Settlement with the Executor

Q. Average profit of the firm is ₹ 2, 00, 000. Total assets of the firm are ₹ 15, 00, 000 whereas Partners' Capital is ₹ 12, 00, 000. If normal rate of return in a similar business is 10% of the capital employed, what is the value of goodwill by Capitalisation of Super Profit?

Q.

A, B and C are partners in a firm whose books are closed on 31st March each year. B died on 30th June, 2009 and according to the agreement, the share of profit of a deceased partner up to the date of the death is to be calculated on the basis of the average profits for the last five years. The net profits for the last 5 years have been 2005 : Rs. 14, 000; 2006 : Rs. 18, 000; 2007 : Rs. 16, 000; 2008 : Rs. 10, 000 (loss) and 2009 : Rs. 16, 000. Calculate B’s share of profits upto the date of death.

1. 1800

2. 2100

3. 1200

4. 900

Q. If value of credit revenue from operations is Rs.6, 00, 000 and Average Trade Receivables are Rs. 2, 00, 000. What will be Trade Receivables Turnover Ratio?

1. 0.33 Times
2. 12 Times
3. 3 Times
4. None of the above

Q.

A trading firm’s average inventory is Rs 20, 000 (cost). If the inventory turnover ratio is 8 times and the firm sells goods at a profit of 20% on sale, ascertain the profit of the firm.

Q.

We close deceased partner's capital account by transferring the amount to ______________ account.

1. ongoing partner's capital account

2. profit and loss account

3. deceased partner's executor's account

4. 
   None of these

Q.

A, B and C are partners in a firm whose books are closed on 31st March each year. C died on 30th September, 2009 and according to the agreement, the share of profit of a deceased partner up to the date of the death is to be calculated on the basis of the average profits for the last four years. The net profits for the last 4 years have been 2006 : Rs. 16, 000; 2007 : Rs. 12, 000; 2008 : Rs. 1, 000 (loss) and 2009 : Rs. 23, 000. Calculate C’s share of profits upto the date of death.

1. Rs. 2, 083

2. Rs. 1, 200

3. Rs. 1, 700

4. Rs. 500

Q.

The interest on the capital accounts of partners is credited to

1. (a) Interest A/C

2. (b) Profit and Loss A/C

3. (c) Partner’s Capital A/C

4. (d) None of the above

Q. Trendz Spa is a company listed on the Bombay Stock Exchange. Its Financial statements for the year ended 31 March 2015 Showed earning per share of Rs.136.
On 1 October 2015, Trendz spa made a 3 for 1 bonus issue. According to IAS 33 - 'Earning per share', what figure for the 2015 EPS will be shown as comparative information in the financial statements for the year ended 31 March 2016?

1. Rs.45.36
2. Rs.34
3. Rs.408
4. Rs.544

Q.

If the firm has sufficient bank balance for settlement to deceased partner, the journal entry would be-

1. None of the above

2. Deceased partner's Executor A/c Dr.

   To Bank A/c

3. Bank A/c Dr.

   To Deceased partner's Executor A/c

4. Deceased partner's A/c Dr.

   To Bank A/c

Q. State whether the following statements are true or false :

An amount due to a deceased partner is transferred to his executor’s loan A/c.

Q. Discuss the accounting treatment of the following transaction:

1. Add Rs. 4, 000 to debit side of profit & loss account
2. Add Rs. 4, 000 to debit side of trading account
3. Deduct Rs. 4, 000 from credit side of profit & loss account
4. Deduct Rs. 4, 000 from credit side of trading account

Q. On 1st april 2012 , an existing firm had assets of rs.75000 including cash of rs.5000. Its cr. Amounted to rs.10000 on that date . The firm had a reserve of rs.10000 while partners cap a/c showed a bal of rs.55000. If the normal rate of return is 20% and the goodwill of thw firm is valued at 24000 at 4 years of purchase of super profit . Find the average profit per year of the existing profit

Q. Objective Questions :
Answer in one Sentence :

How is amount due to deceased partner settled?

Q. 'A' purchased a computer on 1.04.06 for Rs. 60, 000. He purchased another computer on 1.10.07 for Rs. 40, 000. He charges depreciation at 20% p.a. on the straight-line method. What will be the closing balance of the computer as on 31.3.09?

1. Rs. 40, 000
2. Rs. 64, 000
3. Rs. 52, 000
4. Rs. 48, 000

Q. Ques. Following information is available about the business of a firm:
1. Profits: in 2013, Rs 40, 000; in 2014, Rs 50, 000; in 2015, Rs 60, 000;
2. Non-recurring income of Rs 1, 000 is included in the profits of 2014;
3. Profits of 2013 have been reduced by Rs 6, 000 because goods were destroyed by fire;
4. Goods havent been insured but it is thought to insure them in future. The insurance premium is estimated at Rs 400 per year;
5. Reasonable remuneration of the proprietor of business is Rs 6, 000 per year, but is hasnt been taken into account for calculation of above mentioned profits;
6. Profits of 2015 include Rs 5, 000 income on investment.
Goodwill is agreed to be valued at 2 years purchase of weighted average profits of the past 3 years. The appropriate weights to be used are:
2013- 1
2014- 2
2015- 3
Calculate the value of goodwill.