Liabilities Amount Assets Amounts
(Rs.) (Rs.)
Capitals: Plant and Machinery 1,75,000
Raman 1,40,000 Furniture and Fixtures 65,000
Rohit 1,00,000 2,40,000 Stock 47,000
Workmen 40,000 Debtors 1,10,000
Compensation Fund
Creditors 1,60,000 (–) Provision for 1,03,000
Doubtful Debts 7,000
Bank Balance 50,000
4,40,000 4,40,000
On the above date, Saloni was admitted in the partnership firm. Raman surrendered 2/5th of his
share and Rohit surrendered 1/5th of his share in favour of Saloni. It was agreed that :
i. Plant and machinery will be reduced by Rs. 35,000 and furniture and fixtures will be
reduced to Rs. 58,500.
ii. Provision for bad and doubtful debts will be increased by Rs. 3,000.
iii. A claim for Rs. 16,000 for workmen's compensation was admitted.
iv. A liability of Rs. 2,500 included in creditors is not likely to arise.
v. Saloni will bring Rs. 42,000 as her share of goodwill premium and proportionate capital.
Prepare Revaluation Account, partners' Capital Accounts and Balance Sheet of the
reconstituted firm.
Q18. Kalpana and Kanika were partners in a firm sharing profits in the ratio of 3:2. On 1st April, 2021,
they admitted Karuna as a new partner for 1/5th share in the profits of the firm. The balance Sheet
of Kalpana and Kanika as on 1st April, 2021 was as follow :
BALANCE SHEET OF KALPANA AND KANIKA as on 1st April, 2021
Liabilities Amount Assets Amounts
(Rs.) (Rs.)
Capital A/cs : Land and Building 2,10,000
Kalpana 4,80,000 Plant 2,70,000
Kanika 2,10,000 6,90,000 Stock 2,10,000
General Reserve 60,000 Debtors 1,32,000
Workmen's 1,00,000 Less : Provision 12,000 1,20,000
Compensation Fund
Creditors 90,000 Cash 1,30,000
9,40,000 9,40,000
It was agreed that :
a. The value of Land and Building will be appreciated by 20%.
b. The value of plant be increased by Rs. 60,000.
c. Karuna will bring Rs. 80,000 for her share of goodwill premium.
d. The liabilities of Workmen's Compensation Fund were determined at Rs. 60,000.
e. Karuna will bring in cash as capital to the extent of 1/5th share of the total capital of the
new firm.
Prepare Revaluation Account, Partners' Capital Accounts and Balance Sheet of the new firm.
Q19. X and Y were partners in a firm sharing profits in 5:3 ratio. They admitted Z as a new partner for
1/3th in profit. Z was to contribute Rs. 20,000 as his capital. The balance sheet of X and Y on
01.04.2020, was as follows:
Liabilities Rs. Assets Rs.
Creditors 27,000 Land and Building 25,000
Capital; Plant and Machinery 30,000
X 50,000 Stock 15,000
Y 35,000 85,000 Investment 20,000
General Reserve 16,000 Cash 19,500
Detbtors 20,000
Less Provision 1,500 18,500
1,28,000 1,28,000
Other terms agreed upon were :
i. Goodwill of the firm was valued at Rs. 12,000.
ii. Land and Building were to be valued at Rs. 35,000 and Plant and Machinery at Rs. 25,000.
iii. The provision for doubtful debts was found to be in excess by Rs. 400.
iv. A liability for Rs. 1,000 included in sundry creditors was not likely to arise.
v. The capitals of the partners be adjusted on the basis of Z'S contribution of capital in the firm.
vi. Excess or shortfall if any to be transferred to current accounts.
Prepare Revaluation Account, Partner's capital Account and Balance Sheet of the new firm
CHAPTER -6 (RETIREMENT OF A PARTNER)
Answer the following questions :
Q1. On retirement of a partner's the amount of General Reserve is transferred to all partner's capital
account in :
a. new profit sharing ratio b. capital ratio
c. old profit sharing ratio d. none of these
Q2. X, Y and Z were partners sharing profits in the ratio of 5:3:2. Goodwill does not appear in the books
but it is agreed to be worth Rs. 1,00,000. X retires from the firm and Y and Z decide toshare
profits equally. X's share of goodwill will be debited to Y's and Z's Capital A/cs in ratio :
a. 1:1 b. 2:3
c. 3:2 d. None of these
Q3. X, y and Z are partners and share profits in the ratio of 5:3:2. Y retires and X takes 1/10 from Y and
Z takes 1/5 from Y. The new profit sharing ratio will be :
a. 7:13 b. 13:7
c. 3:2 d. 1:1
Q4. Retiring partner is compensated by the continuing partners in their :
a. gaining Ratio b. capital Ratio
c. sacrificing Ratio d. profit sharing Ratio
Q5. Read the following statements : Assertion (A) and Reason (R). Choose one of the correct
alternatives given below :
Assertion (A) : If the partners of the partnership firm wants, then the firm can pay money to
retiring partner against his share in the firm's goodwill.
Reason (R) : The money paid to the retiring partner against his share in the firm's goodwill is
called as his hidden goodwill.
a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
b. Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of
Assertion (A).
c. Assertion (A) is true but Reason (R) is false.
d. Assertion (A) is false but Reason (R) is true.
Q6. X, Y and Z are partners in a firm sharing profits in the ratio of 2:3:4. On 1st April, 2021, X retired and
on that date, there was a debit balance of Rs. 1,80,000 in Profit and Loss Account. Y and Z decided
to share future profits equally. Find out the missing values in the following :
Journal entry :
X's Capital A/c Dr. 40,000
Y's Capital A/c Dr.
Z's Capital A/c Dr.
To Profit and Loss A/c 1,80,000
(Being Accumulated losses distributed among all partners)
Q7. Gain of revaluation is transferred to the side of all Partner's Capital Accounts while loss
is .
Q8. Journal entry will be recorded for writing off the goodwill already existing in Balance Sheet at the
time of retirement of a partner is .
Q9. A, B and C are partners in 3:4:2. B wants to retire from the firm. The profit on revaluation on that
date was Rs. 36,000. New ratio of A and C is 5:3. Profit on revaluation will be distributed as
.
Q10. In case of retirement of a partner, profit or loss on revaluation of assets and re assessment of
liabilities is distributed among partners in the ratio.