MCQs ON ADMISSION OF A PARTNER WITH ANSWERS

At the point when a firm needs extra capital or administrative support or both for the development of its business, another partner might be conceded to enhance its existing assets. As per the Partnership Act 1932, another partner can be conceded into the firm just with the assent of the relative multitude of existing partners, except if in any case settled upon.

Below is a list of multiple-choice questions and answers on Admission of a partner to help students understand the topic better.

1. If the new partner brings his share of goodwill in cash, it will be shared by old partners in ______.

(A) Old profit sharing ratio.

(B) New profit sharing ratio.

(C) In capital ratio.

(D) Ratio of sacrifice.

Answer D) Ratio of sacrifice.

2. Any change in partnership is called ______.

(A) Dissolution of a partnership firm.

(B) Reconstitution of partners.

(C) Reconstitution of a partnership firm.

(D) None of the options are correct.

Answer C) Reconstitution of a partnership firm.

3. If at the time of admission, some profit and loss account balance appears in the books, it will be transferred to ______.

(A) All partners’ Capital Accounts.

(B) Revaluation Account.

(C) Old partners’ Capital Accounts.

(D) Profit and Loss Adjustment Account.

Answer C) Old partners’ Capital Accounts.

4. At the time of admission of a new partner, which adjustments are required?

(A) Accounting treatment of goodwill.

(B) Accounting treatment of accumulated profits.

(C) Calculation of new profit sharing ratio and sacrificing ratio.

(D) All of the options are correct.

Answer C) Calculation of new profit sharing ratio and sacrificing ratio.

5. In the absence of an express agreement as to who will contribute to new partners’ share of profit, it is implied that the old partners will contribute ______.

(A) In the ratio of their capitals.

(B) In their old profit sharing ratio.

(C) In the gaining ratio.

(D) Equally.

Answer B) In their old profit sharing ratio.

6. Which clause should be mentioned in the partnership deed?

(A) Description of the firm.

(B) Nature of the business.

(C) Description of the partners.

(D) All of the options are correct.

Answer D) All of the options are correct.

7. If the incoming partner brings the amount of goodwill in cash and also a balance exists in the goodwill account, this goodwill account is written off among the old partners in _______.

(A) The old profit sharing ratio.

(B) The sacrificing ratio.

(C) The gaining ratio.

(D) The new profit sharing ratio.

Answer A) The old profit sharing ratio.

8. Under which circumstances a partnership firm may be reconstituted?

(A) Admission of a partner.

(B) Death or retirement of a partner.

(C) Change in profit sharing ratio.

(D) All of the options are correct.

Answer D) All of the options are correct.

9. In case of admission of a partner, the entry for unrecorded investments will be ______.

(A) Debit Revaluation A/c and Credit Investment A/c.

(B) Debit Investment A/c and Credit Revaluation A/c.

(C) Debit Partners Capital A/cs and Credit Investments A/c.

(D) None of the above options are correct.

Answer B) Debit Investment A/c and Credit Revaluation A/c.

10. When cash is brought into a partnership firm by a new partner, then this method is known as ______?

(A) Revaluation method.

(B) Memorandum revaluation method.

(C) Premium method.

(D) None of the above options are correct.

Answer C) Premium method.

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