Xii Mcqs CH - 6 Retirement of A Partner

CH – 6: Multiple Choice Questions/Objective Type Questions: Retirement of a Partner
Q. 1 P, Q and R are partners sharing profits in the ratio of 8:5:3. P retires. Q takes 3/16 th share
from P and R takes 5/16th share from P. What will be the new profit sharing ratio?
a) 1:1
b) 10:6
c) 9:7
d) 5:3
Q. 2 X, Y and Z are partners sharing profits and losses in the ratio of 4:3:2. Y retires and
surrenders 1/9th of his share in favour of X and the remaining in favour of Z. The new profit
sharing ratio will be:
a) 1:8
b) 13:14
c) 8:1
d) 14:13
Q. 3 Gaining ratio is used to distribute ------------------ in case of retirement of a partner.
a) Goodwill
b) Revaluation Profit or Loss
c) Profit and Loss Account (Credit Balance)
d) Both b and c
Q. 4 X, Y and Z are partners in a firm. Y retires and his claim including his capital and his share
of goodwill is R. 1,20,000. He is paid partly in cash and partly in kind. A vehicle at Rs.
60,000 unrecorded in the books of the firm and the balance in cash is given to him to settle
his account. The amount of cash to be paid to Y will be:
a) Rs. 80,000
b) Rs. 60,000
c) Rs. 40,000
d) Rs. 30,000
Q. 5 At the time of retirement of a partner, share of retiring partner’s goodwill will be credited to
---------------- Capital Account(s).
a) Remaining Partner(s)
b) Retiring Partner’s
c) Both Sacrificing and Gaining Partner(s)
d) Gaining Partner(s)
Q. 6 A and B were partners. They shared profits as A- ½; B- 1/3 and carried to reserve 1/6. B
died. The balance of reserve on the date of death was Rs. 30,000. B’s share of reserve will
be:
a) Rs. 10,000
b) Rs. 8,000
c) Rs. 12,000
d) Rs. 9,000
Q. 7 If goodwill is already appearing in the books of accounts at the time of retirement, then it
should be written off in -------------.
a) New Ratio
b) Gaining Ratio
c) Sacrificing Ratio
d) Old Ratio
Q. 8 As per Section 37 of the Indian Partnership Act, 1932, interest @ ----------- is payable to the
retiring partner if full or part of his dues remain unpaid.
a) 9% p.m.
b) 12% p.m.
c) 6% p.m.
d) None of the above
Q. 9 “Retiring partner is not liable for firm’s acts after his retirement”. Is the statement True or
False?
Q. 10 A, B and C were partners. Their partnership deed provided that they were to share profits
as; A 26 per cent; B 34 per cent; C 40 per cent ; and that if a partner retires, his capital
should remain in the business for a stated period at a fixed rate of interest, but that the
retiring partner’s share should be credited with an amount for Goodwill, based upon one
and a half year’s average profits, for the five years prior to his death, but be subject to
deduction of 5 per cent from the book debts. C retired, and the profits of the firm for five
years were agreed at Rs. 20,000; Rs. 30,000; Rs. 15,000 (loss); Rs. 5,000 (loss); and Rs.
45,000 respectively. Book Debts stood at Rs. 90,000.The share of Goodwill to be credited
to C’s Account will be:
a) Rs. 2,700
b) Rs. 6,300
c) Rs. 7,200
d) Rs. 3,600
Q. 11 When the balance sheet is prepared after retirement (subsequent to preparation of
Revaluation Account), ------------- values are shown in it.
a) Historical
b) Realisable
c) Market
d) Revalued
Q. 12 On retirement of a partner, debtors of Rs. 34,000 were shown in the Balance sheet. Out of
this Rs. 4,000 became bad. One debtor became insolvent. 70% were recovered from him
out of Rs. 10,000. Full amount is expected from the balance debtors. On account of this
item loss in revaluation account will be:
a) Rs. 10,200
b) Rs. 3,000
c) Rs. 7,000
d) Rs. 4,000
Q. 13 If at the time of retirement, there is some unrecorded asset, it will be ------------- to
------------- Account.
a) Debited, Revaluation
b) Credited, Revaluation
c) Debited, Goodwill
d) Credited, Partners’ Capital
Q. 14 Anil, Bimal and Chetan are partners sharing their profits and losses in the ratio of 4:3:2.
On 1.7.2013, Chetan retired and on that date the capitals of Anil, Bimal and Chetan after
all necessary adjustments stood at Rs. 75,000, Rs. 65,000 and Rs. 45,000 respectively.
Anil and Bimal continued to carry the business for 6 months without settling Chetan’s
account. During the period of six months ending 31st December,2013, a profit of Rs.
50,000 is earned by the firm. Keeping Chetan’s interest in mind, the amount payable to
Chetan will be:
a) Rs. 1,350
b) Rs. 13,362
c) Rs. 12,162
d) Rs. 1,362
Q. 15 X,Y and Z were partners in a firm sharing profits in ratio of 3:4:1 X retired and new profit
sharing ratio between Y and Z will be 5 :4 .On X’s retirement the goodwill of the firm was
valued at ₹̈́ 54,000 .journal entry will be:
A) Y’s capital Dr. 24,000
Z’s capital Dr. 30,000
X’s capital 54,000
B) Y’s capital Dr. 15,000
Z’s capital Dr. 12,,000
X’s capital 27000
C) Y’s capital Dr. 12,000
Z’s capital Dr. 15,000
X’s capital 27,000
D) X’s capitals a/c Dr. 27,000
To Y’s capitals 12,000
To Z’s capitals 15,000
Q. 16 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) Sacrificing Ratio
c) Capital Ratio
d) Profit Sharing Ratio
Q. 17 As per section ------------ of the Indian Partnership Act, a retiring partner becomes entitled
to profits after retirement if his dues remain unpaid
a) Section 73
b) Section 26
c) Section 4
d) Section 37
Q. 18 At the time of retirement, amount remaining in Investment Fluctuation Reserve after

meeting the fall in value of Investment is:
a) Credited in Sacrificing Ratio
b) Credited in New Profit Sharing Ratio
c) Credited in Old Profit Sharing Ratio
d) Credited in Gaining Ratio
Q. 19 P, Q and R were partners in a firm in the ratio of 5:4:3. They admit S for 1/7 share. It is
agreed that Q would retain his original share. ----------- will be the sacrificing ratio between
P and R.
a) 5:4
b) 1:1
c) 5:3
d) 4:3
Q. 20 Match the following with respect to the treatment of goodwill:
i. Change in Profit Sharing Ratio A Gaining Partners Capital A/c Dr.

To Retiring Partners Capital A/c
ii. Admission of a Partner B Gaining Partners Capital A/c Dr.
To Sacrificing Partners Capital A/c
iii. Retirement of a Partner C Premium for Goodwill A/c Dr.
To Sacrificing Partners Capital A/c
a) i- C, ii-A, iii-B
b) i- A, ii-B, iii-C
c) i- B, ii-A, iii-C
d) i- B, ii-C, iii-A
Answers
1. a
2. b
3. a
4. a
5. b
6. c
7. d
8. d
9. False
10. c
11. d
12. c
13. b
14. c
15.c
16. a
17.d
18.c
19.c
20.d

Xii Mcqs CH - 6 Retirement of A Partner

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CH – 6: Multiple Choice Questions/Objective Type Questions: Retirement of a Partner

Q. 18 At the time of retirement, amount remaining in Investment Fluctuation Reserve after

i. Change in Profit Sharing Ratio A Gaining Partners Capital A/c Dr.

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