Activity quizz

If the firm has agreed to settle the retiring or deceased partner’s account by paying him a lump sum amount, then the amount paid to him in excess of what is due to him, based on the balance in his capital account after making necessary adjustments in respect of accumulated profits and losses and revaluation of assets and liabilities, etc., shall be treated as his share of goodwill. This Goodwill can be referred to

• a. Hidden Goodwill

• b. Investment

• c. Combined Goodwill

• d. Inherent Goodwill

On retirement/death of a partner, the retiring/deceased partner’s capital account will be credited with

• a.Goodwill of the firm.

• b.His/her share of goodwill.

• c.Shares of goodwill of remaining partners.

• d.Profit From Writing Off

  Goodwill

The problem of calculating gaining ratio arises primarily when the ___of the continuing partners is specified

• Gain ratio

• New profit-sharing ratio

• Sacrifice Ratio

• Old Profit-sharing ratio

Increase in the liability at the time of retirement Of a Partner

• Credited to Partner’s capital account

• Debited to Profit and loss

• Credited to P&L Appropriation account

• Debited to Revaluation account

Accumulated profits are

• (a) credited to continuing partners' Capital Accounts in their new profit-sharing ratio.

• (b) credited to continuing partners' Capital Accounts in their old profit-sharing ratio.

• c) credited to all the partners' Capital Accounts before reconstitution of the firm in their old profit-sharing ratio.

• (d) debited to all the partners' Capital Accounts before reconstitution of the firm in their old profit-sharing ratio.

Accumulated losses are

• (a) debited to continuing partners' Capital Accounts in their new profit-sharing ratio.

• (b) debited to continuing partners' Capital Accounts in their old profit-sharing ratio.

• (c) debited to all the partners' Capital Accounts before reconstitution of the firm in their old profit-sharing ratio.

• (d) credited to all the partners' Capital Accounts before reconstitution of the firm in their old profit-sharing ratio

Assertion (A): Retirement of partner means partnership comes to an end and new partnership becomes operative.

Reason (R): Retirement of a partner is reconstitution of partnership and the firm continues.

• (a) - Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

• (b) - Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)

• (c) - Assertion (A) is correct but Reason (R) is not correct.

• (d) - Assertion (A) is not correct but Reason (R) is correct.

Assertion (A): Retiring partner will get his share in firm's gain (profit) on revaluation of assets and reassessment of liabilities and will bear loss on revaluation.

Reason (R): Retiring partner is entitled to share in profit and bear loss, if any, up to the date of retirement. In the context of above two statements, which of the following is correct?

• a) Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

• (b) Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).

• (c) Assertion (A) is correct but Reason (R) is not correct

• (d) Assertion (A) is not correct but Reason (R) is correct.