# Unseen Passage

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# Retirement or Death of a Partner MCQ Questions Class 12 Accountancy

Please refer to Chapter 4 Retirement/Death of a Partner MCQ Class 12 Accountancy with answers below. These multiple-choice questions have been prepared based on the latest NCERT book for Class 12 Accountancy. Students should refer to MCQ Questions for Class 12 Accountancy with Answers to score more marks in Grade 12 Accountancy exams. Students should read the chapter Retirement/Death of a Partner and then attempt the following objective questions.

## MCQ Questions Class 12 Accountancy Chapter 4 Retirement/Death of a Partner

Retirement/Death of a Partner MCQ Class 12 Accountancy provided below covers all important topics given in this chapter. These MCQs will help you to properly prepare for exams.

Question. Gain of Revaluation at the time of retirement is transferred to:
(a) All Partners
(b) Outgoing partner
(c) Remaining Partner
(d) Retiring Partner

A

Question. On retirement of a partner, unrecorded assets are
(a) debited to Revaluation Account.
(b) credited to Revaluation Account.
(c) credited to Partner’s Capital Account.
(d) debited to Profit and Loss Appropriation Account.

B

Question. At the time of retirement of a partner, profit (gain) on revaluation will be credited to the Capital Accounts of
(a) retiring partner.
(b) all partners in their old profit-sharing ratio.
(c) the remaining partners in their old profit-sharing ratio.
(d) the remaining partners in their new profit-sharing ratio.

B

Question. If Goodwill is appearing in the balance sheet , it will be Credited to
(a) Gaining partner
(b) Retiring partners
(c) All partners
(d) Remaining Partners’

C

Question. A, B, C are partners sharing profit and losses in the ratio of 4:3:1: B retires and gives his share of profit to A Rs. 3,600 and C Rs. 4,500. What is the Gaining sharing ratio of A and C?
(a) 4:5
(b) 2:1
(c) 68:48
(d) 4: 1

A

Question. increase in liability at the time of retirement of a partner is
(a) credited to Revaluation Account.
(b) debited to Revaluation Account.
(c) debited to Profit and Loss Account.
(d) debited to Profit and Loss Appropriation Account

B

Question. A, B and C are partners in a firm sharing profit/loss in the ratio of 2 : 2 : 1. On March 31, 2019, C died. Accounts are closed on Dec., 31 every year. The sales for the year 2018 was Rs.6,00,000 and the profits were Rs.60,000. The sales for the period from Jan. 1,2019 to March 31, 2019 were Rs.2,00,000. The share of deceased partner in the current year’s profits on the basis of sales is :
(a) Rs.20,000
(b) Rs.8,000
(c) Rs.3,000
(d) Rs.4,000

D

Question. In which ratio Retiring partner is compensated by the continuing partner for his share of goodwill,in which ratio?
(a) Gaining ratio
(b) Sacrificing ratio
(c) Old ratio
(d) New ratio

A

Question. Amount due to outgoing partner is shown on the balance sheet as his
(a) Liability
(b) Asset
(c) Capital
(d) Loan

D

Question. A, B and C are partners in a firm sharing profit and losses in 3:4:2 B retire from the firm. The profit on revaluation on that date was Rs. 72,000, New ratio between A and C is 5:3 Profit on revaluation will be distributed as:
(a) A Rs. 32,000 B Rs. 24,000 C Rs. 16,000
(b) A Rs. 24,000 B Rs. 32,000 C Rs. 16,000
(c) A Rs. 45,000 C Rs. 27,000
(d) A Rs. 47,250 C Rs. 24,750

B

Question. P, Q and R sharing profit and losses in the ratio of 8:5:3. Q retire from the firm takes 3/16 from P and R takes 5/16 from P. New profit sharing ratio between Q and R will be
(a) 1:1
(b) 10:6
(c) 9:7
(d) 5:3

A

Question. Gaining ratio is calculated by
(a) Old ratio – new share
(b) Old share + acquired share
(c) New share – old share
(d) New share + old share

C

Question. Gaining ratio is calculated at the time of
(b) Retirement of a Partner
(c) Dissolution of a partnership firm
(d) Both (a) and (c)

B

Question. In the event of death of a partner of employees provided fund appears in the balance will be shown in
(a) Capital A/c (Cr.)
(b) Account (Dr.)
(c) Liability side [Balance Sheet]
(d) Asset side[Balance Sheet]

C

Question. Share of goodwill of the retiring partner is debited to remaining partners in their
(a) Old ratio
(b) New ratio
(c) Gaining ratio
(d) Sacrificing ratio

C

Question. A, B and C are partner with Profit and Losses in the ratio of 4:3:2. B retires if A and C share profit of b in 5:3 then find the new profit sharing ratio
(a) 47:25
(b) 17:11
(c) 31:11
(d) 14:21

A

Question. If the retiring partner is not paid full amount due to him immediately on retirement, his balance is transferred to his :
(a) Loan A/c
(b) Capital A/c
(c) Bank A/c
(d) Suspense A/c

A

Question. A, B, C were partners sharing Profit and Losses in the ratio of 3.2.1 Books are closed on 31stMarch every year. C dies on 30th, Nov 2018. Under the partnership deed, the executors of deceased partner are entitled to his share of profit up to the date of death, Profit as on ended 31st Mar 2018 was Rs. 2,40,000 C’s share of profit will be
(a) 26667
(b) 40000
(c) 30000
(d) 53333

A

Question. On the retirement of Hari from the firm of Hari, Ram and Sharma, the Balance Sheet showed a debit balance of Rs. 12,000 in the Profit and Loss Account. For calculating the amount payable to Hari, this balance will be transferred
(a) to the credit of the Capital Accounts of Hari, Ram and Sharma equally.
(b) to the debit of the Capital Accounts of Hari, Ram and Sharma equally.
(c) to the debit of the Capital Accounts of Ram and Sharma equally.
(d) to the credit of the Capital Accounts of Ram and Sharma equally.

B

Question. Choose the odd one:
(a) Revaluation Account
(b) Realisation of assets.
(d) Gaining ratio.

B

Question. Outgoing partner give his share of profit remaining partners. In what ratio do the remaining partners contribute to such compensation amount?
(a) Gaining ratio
(b) Capital ratio
(c) Sacrificing ratio
(d) Old profit sharing ratio

A

Question. Claim of the retiring partner is payable in the following form
(a) Fully in cash
(b) Fully transferred to loan A/c to be paid later with some interest on it
(c) Party in cash and party as loan repayable later with agreed interest
(d) Any of the above method

D

Question. A ,B and C are partners sharing profits in the ratio 2:2:1. B retires from the firm .The capital account of A,B and C are Rs 60,000 Rs70,000 and Rs 50,000 respectively after adjustment of goodwill , reserved and revaluation . B was to paid in cash brought in by A and C in such a way that there capital are in proportion of new ratio . How much amount A and C must bring to pay B :
(a) Rs 50,000 by A & Rs 20,000 by B
(b) Rs 60,000 by A & Rs 10,000 by B
(c) Rs35,000 by A and Rs 35,000 by B
(d) Rs 40,000 by A and Rs 30,000 by B

B

Question. 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

A

Question. 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

D

Question. 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

C

Question. 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

C

Question. A, B and C are partners sharing profit or loss in the ratio of 2 : 3 : 4. A retires and after A’s retirement B and C agreed to share profit or loss in the ratio of 3 : 4 in future. Their gaining ratio will be :
(a) 2 : 3
(b) 4 : 3
(c) 3 : 4
(d) 1 : 1

C

Question. A, B and C were partners in a firm sharing profits and losses in the ratio of 2:2:1. The capital balance are Rs.50,000 for A, Rs.70,000 for B, Rs.35,000 for C. B decided to retire from the firm and balance in reserve on the date was Rs.25,000. If goodwill of the firm was valued at Rs.30,000 and profit on revaluation was Rs.7,500 then, what amount will be payable to B?
(a) Rs.70,820
(b)(a) Rs.76,000
(c) Rs.75,000
(d) Rs.95,000

D

Question. At the time death of a partner general reserve appearing in the balance sheet should be credited to:
(a) All partners including deceased partner in their old profit sharing ratio
(b) Remaining partners in the new profit sharing ratio
(c) Neither the decreased nor the remaining partners
(d) Remaining partner in gaining ratio

B

Question. Retiring or outgoing partner
(a) Is liable for firm liabilities
(b) Not liable for any liabilities of the firm
(c) Is liable for obligation incurred before his retirement
(d) Is liable for obligation incurred before and after his retirement

C

Question. At the time of retirement of a partner, profit on revaluation will be credited to:
(a) Capital Account of retiring partner
(b) Capital Accounts of all partners in the old profit-sharing ratio.
(c) Capital Accounts of the remaining partners in their old profit-sharing ratio
(d) Capital Accounts of the remaining partners in their new profit-sharing ratio

B

Question. What journal entry will be recorded for writing off the goodwill already existing in Balance Sheet at the time of retirement of a partner?
(a) Retiring Partner’s Capital A/c Dr.
To Goodwill A/c
(b) All Partner’s Capital A/cs (including retiring) Dr. (in old ratio)
To Goodwill A/c
(c) Remaining Partner’s Capital A/cs Dr. (in gaining ratio)
To Goodwill A/c
(d) Remaining Partner’s Capital A/cs Dr. (in new ratio)
To Goodwill A/c

B

Question. Revaluation account is prepare to calculate gain or loss at the time of
(b) Retirement of a partner
(c) Death of a partner
(d) All of a above

D

Question. An account prepared to ascertain the gain or loss at the time of death of a partner is called
(a) A realisation Account
(b) Executors Account
(c) Revaluation Account
(d) Decreased Partner

C

Question. Partner’s Capital Account is debited
(a) to record the General Reserve
(b) to record the gain on revaluation
(c) to record the Profit and Loss A/c (Dr.)
(d) to record the shortage of capital brought in

A

Question. At the time of retirement of an existing partner, goodwill already shown in the books is written off in ratio.
(a) old
(b) new
(c) sacrifice
(d) gaining

A

Question. At the time of retirement of a partner, account is prepared.
(a) revaluation A/c
(b) profit and loss A/c
(c) balance sheet
(d) All of these.

A

Question. The amount due to deceased partner is paid to
(a) His Father.
(b) His Wife.
(c) His Legal Heir,
(d) Remaining Partners.

B

Question. Gaining ratio is
(a) Old Profit-sharing Ratio – New Profit-sharing Ratio.
(b) Old Profit-sharing Ratio – New Profit-sharing Ratio.
(c) New Profit-sharing Ratio – Old Profit-sharing Ratio,
(d) New Profit-sharing Ratio – Old Profit-sharing Ratio.

B

Question. The amount due to the deceased partner is paid to his……….
(a) Father
(b) Friend
(c) Wife
(d) Executors

D

Question. P, Q and R are sharing profits and losses equally. R retires and the goodwill is appearing in the books at Rs.30,000. Goodwill of the firm is valued at Rs. 1,50,000. Calculate the net amount to be credited to R’s Capital A/c.
(a) Rs.60,000
(b) Rs.50,000
(c) Rs.40,000
(d) Rs. 10,000

C

Question. What treatment is made of accumulated profits and losses on the retirement of a partner?
(a) Credited to all partner’s capital accounts in old ratio
(b) Debited to all partner’s capital accounts in old ratio
(c) Credited to remaining partner’s capital accounts in new ratio
(d) Credited to remaining partner’s capital accounts in gaining ratio

A

Question. The balance of Joint Life Policy Account and Joint Life Policy Reserve A/c is:
(a) Always Equal
(b) Always Unequal
(c) Not Necessary
(d) None of these

C

Question. A, B and C were partners sharing profits and losses in the ratio of 2 : 2 : 1. Books are closed on 31st March every year. C dies on 5th November, 2018. Under the partnership deed, the executors of the deceased partner are entitled to his share of profit to the date of death, calculated on the basis of last year’s profit. Profit for the year ended 31 st March, 2018 was Rs.2,40,000. C s share of profit will be :
(a) Rs.28,000
(b) Rs.32,000
(c) Rs.28,800
(d) Rs.48,000

C

Question. Retirement of a partner is of partnership firm.
(a) dissolution
(b) winding up
(c) reconstitution
(d) None of these.

C

Question. Revaluation account or Profit & loss adjustment account is
(a) Personal Account
(b) Real Account
(c) Nominal Account
(d) None of the options

C

Question. 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) Capital Ratio
(c) Sacrificing Ratio
(d) Profit Sharing Ratio

A

Question. Revaluation Account is prepared to give effect to
(a) change in value of assets alone.
(b) change in value of liabilities alone.
(c) undistributed profits and losses.
(d) change in the values of assets and liabilities.

D

Question. Revaluation account is prepared at the time of :
(b) Retirement of a partner
(c) Death of a partner
(d) Reconstitution of the firm

D

Question. If three partners A, B, C are sharing profit as 5:3:2,then on the death of a partner A, how much B and C will pay to A executor on account of goodwill. Goodwill is to be calculated on the basic of 2 years purchase of last 3 years average profit, profits for the last 3 years are Rs. 3,28,000 Rs. 3,46,000 and Rs. 4,00,000.
(a) Rs. 3,16,000 and Rs. 1,42,000
(b) Rs. 2,44,000 and Rs. 2,16,000
(c) Rs. 4,29,600 and Rs. 2,86,400
(d) Rs. 2,16,000and Rs. 1,44,000

C

Question. The Partnership Deed does not have a clause on rate of interest to be paid on amount due to heirs of deceased partner. At what rate interest on the outstanding amount shall be payable?
(a) At the rate at which the banks grant loan.
(b) At the rate of interest provided in the Partnership Act, 1932.
(c) At the rate of interest demanded by the heirs of the deceased partner.
(d) 8% p.a.

B

Question. On the death of a partner, his share in the profits of the firm till the date of his death is transferred to the
(a) Debit of Profit and Loss Account
(b) Credit of Profit and Loss Account.
(c) Debit of Profit and Loss Suspense Account.
(d) Credit of Profit and Loss Suspense Account

C

Question. A, B and C sharing profit in ratio 3:2:1 C retires from the firm. Goodwill is to be valued at Rs. 60,000 find the amount payable to retiring on account of goodwill
(a) Rs. 30,000
(b) Rs. 20,000
(c) Rs. 10,000
(d) Rs. 60,000

B

Question. A ,B & C are partners sharing profits in ratio 3:2:1.C retired from the firm . The total capital of new firm is fixed at Rs 60,000 . What will be the new capital of A and B :
(a) Rs 30,000 and Rs 30,000
(b) Rs 24,000 and Rs 36,000
(c) Rs 36,000 and Rs 24,000
(d) Rs 40,000 and Rs 20,000

C

Question. On retirement of a partner, goodwill will be credited to the Capital Account of:
(a) Retiring Partner
(b) Remaining Partners
(c) All Partners
(d) None of the Above

A

Question. On the death of a partner, the amount due to him will be credited to :
(a) All partner’s Capital Accounts
(b) Remaining partner’s Capital Accounts
(c) His Executor’s Account
(d) Governments’ Revenue Account

C

Question. On retirement of a partner, his capital account will be credited with
(a) His/her share of goodwill.
(b) His share in reserves and surplus.
(c) His share of profit in revaluation
(d) All of the above

D

Question. On the death of a partner, the amount of joint life policy should be credited to the capital accounts of:
(a) All the partners including the deceased partner in their profit sharing ratio.
(b) The remaining partners in the new profit sharing ratio.
(c) Only the deceased partner’s capital account.
(d) Neither the deceased partner nor the remaining partners’ capital account.

A

Question. ‘Gaining Ratio’ means :
(a) Old Ratio – New Ratio
(b) New Ratio – Old Ratio
(c) Old Ratio – Sacrificing Ratio
(d) New Ratio – Sacrificing Ratio

B

Question. Which of the following statement is correct?
(a) Goodwill at the time of retirement of a partner is credited to remaining Partners’ Capital Accounts in sacrificing ratio.
(b) Goodwill at the time of retirement of a partner is credited to remaining Partners’ Capital Accounts in gaining ratio.
(c) Goodwill at the time of retirement of a partner is debited to remaining Partners’ Capital Accounts in sacrificing ratio.
(d) Goodwill at the time of retirement of a partner to the extent of retiring Partner’s Share is debited to remaining Partners’ Capital Accounts in gaining ratio.

D

Question. On retirement of a partner, the remaining partner’s who have gained due to change in profit sharing ratio should compensate the:
(a) Retiring partners only.
(b) Remaining partners (who have/sacrificed) as well as the retiring partners.
(c) Remaining partners only (who have sacrifice.
(d) None of the above.

A

Question. On retirement of a partner, unrecorded assets are:
(a) Credited to Revaluation account
(b) Shown in balance sheet of new firm
(c) All of the above (a & b)
(d) None of the above

C

Question. Which of the following is true about profit and loss suspense account?
(a) Profit and loss suspense account is shown in new balance sheet on assets side.
(b) Profit and loss suspense account is closed by transferring its balance to profit and loss appropriation account.
(c) In partnership account, Profit and loss suspense account is opened only in case of death of a partner.
(d) All of the above

D

Question. Partnership will be dissolved if
(a) profit sharing ratio changed
(b) admission of a new partner
(c) retirement of a partner
(d) All of these

D

Question. The retiring/deceased partner must be compensated in the form of premium (goodwill) for the share of profit in favour of continued partners. .
(a) sacrificed
(b) gained
(c) obtained
(d) None of these.

A

Question. At the time of death of a partner account is prepared.
(a) Representative Account
(b) Deceased Partner’s Capital A/c
(c) Profit and Loss Account
(d) All of these.

A

Question. On the death of a partner in a firm payments are made to;
(a) Capital A/c
(b) Executor’s A/c
(c) Current A/c
(d) Loan A/c

B

Question. What are the methods of calculating share of the deceased partner in the profit of the firm upto the date of death:
(a) On time basis
(b) On sales basis
(c) Both (a) and (b)
(d) None of these

C

Question. Joint life policy amount received by a firm is distributed in _____.
(a) Opening capital ratio.
(b) Closing capital ratio.
(c) Old profit sharing ratio of partners.
(d) New profit sharing ratio of partners.

C

Question. On retirement, profit on revaluation of assets and liabilities is credited to:-
(a) All the partners in old profit sharing ratio.
(b) Remaining partners in new profit sharing ratio.
(c) The capital account of the retiring partners only.
(d) None

A

Question. How goodwill is recorded on the retirement of a partner?
(a) Remaining Partner’s Capital A/cs Dr. (In Gaining Ratio)
To Retiring Partner’s Capital A/c (with his share of goodwill)
(b) Remaining Partner’s Capital A/cs Dr. (In New Ratio)
To Retiring Partner’s Capital A/c (with his share of goodwill)
(c) Goodwill A/c Dr.
To All Partner’s Capital A/cs (In Old Ratio)
(d) Goodwill A/c Dr.
To Retiring Partner’s Capital A/c (with his share)

A

Question. Retiring partner is compensated by the continuing partners in their
(a) Gaining Ratio.
(b) Capital Ratio.
(c) Sacrificing Ratio.
(d) Profit-sharing Ratio.