The following accounting adjustments becomes necessary when a new person is admitted as partner. Which of the following is correct?
I. Adjustment in the Profit sharing ratio
II. Adjustment for goodwill
III. Adjustment for capital
IV. Adjustment for revaluation of assets and liabilities

I and II are correct

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III and IV are correct

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II and IV are correct

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All of the above

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Solution

The correct option is D All of the above
According to section 31 of the Indian partnership act, 1932, a partner can be admitted only after the consent of the other partners. The following adjustments are required to meet when a new person is admitted as partner:
Adjustment in the profit sharing ratio.
Adjustment for goodwill.
Adjustment for capital.
Adjustment for revaluation of assets and liabilities.

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Similar questions

A, B

and

C

are partners sharing profits in the ratio of

\frac{4}{9} : \frac{3}{9} : \frac{2}{9}

B

retired and his capital after making adjustment for reserves and gain (profit) on revaluation stands at

R s . 1, 39, 200

A

and

C

agreed to pay him

R s . 1, 50, 000

in full settlement of his claim. Record necessary Journal entry for adjustment of goodwill if the new profit-sharing ratio is decided at

5 : 3

A, B and C are partners sharing profits in the ratio of 2 : 2 : 1. A retires and after all adjustments relating to revaluation, goodwill and accumulated profits the capital account of B showed a credit balance of Rs 1,40,000 and that of C Rs 1,00,000. It was decided to adjust the capitals of B and C in their profit sharing ratio. Calculate the new capitals of the partners and record necessary entry for bringing in or withdrawing cash.

Q. X, Y and Z are partners sharing profits and losses in the ratio of 6 : 3 : 1. They admitted W into partnership with effect from 1st April, 2019. New profit-sharing ratio between X, Y, Z and W was agreed to be 3 : 3 : 3 : 1. They also decide to record the effect of the following revaluations without affecting the book values of the assets and liabilities by passing an adjustment entry:

	Book Values (₹)	Revised Values (₹)
Plant and Machinery	3,50,000	3,40,000
Land and Building	5,00,000	5,50,000
Trade Creditors	1,00,000	90,000
Outstanding Expenses	85,000	1,00,000

Pass necessary adjustment entry.

Q. X, Y and Z are partners sharing profits ands losses in the ratio of 6 : 3 : 1 . They decide to take W into partnership with effect from 1st April, 2018 . The new profit-sharing ratio between X, Y , Z and W will be 3 : 3 : 3 : 1 . They also decide to record the effect of the following revaluations without affecting the book values of the assets and liabilities by passing a single adjustment entry:

	Book Value(₹ )	Revised Value(₹ )
Plant and Machinery	3,50,000	3,40,000
Land and Building	5,00,000	5,50,000
Trade Creditors	1,00,000	90,000
Outstanding Expenses	85,000	1,00,000

Pass necessary adjustment entry.

Q. A, B and C are partners sharing profits in the ratio of 4/9 : 3/9 : 2/9. B retires and his capital after making adjustments for reserves and gain (profit) on revaluation stands at ₹ 1,39,200. A and C agreed to pay him ₹ 1,50,000 in full settlement of his claim. Record necessary Journal entry for adjustment of goodwill if the new profit-sharing ratio is decided at 5 : 3.

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The following accounting adjustments becomes necessary when a new person is admitted as partner. Which of the following is correct?I. Adjustment in the Profit sharing ratioII. Adjustment for goodwillIII. Adjustment for capitalIV. Adjustment for revaluation of assets and liabilities

The following accounting adjustments becomes necessary when a new person is admitted as partner. Which of the following is correct?
I. Adjustment in the Profit sharing ratio
II. Adjustment for goodwill
III. Adjustment for capital
IV. Adjustment for revaluation of assets and liabilities