# MCQ Questions Chapter 4 Reconstitution of a Partnership Firm – Retirement/Death of a Partner Class 12 Accountancy

Please refer to MCQ Questions Chapter 4 Reconstitution of a Partnership Firm – Retirement/Death of a Partner Class 12 Accountancy with answers provided below. These multiple-choice questions have been developed based on the latest NCERT book for class 12 Accountancy issued for the current academic year. We have provided MCQ Questions for Class 12 Accountancy for all chapters on our website. Students should learn the objective based questions for Chapter 4 Reconstitution of a Partnership Firm – Retirement/Death of a Partner in Class 12 Accountancy provided below to get more marks in exams.

## Chapter 4 Reconstitution of a Partnership Firm – Retirement/Death of a Partner MCQ Questions

Please refer to the following Chapter 4 Reconstitution of a Partnership Firm – Retirement/Death of a Partner MCQ Questions Class 12 Accountancy with solutions for all important topics in the chapter.

MCQ Questions Answers for Chapter 4 Reconstitution of a Partnership Firm – Retirement/Death of a Partner Class 12 Accountancy

Question. 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

A

Question. 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

A

Question. P, Q and R are partners sharing profits in the ratio of 8:5:3. P retires. Q takes 3/16th 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

A

Question. 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

B

Question. 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

C

Question. 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

D

Question. 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)

B

Question. 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

D

Question. 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. 10,000Full amount is expected from the balance debtors. On account of this item loss in revaluation accountwill be:
(a) Rs. 10,200
(b) Rs. 3,000
(c) Rs. 7,000
(d) Rs. 4,000

C

Question. 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

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. A, B and C are partners sharing profits in the ratio of 5 : 2 : 1. If the new ratio on the retirement of A is 3 : 2, what will be the gaining ratio?
(a) 11: 14
(b) 3 : 2
(c) 2 : 3
(d) 14:11

D

Question. P, Q and R are partners sharing profits in the ratio of 5 : 4 : 3. Q retires and P and R decide to share future profits equally. Gaining Ratio will be :
(a) 5 : 3
(b) 1 : 1
(c) 1 : 3
(d) 3 : 1

C

Question. A, B and C are partners sharing profits in the ratio of 1/2 : 1/4 : 1/4. New ratio on the retirement of B will be :
(a) 2 : 4
(b) 1 : 2
(c) 2 : 1
(d) 1/4 : 1/2

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

B

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. 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. 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. 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. 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. 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.‘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. On 1st April, 2019 A, B and C were partners sharing profits and losses in the ratio of 5 : 3 : 2 respectively. On this date B retires. The new profit sharing ratio of A and C will be 3 : 2. Gaining ratio will be :
(a) 1 :2
(b) 2 : 1
(c) 1 : 1
(d) 5 : 2

A

Question. B, P and L sharing profits in the ratio 4:3:2. B retires, P and L decided to share profits in future in the ratio of 5 : 3. Gaining ratio will be :
(a) 11:21
(b) 21: 11
(c) 11 : 13
(d) 13 : 11

B

Question. 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, theamount payable to Chetan will be:
(a) Rs. 1,350
(b) Rs. 13,362
(c) Rs. 12,162
(d) Rs. 1,362

C

Question. X,Y and Z were partners in a firm sharing profits in ratio of 3:4:1 X retired and new profit sharingratio 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

C

Question. At the time of retirement, amount remaining in Investment Fluctuation Reserve after meeting the fallin 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. Retiring partner is compensated for parting with the firm’s future profits in favour of remainingpartners. 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 profitsafter retirement if his dues remain unpaid
(a) Section 73
(b) Section 26
(c) Section 4
(d) Section 37

D

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 Qwould 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

B

Question. A, B and C were partners. Their partnership deed provided that they were to share profits as; A 26per cent; B 34 per cent; C 40 per cent ; and that if a partner retires, his capital should remain in thebusiness for a stated period at a fixed rate of interest, but that the retiring partner’s share should becredited with an amount for Goodwill, based upon one and a half year’s average profits, for the fiveyears prior to his death, but be subject to deduction of 5 per cent from the book debts. C retired, andthe 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 becredited to C’s Account will be:
(a) Rs. 2,700
(b) Rs. 6,300
(c) Rs. 7,200
(d) Rs. 3,600

C

Question. When the balance sheet is prepared after retirement (subsequent to preparation of RevaluationAccount), ————- values are shown in it.
(a) Historical
(b) Realisable
(c) Market
(d) Revalued

D

Question. Match the following with respect to the treatment of goodwill:

(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

D

Question. A, B and C are partners in a firm sharing profits and losses in the ratio of 2:2:1. On March, 31, 2018 Cdied. Accounts are closed on December 31st every year. The sales for the year 2017 was Rs. 6,00,000 andthe profits were Rs. 60,000. The sales for the period for the period January 1, 2018 to March 31st 2018 wereRs.2,00,000. The share of deceased Partner in the current year’s profit on the basis of sales is
(a) Rs.20,000
(b) Rs. 8,000
(c) Rs. 3,000
(d) Rs. 4,000

D

Question. An account operated to ascertain the loss or gain at the time of death of a Partner is called
(
a) Realisation Account
(b) Executors Account
(c) Revaluation Account
(d) Deceased Partners capital account

C

Question. On death of a Partner, the remaining partner(s) who have gained due to change in profit sharing ratioshould compensate the
(a) Deceased partner only
(b) Remaining partners (who have sacrificed) as well as deceased partner
(c) Remaining partners only (who have sacrificed)
(d) None of the above

B

Question. A, B and C were partners sharing profits and losses in the ratio of 2:2:1. Books are closed on 31st Marchevery year. C died on November 5, 2018. Under the Partnership deed the executors of the deceased partnerare entitled to his share of profit to the date of death calculated on the basis of last year’s profit. Profit forthe year ended 31st March, 2018 was Rs. 2,14,000. 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. Kiran, umesh and Aditya were in Partnership firm. Suddenly on October 31,2018, Kiran died. Amountpayable to her on that date amounted to Rs. 1,05,000. Rs. 5000 was paid immediately and balance was paidin 4 equal annual instalments along with interest @ 12% p.a.starting from 31st October 2019. Calculate theinterest due as on 31st March, 2019. Financial year was followed as accounting year by the firm.
(a) Rs. 2,500
(b) Rs.3,000
(c) Rs.4,500
(d) Rs. 3,750

C

Question. Which account is opened to transfer deceased partner’s share of profit to his capital account
(b) P&L Appropriation account
(c) P&L Suspense account
(d) None of the above

C

Question. Karan, Aman and Girish were Partners with capitals of Rs. 3,00,000’; Rs.2,50,000 and Rs.2,00,000 respectively as on 31st March, 2018. Aman died, partners decided to pay the entire amount to Aman’sExecutor but they only had Rs.50,000 cash and rest of the amount was to be brought in by Karan and Girishin such a way that their future capital will be equal. Calculate the amount to be brought in by Karan and Girish.
(a) Rs.50,000 by Karan and Rs.1,50,000 by Girish
(b) Rs.50,000 by Girish and Rs.1,50,000 by Karan
(c) Rs.25,000 by Karan and Rs.1,25,000 by Girish
(d) Rs.25,000 by Girish and Rs.1,25,000 by Karan

A

Question. “Retiring partner is not liable for firm’s acts after his retirement”. Is the statement True or False?

False

Question. In case of goodwill account written off the capital account of all partners is credited.

False

Question. Retiring Partner remains liable for all the acts of the firm up to the date of his retirement.

True

Question. Provident Fund is credited to all partners in their old ratio at the time of Retirement of a Partner.

False

Question. Share in profit of deceased partner is transferred to P&L suspense A/c.

True

Question. A, B and C are partners sharing profits in the ratio of 5:2:1.On retirement of C, the gaining ratio will be 5:2.

True

Question . On the death of a partner, Cr. Balance of P&L A/c appearing in the Balance sheet should be credited to the capital A/c of the remaining partners in their new profit sharing ratio.

False

Question. The share of goodwill of the retiring partner is debited to remaining partner in their gaining ratio.

True

Question. Remaining partners acquire the share of profit of the retiring partner in old ratio.

False

Question. Goodwill is recorded in the books only when it is purchased.

True

Question. Partner capital account is debited with his/her share of goodwill is credited in their gaining ratio.

False

Question. The retiring partner’s capital account is debited with his/her share of goodwill and remaining partner’s capital account is credited.

False

Question. Interest on drawing due from deceased partner till the date of the death is ________ to his capital account.

Debited

Question. The share of profit of deceased partner from the closure of last balance sheet till the date of his death is credited to __________ account.

Profit and Loss A/c

Question. New ratio – old ratio = ________ ratio.

Gaining

Question. A, B,C, are partners sharing profits in the ratio of 7:5:4 . C died on 30th June, 2018 and profits for the year 2017-18 were Rs. 24,000. C’s share in profit will be ______.

Rs. 1,500

Question. As per section 37 of the Indian partnership act 1932, in the absence of partnership deed, the retiring partner is entitled to interest @______ till the time amount due to him is not paid.

6%

Question. In case of death of a partner the profit may be estimated on the basis of time or ____________.

Turnove

Question. Ram Mohan and Sohan are partner sharing profit in the ratio of 4:3:2 , Mohan died on 1st Oct 2019,new ratio will be 1:2 among Ram and Sohan , goodwill of the firm is valued at Rs. 6,00,000_____________ amount will be transfer to Mohan capital A/c.

Rs.2,00,000

Question. (A)When a partner retires or dies his share of profit taken over by the remaining partners in ________ ratio.