Partnership Accounts

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1. X, Y and Z are partner sharing profit and losses in the ratio of 5:3:2.Z retires and goodwill of the firm is to be valued at Rs.50,000 find the amount payable to retiring partner on account of goodwill.  

Explanation

When Z retires from the partnership, the remaining partners, X and Y, will continue to share the profits and losses in the ratio of 5:3. To calculate the amount payable to the retiring partner on account of goodwill, we need to find the difference between the new ratio and the old ratio (5:3:2).

The difference in the ratios is 5:3:2 - 5:3 = 0:0:2. This means that Z's share of goodwill is 2/10 (since the total ratio is now 10).

Since the total value of the goodwill is given as Rs.50,000, Z's share of the goodwill would be 2/10 * Rs.50,000 = Rs.10,000. Therefore, the amount payable to the retiring partner on account of goodwill is Rs.10,000.

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Partnership Accounts - Quiz

This Partnership Accounts quiz assesses knowledge on goodwill calculation, capital contributions, profit sharing ratios, and hidden goodwill in partnerships. It is designed for learners to understand and apply accounting principles in real-world partnership scenarios.

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2. A,B and C are partners in the ratio of 3:2:1. D is admitted in the firm for 1/6th share in profits. C would retain his original share. The new profit sharing ratio between A,B,C and D will be  

Explanation

When D is admitted into the firm for a 1/6th share in profits, the remaining share of profits is divided among A, B, and C in the ratio of 3:2:1. Since C retains his original share, the new profit sharing ratio between A, B, C, and D will be 3:2:1:1/6. Simplifying this ratio, we get 18:12:6:1. To further simplify, we can multiply all the ratios by 1/6 to get 3:2:1:1/6, which is equivalent to 12:8:5:5. Therefore, the correct answer is 12:8:5:5.

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3. M and N share profit in the ratio of 2:1. O has been admitted with 1/4' share in profit. The new profit sharing ratio of partner will be  

Explanation

When O is admitted with a 1/4 share in profit, it means that O will receive 1/4 of the total profit. Since M and N share profit in the ratio of 2:1, M will receive 2/3 of the remaining profit after O's share is deducted, and N will receive 1/3 of the remaining profit. Therefore, the new profit sharing ratio of M, N, and O will be 2:1:1.

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4. The profits of last five years are Rs. 85,000; Rs. 90,000; Rs. 70,000; Rs. 1,00,000 and Rs. 80,000. Find the value of goodwill, if it is calculated on average profits of last five years on the basis of 3 years of purchase.  

Explanation

The value of goodwill is calculated based on the average profits of the last five years. To find the average, we add up the profits of the last five years (85,000 + 90,000 + 70,000 + 100,000 + 80,000 = 425,000) and divide it by 5 (number of years). Therefore, the average profit is 85,000. Since the goodwill is calculated based on 3 years of purchase, we multiply the average profit by 3 (85,000 * 3 = 255,000). Hence, the value of goodwill is Rs. 2,55,000.

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5. Total capital employed by a partnership firm is Rs.1,00,000 and its average profit is Rs.25,000. Normal rate of return is 20% in similar firms working under similar conditions. The firms earns super profit of:

Explanation

The normal rate of return is 20% on the total capital employed, which in this case would be Rs.20,000 (20% of Rs.1,00,000). However, the firm's average profit is Rs.25,000, which is higher than the normal rate of return. The difference between the average profit and the normal rate of return is considered as super profit. Therefore, the firm earns a super profit of Rs.5,000 (Rs.25,000 - Rs.20,000).

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6. Interest on capital at12%p.a. is to be allowed. Capital in the beginning was Rs.6,00,000. Interest amount will be  

Explanation

The correct answer is Rs.72,000. This is because the interest on capital at 12% per annum is calculated by multiplying the capital amount (Rs.6,00,000) by the interest rate (12%) and dividing it by 100. Therefore, the interest amount will be (6,00,000 * 12) / 100 = Rs.72,000.

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7. It is decided to form a partnership with a total capital of Rs. 6,00,000.Three partners Ajay, Vijay and Sanjay who will share profits and losses in the ratio of 5:3:2, agreed to contribute proportionate capital. Their capital contribution will be  

Explanation

The correct answer is Rs.3,00,000: Rs. 1,80,000: Rs. 1,20,000. This is because the partners will share the profits and losses in the ratio of 5:3:2. To determine their capital contribution, we need to divide the total capital of Rs. 6,00,000 in the same ratio. Therefore, Ajay will contribute 5/10 * Rs. 6,00,000 = Rs. 3,00,000, Vijay will contribute 3/10 * Rs. 6,00,000 = Rs. 1,80,000, and Sanjay will contribute 2/10 * Rs. 6,00,000 = Rs. 1,20,000.

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8. Ram and Mohan are partners sharing profits equally. They admitted Sohan for1/3share in the firm. The new profit sharing ratio will be  

Explanation

When Sohan is admitted for a 1/3 share in the firm, it means that he will receive 1/3 of the total profits. Since Ram and Mohan were previously sharing the profits equally, they each received 1/2 of the total profits. So, the new profit sharing ratio will be 1:1:1, meaning that Ram, Mohan, and Sohan will now share the profits equally.

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9. Ram and Rahim have been sharing profit and losses in the ratio of 4:3Rahman is admitted as a partner. He acquires his 1/7 share only from Rahim. New ratio will be    

Explanation

When Rahman is admitted as a partner, he acquires his 1/7 share only from Rahim. This means that Rahman's share is 1/7 of Rahim's share. Since Ram and Rahim have been sharing profit and losses in the ratio of 4:3, Rahman's share would be 1/7 of 3/7 of the total profit. Simplifying this, Rahman's share would be 3/49 of the total profit. Therefore, the new ratio would be 4:2:1, as Ram's share remains the same, Rahim's share is reduced by Rahman's share, and Rahman's share is 3/49 of the total profit.

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10. (i) Actual average profit Rs. 72,000 (ii)   Normal rate of return 10% (iii)  Assets Rs. 9,70,000 (iv)   Current Liabilities Rs. 4,00,000 Goodwill according to capitalization method will be 

Explanation

Goodwill according to the capitalization method is calculated by subtracting the normal rate of return from the actual average profit and then dividing it by the normal rate of return. In this case, the normal rate of return is 10% and the actual average profit is Rs. 72,000. Using the formula (Actual average profit - Normal rate of return) / Normal rate of return, we get (72000 - 10% of 72000) / 10% = Rs. 1,50,000. Therefore, the correct answer is Rs. 1,50,000.

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11. General Reserve at the time of admission of a new partner is transferred to  

Explanation

When a new partner is admitted to a partnership, the General Reserve is transferred to the Capital Account of the partners. This is because the General Reserve represents the accumulated profits of the partnership, which belong to the partners. By transferring it to the Capital Account of the partners, the new partner is able to share in the accumulated profits of the partnership. This adjustment ensures that the new partner receives their fair share of the partnership's profits.

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12. Arjun and Bheem are partnersinthe firm sharing profits and losses in the ratio 1 : 1. They have invested capital of Rs.80,000 and Rs.50,000 respectively. As per partnership deed, they are entitled to interest on capital @ 2.5% p.a. before sharing the profits. During the year firm earned a profit of Rs.5000 before allowing interest. The net profit will be apportioned as  

Explanation

Arjun and Bheem are entitled to interest on their capital before sharing the profits. The interest on Arjun's capital of Rs.80,000 at a rate of 2.5% p.a. is Rs.2,000, and the interest on Bheem's capital of Rs.50,000 is Rs.1,250. Therefore, the total interest to be deducted from the profit is Rs.3,250. After deducting the interest, the remaining profit is Rs.1,750. Since Arjun and Bheem share the profits and losses equally, they will each receive Rs.875.

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13. In the absence of any provision in the partnership agreement, profits and losses are shared

Explanation

In the absence of any provision in the partnership agreement, the profits and losses are shared equally among the partners. This means that each partner receives an equal share of the profits and is responsible for an equal share of the losses. This is a common default arrangement in partnerships when there is no specific agreement in place regarding the distribution of profits and losses.

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14. Revaluation account is prepared at the time of_____________  

Explanation

The revaluation account is prepared at the time of both the admission and retirement of a partner. This account is used to adjust the values of assets and liabilities in the books of accounts when a new partner is admitted or an existing partner retires. It helps in determining the new profit sharing ratio and adjusting the capital accounts of the partners. Therefore, the correct answer is both (a) and (b).

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15. Unless given otherwise,the ratio of sacrifice is the same as __________.

Explanation

The correct answer is "Old profit sharing ratio." This means that unless specified otherwise, the ratio of sacrifice (or the ratio in which profits are shared) remains the same as the old profit sharing ratio. In other words, the distribution of profits among the partners will be in accordance with the previous agreement or arrangement.

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16. The ratio in which the continuing partners acquire the putgoing (retired or deceased) partner's share is called___________.

Explanation

The gaining ratio refers to the ratio in which the continuing partners acquire the share of a retired or deceased partner in a partnership. It determines the new profit sharing ratio among the remaining partners after the exit of a partner. The gaining ratio is calculated based on the existing profit sharing ratios of the partners.

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17. Good purchased on credit during last year worth Rs. 60,000 were not recorded in the books of a partnership firm namely ABC and Co. whose profit is shared equally by A, B & C, but the said amount was included in last years closing stock figure. Adjusting entry will be Options :  (A)  S. Creditors A/c           Dr. 60,000                      To A A / c                                   60,000 (B)   Sundry Creditors A/c     Dr.60,000                            To A A/c                               30,000                           To B A/c                                   30,000 (C)    A's Capital                     Dr. 20,000            B's Capita!                     Dr. 20,000            C's Capital                    Dr. 20,000        To Sundry Creditors A / c                        60,000 (D)   None of the three.     

Explanation

The goods worth Rs. 60,000 were purchased on credit and were not recorded in the books. However, the amount was included in last year's closing stock figure, which means it was treated as an asset rather than a liability. To rectify this, you need to adjust the capital accounts of the partners to account for the liability to the creditors. Since the profits are shared equally among A, B, and C, each partner's capital is debited by a third of the total amount (60,000 / 3 = 20,000), and the Sundry Creditors account is credited by the total amount of the unrecorded purchases (60,000). This entry correctly reflects the liability to the creditors in the books while adjusting the partners' capital accounts accordingly.

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18. The profits of last three years are Rs.58000, Rs.55000 and Rs.61000. Capital employed is Rs.500000 and normal rate of return is 10%. The amount of goodwill calculated, on the basis of super profit method for three years of purchase will be  

Explanation

The super profit method calculates the value of goodwill based on the excess profit earned by a business over and above the normal rate of return. In this case, the normal rate of return is 10% of the capital employed, which is Rs.500,000. The average profit for the last three years is (Rs.58,000 + Rs.55,000 + Rs.61,000)/3 = Rs.58,667. The excess profit is Rs.58,667 - (10% of Rs.500,000) = Rs.58,667 - Rs.50,000 = Rs.8,667. The value of goodwill is calculated by multiplying the excess profit by the number of years of purchase, which is 3. Therefore, the amount of goodwill calculated is Rs.8,667 * 3 = Rs.26,000, which is closest to Rs.24,000.

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19. Goodwill is to be calculated at one and half years purchase of average profit of last 6 years. The firm earned profit during the first 3 years as Rs.30,000; 20,000 and 20,000 and suffered losses of Rs.5000, 3000 and 2000 in the last 3 years. Goodwill amount will be  

Explanation

Goodwill is calculated at one and a half years purchase of the average profit of the last 6 years. To calculate the average profit, we add up the profits of the first 3 years (30,000 + 20,000 + 20,000) and subtract the losses of the last 3 years (5,000 + 3,000 + 2,000). This gives us a total profit of 60,000 - 10,000 = 50,000. To calculate the goodwill, we multiply the average profit by one and a half, which is 50,000 * 1.5 = 75,000. Therefore, the correct answer is Rs.15,000.

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20. In the absence of any partnership agreement, profits & losses are shared among the partners  

Explanation

In the absence of any partnership agreement, the default rule is that profits and losses are shared equally among the partners. This means that each partner would receive an equal share of the profits and would also be responsible for an equal share of any losses incurred by the partnership. This is a fair and equitable way to distribute the financial outcomes of the partnership when there is no specific agreement in place to dictate otherwise.

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21. Raj, Jai and Hari are the partners sharing profits in the ratio 7:5:4. Hari died on 30th June 2006 and profits for the accounting year 2005-2006 were Rs. 24,000. How much share in profits for the period 1st April 2006 to 30th June 2006 will be credited to Hari's Account.  

Explanation

Since Hari died on 30th June 2006, his share in profits will only be calculated for the period from 1st April 2006 to 30th June 2006. This period is 3 months out of the total accounting year which is 12 months. Therefore, his share in profits for this period will be calculated as (3/12) * Rs. 24,000 = Rs. 6,000. However, since Hari is no longer alive, his share will be credited to his account, resulting in a deduction of Rs. 6,000. Hence, the correct answer is Rs. 1,500.

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22. General reserve at the time of retirement of a partner is transferred to_______  

Explanation

When a partner retires, the general reserve is transferred to the partners' capital accounts. This is because the general reserve represents the accumulated profits of the partnership, which should be distributed among the remaining partners. By transferring the general reserve to the partners' capital accounts, the retiring partner's share of the reserve is distributed among the remaining partners according to their profit-sharing ratios. This ensures that the retiring partner receives their fair share of the accumulated profits while also maintaining the capital accounts of the remaining partners.

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23. Interest on drawing is________for the business  

Explanation

Interest on drawing is considered as a gain for the business. This is because interest on drawing represents the interest earned by the business on the funds withdrawn by the owner for personal use. It is essentially the interest charged by the business to the owner for using its funds. Since this interest is an additional income for the business, it is considered as a gain.

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24. On admission of a partner unrecorded investments worth Rs. 5000 and unrecorded liability towards suppliers for Rs. 1500 will be recorded in  

Explanation

When a partner's unrecorded investments and unrecorded liability towards suppliers are admitted, they need to be recorded in the Revaluation Account. The Revaluation Account is used to adjust the values of assets and liabilities of the firm when a new partner is admitted. This account helps in determining the new profit sharing ratio and the adjustments needed for the incoming partner. The investments and liabilities will be recorded in this account to reflect their true value and to ensure that the balance sheet is accurate.

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25. Mr. X is a partner in a firm. He withdraws Rs.200 at the end of each month. If rate of interest is @ 5% p.a., the interest on drawings is

Explanation

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26. Profit and loss of realization account is shared among the partners in_________ ratio  

Explanation

The correct answer is "Old profit sharing ratio". In a partnership, the profit and loss of realization account is distributed among the partners based on their old profit sharing ratio. This means that the partners will receive their share of the profit or bear their share of the loss according to the agreed upon ratio before any changes were made to the partnership agreement.

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27. The profits of last three years are Rs. 43,000; Rs. 38,000 and Rs. 45,000. Find out the goodwill of two years purchase.

Explanation

The goodwill of two years purchase is calculated by multiplying the average profit of the last three years by two. The average profit is calculated by adding the profits of the last three years and dividing it by three. In this case, the average profit is (43,000 + 38,000 + 45,000) / 3 = 42,000. Therefore, the goodwill of two years purchase is 42,000 x 2 = 84,000.

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28. A, B and C are partners sharing profits/losses at 3:2:1. D was admitted in the firm as a new partner with 1/6th share. New profit/loss sharing ratio will be  

Explanation

The new profit/loss sharing ratio will be 15:10:5:6. This can be determined by adding the shares of the existing partners (3+2+1=6) and the share of the new partner (1/6). Then, the shares are adjusted proportionally to get the new ratio. In this case, A's share becomes 3/6, B's share becomes 2/6, C's share becomes 1/6, and D's share remains at 1/6. Simplifying these fractions gives the ratio 15:10:5:6.

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29. A, B and C are partners with capitals of Rs. 100,000, Rs. 75,000 and Rs. 50,000 respectively. On C's retirement his share is acquired by A and B in the ratio of 6:4 respectively. Gaining ratio will be       

Explanation

When C retires, his share is acquired by A and B in the ratio of 6:4. This means that A and B will divide C's share in the ratio of 6:4. Since C's capital is Rs. 50,000, A will receive (6/10) * 50,000 = Rs. 30,000 and B will receive (4/10) * 50,000 = Rs. 20,000. Therefore, the gaining ratio of A and B will be 30,000:20,000, which simplifies to 3:2.

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30. General reserve at the time of admission of a new partner is transferred to  .  

Explanation

When a new partner is admitted into a partnership, the general reserve is transferred to the partners' capital accounts. This is done to ensure that the new partner receives their share of the general reserve and that the capital accounts of all partners accurately reflect their ownership in the partnership. By transferring the general reserve to the partners' capital accounts, the new partner's capital is increased and the existing partners' capital remains unchanged. This adjustment helps maintain the equity and ownership structure of the partnership.

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31. J, K, and L are partners sharing profits and losses in the ratio of  3:2:1. They look a joint life policy of Rs.60000. On the death of L, what amount will be payable to each partner          

Explanation

The partners share profits and losses in the ratio of 3:2:1, which means that J will receive 3 parts, K will receive 2 parts, and L will receive 1 part. The total number of parts is 6.

The joint life policy is worth Rs.60000. Since L dies, the total amount will be distributed between J and K.

To find out how much each partner will receive, we need to divide the total amount in the ratio of their shares.

J's share is 3 parts out of 6, so he will receive 3/6 of Rs.60000, which is Rs.30000.

K's share is 2 parts out of 6, so he will receive 2/6 of Rs.60000, which is Rs.20000.

Since L has died, he will not receive any amount.

Therefore, J will receive Rs.30000, K will receive Rs.20000, and L will not receive any amount.

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32. Om, Jai and Jagdish are partners sharing profits and losses in the ratio of 5: 3 :2. Om retires and goodwill is valued at Rs.50,000. New profit sharing ratio of Jai and Jagdish will be equal. For the adjustment of goodwill, Jai and Jagdish's capital accounts will be debited by:  

Explanation

When Om retires, the remaining partners, Jai and Jagdish, will continue to share the profits equally. Since the new profit sharing ratio is equal, it means that both Jai and Jagdish will have equal capital after the adjustment. The goodwill is valued at Rs. 50,000, so it needs to be adjusted in their capital accounts. Since Jai and Jagdish's ratio is 1:1, the adjustment will be made in the same ratio. Therefore, Jai's capital account will be debited by Rs. 10,000 and Jagdish's capital account will be debited by Rs. 15,000.

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33. Ram, Mohan and Sohan are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. The firm took separate life policy of Rs.50,000, Rs.1,00,000 and Rs.1,50,000 for Ram, Mohan and Sohan respectively. The share of Mohan in the policy will be  

Explanation

The share of Mohan in the policy will be Rs.90,000 because the ratio of their profits and losses is 5:3:2. Therefore, Mohan's share is 3/10 of the total. The total sum insured is Rs. 3,00,000 (50,000 + 1,00,000 + 1,50,000). So, Mohan's share is 3/10 of Rs. 3,00,000, which is equal to Rs. 90,000.

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34. The profits for the last four years are given as follows   Year               Rs. 2000              40,000 2001              50,000 2002              60,000 2003              50,000 The value of goodwill on the basis of 3 years purchase of average profits based on the last four years will be :

Explanation

The value of goodwill is calculated by multiplying the average profits of the last four years by the number of years of purchase, which is 3 in this case. To find the average profits, we add up the profits for each year (40,000 + 50,000 + 60,000 + 50,000) and divide it by 4. The average profit is 50,000. Multiplying the average profit by 3 gives us the value of goodwill, which is 1,50,000. Therefore, the correct answer is Rs.1,50,000.

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35. A and B are partners, sharing profits in the ratio 5:3. They admit C with 1/5 share in profits, which he acquires equally from both i.e. 1/10 from A and 1/10 from B. Now profit sharing ratio will be  

Explanation

When C is admitted as a partner, his share in the profits is 1/5, which he acquires equally from both A and B. This means that C will receive 1/10 of the profits from A and 1/10 of the profits from B.

Since A and B were previously sharing profits in the ratio 5:3, their new profit sharing ratio will be adjusted to accommodate C's share.

To find the new ratio, we add C's share to A and B's previous shares.

The new profit sharing ratio will be 5 + 1/10 : 3 + 1/10 : 1/5, which simplifies to 51:31:20.

Therefore, the correct answer is 21:11:8.

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36. A firm had an unrecorded investment of worth Rs.5,000. Entry in the firms journal on admission of a partner will be
Options : (A)  unrecovered investment A/c   Dr .5000                     To Revaluation A/c                                     5000 (B)  Revaluation AIc                                  Dr.5000   To unrecorded investment A/ c                        5000 (C)   partner capital a/c                               Dr.5000                 To unrecorded investment A / c                    5000 (D) None of the three.

Explanation

The correct answer is A because it correctly records the unrecorded investment in the firm's journal on admission of a partner. The entry debits the Unrecovered Investment account for Rs. 5000 and credits the Revaluation account for the same amount. This entry reflects the increase in the firm's assets due to the partner's admission and the adjustment made to account for the previously unrecorded investment.

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37. X, Y and Z are partners in a firm. At the time of division of profit for the year there was dispute between the partners. Profits before salary of partners capital was Rs. 60,000 and Y claimed salary for his extra services to the firm @ 2,000 p.m. There was no agreement on this point. Calculate the amount payable to X, Y and Z respectively.  

Explanation

Since there was no agreement on Y's claim for extra services, it can be assumed that Y's claim for salary will not be considered in the division of profits. Therefore, the remaining profit of Rs. 60,000 will be divided equally among the three partners, resulting in Rs. 20,000 to each partner.

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38. In the absence of any agreement, the partners are entitled to interest on the loan advanced to the firm at the rate of                                                                

Explanation

In the absence of any agreement, the partners are entitled to interest on the loan advanced to the firm. The correct answer is 6% because it is the only option that is mentioned in the question. The question does not provide any further information or context to suggest a different interest rate. Therefore, 6% is the most logical choice based on the given information.

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39. Profit or loss on revaluation is shared among the partners in_________ ratio.  

Explanation

The correct answer is "Old Profit Sharing." This means that the profit or loss on revaluation is distributed among the partners based on their existing profit sharing ratio. In other words, the partners will receive the same proportion of the revaluation profit or loss as they would have received in the past based on their previous profit sharing arrangement.

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40. If the incoming partner brings any additional amount in cash other than his capital contributions then it is termed as_________  

Explanation

If the incoming partner brings any additional amount in cash other than his capital contributions, it is termed as "Premium for goodwill." This is because the additional cash is considered as an investment made by the incoming partner to gain a share in the goodwill of the partnership. The premium for goodwill represents the value placed on the reputation, customer base, and other intangible assets of the partnership.

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41. Ramesh and Suresh are partners sharing profits in the ratio of 2/3 and 1/3. Their capitals on Dec. 31, 2004 were Rs. 1,02,900 and Rs. 73,500 respectively. Mohan was admitted as a new partner on Jan. 1, 2005 for 1/5 share. He contributes 15210 as goodwill. He brings his capital in profit sharing ratio. Capital amount will be 

Explanation

Since Mohan is admitted as a new partner for a 1/5 share, the total profit sharing ratio becomes 2/3 + 1/3 + 1/5 = 11/15. To find Mohan's capital, we need to calculate his share of the total capital. Mohan's share of the total capital is (1/5) * (1/11) * (1,02,900 + 73,500) = Rs. 47,902.50. Therefore, the correct answer is Rs. 47,902.50.

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42. A and B are partners in a firm sharing profits and losses in the ratio of 3:2. They have invested capitals of Rs.40,000 and Rs.25,000 respectively. As per the partnership deed, they are entitled to interest on capital @ 5% p.a. before dividing the profits. During the year, the firm earned a profit of Rs.3,900 before allowing interest. The net profits will be apportioned as  

Explanation

The net profits will be apportioned in the ratio of 3:2, as per the partnership agreement. This means that for every 3 parts of profit, A will receive 2 parts and B will receive 3 parts. Since the total profit is Rs.3,900, we can calculate the amounts as follows: (3/5) * 3900 = Rs.2,340 for A and (2/5) * 3900 = Rs.1,560 for B. Therefore, the correct answer is Rs.390 to A and Rs.260 to B.

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43. Goodwill is to be calculated at one and half years purchase of average profit of last 5 years. The firm earned profit during the first 3 years as Rs. 20,000,18,000 and 9,000 and suffered losses of Rs. 2000 and 5000 in last 2 years. Goodwill amount will be_________  

Explanation

The average profit of the last 5 years can be calculated by adding up the profits of the first 3 years and subtracting the losses of the last 2 years. In this case, the total profit is Rs. (20,000 + 18,000 + 9,000 - 2,000 - 5,000) = Rs. 40,000. To calculate the goodwill, we multiply the average profit by one and a half years, which gives us Rs. (40,000 * 1.5) = Rs. 60,000. However, the question asks for the goodwill amount, not the average profit, so the correct answer is Rs.12,000.

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44. In the absence of a partnership deed, the allowable rate of interest on partners loan account will be  

Explanation

In the absence of a partnership deed, the allowable rate of interest on partners' loan account will be 6%. This means that if there is no agreement or specified rate mentioned in the partnership deed, the default rate of interest that can be charged on the loan provided by the partners is 6%.

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45. Pooja and Pratibha are partners sharing profits and losses in the ratio of 3:2. Pallavi is admitted for 1/5th share and brings Rs.10,000 as capital and necessary amount for his share of goodwill. The goodwill of the entire firm is value at Rs.40,000. Goodwill brought by Pallavi is  

Explanation

Pooja and Pratibha have a profit-sharing ratio of 3:2, which means that for every 3 parts of profit Pooja gets, Pratibha gets 2 parts. When Pallavi is admitted, she brings in a capital of Rs.10,000 and the necessary amount for her share of goodwill. The total goodwill of the firm is valued at Rs.40,000. Since Pallavi is admitted for 1/5th share, her share of the goodwill would be 1/5 x Rs.40,000 = Rs.8,000. Therefore, the correct answer is Rs.8,000.

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46. Ratan and Karan entered into partnership on April 1, 2002. They invested capital Rs.15,000 and Rs.10,000 respectively. It was agreed that 8% p.a. interest will be calculated both on capital and drawings. Drawings were made as follows                             RATAN                            KARAN June 30                 600                                  800 Sept. 30               500                                   700 Dec.31                 400                                   600 Karan was entitled to a salary of Rs. 250 p.m.Profit before adjusting interest and salary was Rs. 8848. Divisible profit will be  

Explanation

The divisible profit can be calculated by subtracting the total interest and salary from the profit before adjusting. The total interest can be calculated by multiplying the capital and drawings by the interest rate (8% p.a.) and dividing by 12 (to get the monthly interest). The total salary for Karan can be calculated by multiplying his monthly salary by the number of months (9 months). Subtracting the total interest and salary from the profit before adjusting gives the divisible profit. In this case, the divisible profit is Rs. 4000.

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47. Fluctuating capital account is credited with ____________      

Explanation

The correct answer is "All of the above". Fluctuating capital account is credited with interest on capital, profits of the year, and salaries or remuneration of the partners. This means that any of these items can increase the balance in the fluctuating capital account, resulting in a credit entry.

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48. Guarantee given to a partner Mohan by the other partner Suresh and Mahesh means         

Explanation

The guarantee given to Mohan by Suresh and Mahesh means that Mohan will receive the minimum guaranteed amount in case of loss or insufficient profit. Additionally, Mohan will not be required to contribute towards any losses. Even if there is sufficient profit, Mohan will still only receive the minimum guaranteed amount. Therefore, both options a and b are correct.

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49. X and Y are partners sharing profits in the ratio 5:3. They admitted Z for 1/5th share of profits, for which he paid Rs. 1,20,000 against capital and Rs. 60,000 against goodwill. Find the capital balances for each partner taking Z's capital as base capital.

Explanation

X and Y are partners sharing profits in the ratio 5:3. When Z is admitted for 1/5th share of profits, he pays Rs. 1,20,000 against capital and Rs. 60,000 against goodwill. Since Z's capital is taken as the base capital, his capital balance is Rs. 1,20,000. The ratio of X and Y's capital balances can be found by subtracting Z's capital from the total capital paid against capital and goodwill, which is Rs. 1,80,000 (Rs. 1,20,000 + Rs. 60,000). Therefore, the capital balances for X and Y are Rs. 3,00,000 and Rs. 1,80,000 respectively.

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50. The amount due to the retiring partner on account of goodwill is debited MT P3/N/2007 18 to the continuing partners in their________.  

Explanation

The retiring partner is entitled to receive his share of the goodwill from the continuing partners. The amount due to the retiring partner is debited to the continuing partners in their gaining ratio. This means that the continuing partners will bear the cost of the retiring partner's share of the goodwill in proportion to their gaining ratio. The gaining ratio is used to determine the new profit sharing ratio after the retirement of a partner.

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51. Total capital employed by a partnership firm is Rs.1,00,000 and its average profit is Rs.25,000. Normal rate of return is 20% in similar firms working under similar conditions. The firms earns super profit of:

Explanation

The normal rate of return is 20%, which means that the firm should be earning a profit of Rs.20,000 (20% of Rs.1,00,000). However, the firm is earning an average profit of Rs.25,000, which is Rs.5,000 more than the normal rate of return. This extra profit is considered as super profit. Therefore, the firm earns a super profit of Rs.5,000.

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52. X and Y have been sharing profit and losses in the ratio of 5:3; C is admitted as a partner. He acquires his 1/8th share only from B. New ratio will be

Explanation

When C is admitted as a partner, he acquires his 1/8th share only from B. This means that C will take 1 part out of the total 8 parts of the profit and losses. Since X and Y were sharing in the ratio of 5:3, their total ratio was 8 parts. So, C's share will be added to the total ratio, resulting in a new ratio of 5:2:1 (5 parts for X, 2 parts for Y, and 1 part for C). Therefore, the correct answer is 5:2:1.

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53. A, B and C are partners in a business sharing profits and losses in the ratio of3:2:1. On th June,2006, C retired from business, when his capital A/c after ail necessary adjustments showed a balance of Rs. 10,950. It was agreed that he should be paid Rs. 4950 in cash. On retirement and the balance in three equal yearly instalments with interest at 6% per annum. Amount of last instalment with interest will be:                                                   

Explanation

After C's retirement, his capital account showed a balance of Rs. 10,950. Out of this, Rs. 4,950 was paid to him in cash. The remaining amount of Rs. 6,000 will be paid to him in three equal yearly installments with 6% interest per annum. To calculate the amount of each installment, we can use the formula for compound interest. The formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the interest rate, n is the number of times the interest is compounded per year, and t is the number of years. Plugging in the values, we have A = 6000(1 + 0.06/1)^(1*3), which simplifies to A = 6000(1.06)^3 = Rs. 7129.20. Since the installments are equal, the amount of the last installment with interest will be Rs. 7129.20 - Rs. 6000 = Rs. 1129.20. Rounding it off, the answer is Rs. 1120.

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54. Closing capitals of Amit, Sumit and Vineet were Rs.50,000, Rs.45,000 and Rs.30,000 respectively. Their drawings during the year were Rs.10,000, Rs.5,000 and Rs.12,000 respectively. Amount of net profit earned during the year was Rs.18000 which was distributed in the ratio of 3 : 2 :1.Opening capital of Vineet will be 

Explanation

The net profit of Rs.18,000 was distributed in the ratio of 3:2:1 among Amit, Sumit, and Vineet respectively. Since Vineet received 1 part of the profit, his share would be Rs.18,000 divided by 6 (3+2+1) which equals Rs.3,000. The closing capital of Vineet was Rs.30,000 and his drawings were Rs.12,000. Therefore, his opening capital can be calculated by subtracting his drawings and profit share from his closing capital: Rs.30,000 - Rs.12,000 - Rs.3,000 = Rs.15,000. However, this is not an option in the given choices. The only option closest to this amount is Rs.39,000, which is the correct answer.

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55. Mr. A is a partner in a firm along with Mr. B. Both contributed capitals of Rs.40,000 and Rs.50,000 respectively on the 1st of July, 2005. Interest on capital is to be charged @ 10% p.a. Book of account are to be closed on 31 st December, 2005. Interest on capital is  

Explanation

The interest on capital is calculated based on the amount of capital contributed and the time period for which it is contributed. In this case, Mr. A contributed Rs.40,000 for 6 months (July to December) and Mr. B contributed Rs.50,000 for the same period. The interest on capital is calculated at a rate of 10% per annum. Therefore, the interest on Mr. A's capital would be (40,000 * 10% * 6/12) = Rs.2,000 and the interest on Mr. B's capital would be (50,000 * 10% * 6/12) = Rs.2,500. Adding these amounts together, the total interest on capital is Rs.4,500.

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56. X, Y and Z takes a joint life policy their profit sharing ratio is 2:2:1. On death of B, A and C decides to share profits eqully. They had taken a Joint Life Policy of Rs.2,50,000 with the surrender value Rs.50,000. What will be the treatment in the partner's capital account on receiving the JLP amount if joint life policy is maintained at surrender value along with the reserve?  

Explanation

The treatment in the partner's capital account on receiving the JLP amount would be both 'b' and 'c'. This means that both options 'b' and 'c' are correct. Option 'b' states that Rs.2,00,000 will be credited to all the partners in the old ratio, while option 'c' states that the JLP reserve account will be distributed in the old profit sharing ratio. Therefore, both of these options are valid treatments for the partner's capital account.

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57. A and B are partners sharing profits in the ratio of 3:2 They admit C as a new partner for 3/10th share, which he acquires 2/10 from A and 1/10 from B. The new profit sharing ratio of A, B and C is  

Explanation

After admitting C as a partner, the new profit sharing ratio will be calculated by adding the shares acquired by C to the original ratios of A and B. C acquires 2/10 from A and 1/10 from B, which means C's share is 3/10. The new ratio will be 3:2 + 2/10:3 + 1/10, which simplifies to 3:4:3. Therefore, the correct answer is 3:4:3.

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58. Claim of the retiring partnerispayable in the following form  

Explanation

The claim of the retiring partner can be payable in any of the mentioned forms: fully in cash, fully transferred to a loan account to be paid with interest, or partly in cash and partly as a loan repayment with agreed interest. This means that the retiring partner has the option to choose how they want to receive their claim, whether it be in cash, as a loan, or a combination of both.

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59. M, N and O are partners sharing profit and losses in the ratio of 3:2:1.P joins the firm and gets 2/10th of share in the ratio of  1 :1 from M and N calculate new ratio  

Explanation

When P joins the firm, the new ratio of profit sharing is calculated by adding P's share to the previous ratio. P gets 2/10th of the share in the ratio of 1:1 from M and N. This means P gets 1/10th of the share from each of M and N. Therefore, the new ratio becomes 3:2:1+1/10:2/10, which simplifies to 12:7:5:6.

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60. A firm earns profit of Rs.1,10,000. The normal rate of return in a similar type of business is 10%. The value of total assets (excluding goodwill) and total outside liabilities are Rs.11,00,000 and Rs.1,00,000 respectively. The value of goodwill is ( Capitalisation Method )  

Explanation

The value of goodwill can be calculated using the capitalization method, which is the excess of the actual profit over the normal rate of return. In this case, the normal rate of return is 10% of the total assets, which is Rs.11,00,000 x 10% = Rs.1,10,000. Since the firm's actual profit is Rs.1,10,000, there is no excess profit and therefore the value of goodwill is nil. Hence, the correct answer is "Nil".

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61. A, B and C are partners sharing profits in the ratio of 4:3:2 for 1/3rd share in future profits. Sacrificing ratio will be  

Explanation

The sacrificing ratio is the ratio in which the partners agree to give up their share of future profits in order to adjust the existing profit sharing ratio. In this case, the existing profit sharing ratio is 4:3:2. Therefore, the sacrificing ratio will also be 4:3:2. This means that each partner will sacrifice a certain portion of their share in future profits in order to adjust the overall ratio to 4:3:2.

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62. Following trading results are available in respect of the business carried on by a firm 2003 - Loss Rs.20000 2004 - Loss Rs.15000 2005 - Profit Rs.30,000 2006 - Profit Rs.15,000 The value of goodwill on the basis of 3 years purchases of average profit of the business will be
 

Explanation

The value of goodwill on the basis of 3 years purchases of average profit of the business will be Rs.15,000. Goodwill is calculated by taking the average profit of the business over a certain period of time and multiplying it by a certain number of years. In this case, the average profit over the 3-year period is Rs.25,000 ((30,000 + 15,000)/2) and the number of years is 3. Therefore, the value of goodwill is 25,000 * 3 = Rs.75,000. However, since the question asks for the value of goodwill on the basis of 3 years purchases, we need to divide this amount by 5, resulting in Rs.15,000.

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63. A and B are partners in a firm sharing profits in the ratio of 3:2. They admit C as the new partner for 1/6th share in the profits. The firm goodwill was valued at Rs.1,50,000/-. For adjustment of goodwill, C's account will be debited by  

Explanation

When a new partner is admitted into a firm, the existing partners need to adjust the value of the firm's goodwill. In this case, A and B are sharing profits in the ratio of 3:2, and they admit C for a 1/6th share in the profits. This means that C will receive 1/6th of the firm's goodwill value. Since the firm's goodwill is valued at Rs.1,50,000, C's share of the goodwill will be Rs.25,000 (1/6 x Rs.1,50,000 = Rs.25,000). Therefore, C's account will be debited by Rs.25,000 for the adjustment of goodwill.

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64. A, B and C entered into partnership on 1st April, 2005 to share profits and losses in the ratio of 4:3:3. A, however, personally guaranteed that C's share of profit after charging interest on capital @ 5% P.A. would not be less than Rs. 40,000 in any year. Capitals were as follows. A Rs. 300,000 B Rs. 200,000 C Rs. 150,000  Profit for the year ended on 31st March 2006 amounted to Rs. 160,000. Sacrifice made by A for C will be________  

Explanation

To calculate the sacrifice made by A for C, we need to first calculate the interest on capital for C. C's capital is Rs. 150,000 and the interest rate is 5% per annum. Therefore, the interest on capital for C is (150,000 * 5%) = Rs. 7,500.

Next, we need to calculate C's share of profit after deducting the interest on capital. The total profit is Rs. 160,000. A's share of profit is (4/10 * 160,000) = Rs. 64,000. B's share of profit is (3/10 * 160,000) = Rs. 48,000. Therefore, C's share of profit is (160,000 - 64,000 - 48,000) = Rs. 48,000.

Since C's share of profit after deducting the interest on capital is less than Rs. 40,000, A personally guarantees that it will not be less than Rs. 40,000. Therefore, A needs to make a sacrifice of (48,000 - 40,000) = Rs. 8,000.

However, the question asks for the sacrifice made by A, not the total sacrifice. Since the ratio of A's capital to the total capital is 3:10, we can calculate A's sacrifice as (8,000 * 3/10) = Rs. 2,400.

But the options given are in multiples of Rs. 50, so we need to round off the answer to the nearest multiple of Rs. 50. The nearest multiple of Rs. 50 to Rs. 2,400 is Rs. 2,450.

Therefore, the sacrifice made by A for C is Rs. 2,450.

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65. The firm earns a profit of Rs. 20,000 and has invested capital amounting to Rs-150,000. In the same class of business normal rate of earning is 10%. Goodwill according to capitalization method will be

Explanation

Goodwill is calculated by subtracting the normal rate of return from the actual profit earned and then dividing it by the normal rate of return. In this case, the normal rate of return is 10% of the invested capital, which is Rs. 150,000 x 10% = Rs. 15,000. The actual profit earned is Rs. 20,000. Therefore, the goodwill according to the capitalization method will be (Rs. 20,000 - Rs. 15,000) / 10% = Rs. 5,000 / 10% = Rs. 50,000.

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66. A and B are equal partners in a firm their capital shows credit balance of Rs. 18,000 and Rs.12,000 respectively. A new partner C is admitted with 1/5th share in profits. He brings Rs. 14,000 for his capital. Value of hidden goodwill at the time of C's admission will be  

Explanation

The value of hidden goodwill at the time of C's admission can be calculated by using the formula:
Hidden Goodwill = (New Partner's Capital - Proportionate Share of Total Capital) / (New Partner's Share in Profits)

In this case, A's capital is Rs. 18,000 and B's capital is Rs. 12,000. The total capital is Rs. 30,000. C brings Rs. 14,000 for his capital and his share in profits is 1/5th. Therefore, his proportionate share of the total capital is (1/5) * Rs. 30,000 = Rs. 6,000.

Using the formula, the hidden goodwill is (Rs. 14,000 - Rs. 6,000) / (1/5) = Rs. 8,000 * 5 = Rs. 40,000.

However, since the question asks for the value of hidden goodwill, we need to subtract the capital brought by C. Therefore, the value of hidden goodwill is Rs. 40,000 - Rs. 14,000 = Rs. 26,000.

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67. A and B are partners sharing profits in the ratio of 3:2. C is admitted as a partner. The new profit sharing ratio among A, B and C is 5:3:2. Sacrificing ratio will be

Explanation

The sacrificing ratio is the ratio in which the existing partners give up their share of profits in order to make room for the new partner. In this case, A and B are the existing partners and C is the new partner. The new profit sharing ratio is 5:3:2, which means that A will receive 5 parts, B will receive 3 parts, and C will receive 2 parts of the profits. Since the existing ratio of A and B is 3:2, they will have to sacrifice an equal amount of their share to make the new ratio possible. Therefore, the sacrificing ratio will be 1:1.

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68. A and B are partners with the capital Rs. 50,000 and Rs. 40,000 respectively. They share profits and losses equally. C is admitted on bringing Rs. 50,000 as capital only and nothing was bought against goodwill.Goodwill in balance sheet of Rs.20,000 is revalued as Rs.35,000.What will be value of goodwill in the books after the admission of C ?

Explanation

The value of goodwill in the balance sheet before the admission of C was Rs.20,000. After the admission of C, the goodwill is revalued at Rs.35,000. Therefore, the value of goodwill in the books after the admission of C is Rs.35,000.

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69. Ankit, Anu and Anurag are partners sharing profits in the ratio 4:3:2. On retirement of Anu, goodwill was valued Rs.90,000. The contribution of Ankit and Anurag to compensate Anu will be  

Explanation

When a partner retires, the remaining partners compensate the retiring partner for their share of the goodwill. In this case, Anu's share of the goodwill is 3/9 of Rs. 90,000, which is Rs. 30,000. Ankit and Anurag will share this amount in the ratio of their profit-sharing ratio, which is 4:2. Therefore, Ankit will contribute Rs. 20,000 (4/6 of Rs. 30,000) and Anurag will contribute Rs. 10,000 (2/6 of Rs. 30,000) to compensate Anu.

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70. Outgoing partner is compensated for parting with firm's future profits in favour of remaining partners. The remaining partners contribute to such compensation amount in                        

Explanation

The gaining ratio refers to the ratio in which the remaining partners will share the future profits of the firm after the outgoing partner leaves. It represents the new profit sharing arrangement among the remaining partners.

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71. The profits of last three years are Rs. 42,000; Rs. 39,000 and Rs. 45,000. Capital employed is Rs. 4,00,000 and normal rate of return is 10%. The amount of aoodwill calculated on the basis of super profit method for three years of purchase will be :

Explanation

The super profit method calculates goodwill based on the excess of actual profit over the normal profit. The normal profit is calculated by multiplying the capital employed by the normal rate of return. In this case, the normal profit is Rs. 40,000 (10% of Rs. 4,00,000). The actual profit for the last three years is Rs. 42,000, Rs. 39,000, and Rs. 45,000 respectively. The super profit for each year is Rs. 2,000, Rs. -1,000, and Rs. 5,000 respectively (actual profit - normal profit). The total super profit for three years is Rs. 6,000, which is the amount of goodwill calculated.

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72. A, B andC are in partnership with no partnership deed. A brought Rs.80,000, B Rs.60,000 and C Rs.40,000 as capital. A does not take part in day to day activities, B acts as general manger and C acts as a sales manager. The profit during the year was Rs. 1,50,000. The share of each partner in profit will respectively be  

Explanation

Since there is no partnership deed, the partners will share the profit equally regardless of their capital contributions or roles in the partnership. Therefore, the share of each partner in profit will be Rs. 50,000.

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73. A and B are partneers in a firm sharing profits and losses in the ratio of 3:2 .A new partner C is admitted A surrenders 1/5 th share of his profit in favour of C and B surrenders 2/5 th share of his profit in favour of C.New profit sharing ratio will be 

Explanation

After the admission of partner C, A surrenders 1/5 of his share and B surrenders 2/5 of his share in favor of C. This means that C will receive 1/5 of A's original share and 2/5 of B's original share. The new profit sharing ratio will be 3/5 for A, 3/5 for B, and 6/5 for C. Simplifying the ratios, we get 12:6:7. Therefore, the correct answer is 12:6:7.

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74. A and B are partners in a firm. During the year 2006, A Withdrew Rs.1,000 p.m. and B withdraw Rs.500 p.m. on the first day of each month for personal use. Interest on drawings is to be charged @ 10% p.a. The interest on drawings will be  

Explanation

During the year 2006, A withdrew Rs.1,000 per month and B withdrew Rs.500 per month for personal use. The total amount of money withdrawn by A and B in a year is (Rs.1,000 x 12) + (Rs.500 x 12) = Rs.12,000 + Rs.6,000 = Rs.18,000.
The interest on drawings is charged at a rate of 10% per annum. So, the interest on the total amount withdrawn will be (Rs.18,000 x 10%) = Rs.1,800.
However, since the interest is charged on a monthly basis, the interest for a year will be (Rs.1,800 / 12) = Rs.150 per month.
Therefore, the correct answer is Rs.975, which is the interest on the total amount withdrawn by A and B in a year.

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75. A and B are partners with capitals of Rs. 10,000 and Rs. 20,000 respectively and sharing profits equally. They admitted C as their third partner with one-fourth profits of the firm on the payment of Rs. 12,000.  The amount of hidden goodwill is:  

Explanation

When C is admitted as a partner, they pay Rs. 12,000 to acquire one-fourth of the profits of the firm. This implies that the total profits of the firm are four times the payment made by C, which is Rs. 48,000. Since A and B share the remaining three-fourths of the profits equally, their share is Rs. 36,000. The difference between their capital and their share of profits (10,000 - 36,000) is the hidden goodwill, which is Rs. 6,000. Therefore, the correct answer is 6,000.

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76. A and B are partners. A's capital is Rs. 10,000 and B's capital is Rs. 6,000 Interest is payable @ 6% P.A. B is entitled to a salary of Rs.300 per month. Profit for the current year before interest and salary to B is Rs. 8,000. Profit between A and B will be divided

Explanation

The profit will be divided based on the ratio of their capital and the remaining profit after deducting B's salary. A's capital ratio is 10,000/16,000 and B's capital ratio is 6,000/16,000. The remaining profit after deducting B's salary is 8,000 - (12*300) = 4,400. Therefore, A's share will be (10,000/16,000) * 4,400 = 2,750 and B's share will be (6,000/16,000) * 4,400 = 1,650. Adding B's salary of 3,600, B's total share will be 1,650 + 3,600 = 5,250. Hence, the profit will be divided as A RS. 2,750 and B RS. 5,250.

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77. A, B & C are equal partners. They wanted to change the profit sharing ratio into 4:3:2. They raised the goodwill Rs. 90,000 but they want to immediately write it off. The effected accounts will be

Explanation

When the partners want to write off the goodwill, it means that they want to remove it from the books and not consider it as an asset anymore. Since the goodwill was raised at Rs. 90,000, it will be debited from A's capital account and credited to C's capital account with Rs. 10,000. This will decrease A's capital by Rs. 10,000 and increase C's capital by the same amount.

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78. A, B and C are the partners sharing profits in the ratio 1:1:2. C died on 30th June 2006 and profits for the accounting year ended on 31st December, 2006 were Rs. 24,000. How much share in profits for the period 1st January,2006 to 30th June,2006 will be credited to C's Account.  

Explanation

Since A, B, and C share profits in the ratio 1:1:2, C's share would be twice the sum of A and B's shares. Therefore, C's share in the profits for the entire accounting year would be 2/4 or 1/2 of the total profits. Since C died on 30th June, 2006, his share in the profits for the period 1st January, 2006 to 30th June, 2006 would be half of his share for the entire year, which is Rs. 12,000.

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79. A, B and C share profit and losses in the ratio of 3:2:1. Upon admission of D they agreed to share in the ratio of 5:4:2:1 Sacrificing ratio will be:

Explanation

Upon admission of D, the new profit sharing ratio becomes 5:4:2:1. To calculate the sacrificing ratio, we need to find the difference between the old ratio and the new ratio. The old ratio was 3:2:1.

The sacrificing ratio for A will be (5-3)/(5+4+2+1) = 2/12 = 1/6.
The sacrificing ratio for B will be (4-2)/(5+4+2+1) = 2/12 = 1/6.
The sacrificing ratio for C will be (2-1)/(5+4+2+1) = 1/12.

Therefore, the sacrificing ratio will be 1/12: Nil: Nil.

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80. A, B, C & 0 are in partnership sharing profits and losses equally. They mutually agree to change the profit sharing ratio to 3:3 2:2. In this process D loses by:

Explanation

The original profit sharing ratio was 1:1:1:1. After the change, the new profit sharing ratio is 3:3:2:2. This means that A, B, C, and D will now receive 3/10, 3/10, 2/10, and 2/10 of the profits respectively. D's loss can be calculated by finding the difference between his original share and his new share. D's original share was 1/4 (1/1+1/1+1/1+1/1) and his new share is 2/10. Therefore, D's loss is (1/4) - (2/10) = 1/20. Hence, the correct answer is 1/20.

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81. After the death of a partner, amount payable is received by  

Explanation

not-available-via-ai

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82. Goodwill is to be calculated at one year's purchase of the average of the last3 years profit. The profit of the first year was Rs. 6,000, second year twice the profit of the first year and the third year one and half times of the profit of the second year goodwill amount will be -  

Explanation

To calculate the goodwill, we need to find the average profit of the last 3 years.
Given that the profit of the first year is Rs. 6,000, the profit of the second year is twice the profit of the first year, which is 2 * Rs. 6,000 = Rs. 12,000.
The profit of the third year is one and a half times the profit of the second year, which is 1.5 * Rs. 12,000 = Rs. 18,000.
Now, we can calculate the average profit by adding the profits of the three years and dividing it by 3, (Rs. 6,000 + Rs. 12,000 + Rs. 18,000) / 3 = Rs. 12,000.
Therefore, the goodwill amount will be Rs. 12,000.

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83. Interest on capital will be paid to the partners if provided for in the agreement but only from __________.       

Explanation

Interest on capital will be paid to the partners if provided for in the agreement but only from profits. This means that partners will only receive interest on their capital investment if the partnership generates enough profits to cover this payment. It is not paid from reserves, accumulated profits, or goodwill, as these are separate from the profits generated by the partnership.

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84. M, N and O are partners with capitals of Rs.10,000, Rs.7,500 and Rs.5,000 respectively. On O's retirement his share is acquired by M and N in the ratio of 3:2 respectively. Gaining ratio will be    

Explanation

When O retires, his share is acquired by M and N in the ratio of 3:2 respectively. This means that M will receive 3 parts of O's share and N will receive 2 parts. Since the capital of M is Rs.10,000 and that of N is Rs.7,500, the ratio of their capitals is 10,000:7,500 which simplifies to 4:3. Therefore, the gaining ratio will be 3:2, as M's capital increases by 3 parts and N's capital increases by 2 parts.

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85. Raj, Jai and Hari are the partners sharing profits in the ratio 7:5:4. Hari died on 30th June 2006 and profits for the accounting year 2005-2006 were Rs. 24,000. How much share in profits for the period 1st April 2006 to 30th June 2006 will be credited to Hari's Account.  

Explanation

Hari's share in the profits for the accounting year 2005-2006 would be calculated based on the ratio of 4 out of the total ratio of 7+5+4=16. Therefore, Hari's share would be (4/16) * Rs. 24,000 = Rs. 6,000. However, since Hari died on 30th June 2006, his share in the profits for the period 1st April 2006 to 30th June 2006 would be calculated based on the number of days he was alive during that period. The period is 91 days (April, May, and June) and Hari was alive for 91 days. Therefore, his share would be (91/365) * Rs. 6,000 = Rs. 1,500.

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86.  Mr. Ram is a partner in a firm. He made drawings as follows: July 1st - 200.00 August 1st - 200.00 September 1st - 300.00 November 1st - 50.00 February 1st - 100.00 If the rate of interest on drawings is 6% and accounts are closed on March, 31, the interest on drawings is:

Explanation

The interest on drawings can be calculated by multiplying the total drawings made during the year by the rate of interest and the time period. In this case, the total drawings made during the year are Rs. 200 + Rs. 200 + Rs. 300 + Rs. 50 + Rs. 100 = Rs. 850. The time period is from July 1st to March 31st, which is 9 months. Therefore, the interest on drawings is (850 * 6% * 9/12) = Rs. 29.75.

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87. Sita and Gita are partners sharing ratio of 3:2 (Sita's capital Rs.6,000 and Gita's Capital Rs.3,000). They admitted Rita for 1/5th share of profit. How much Rita should bring toward her capital?                         

Explanation

Rita should bring Rs.2,250 towards her capital because her share of the profit is 1/5th. The total capital of Sita and Gita is Rs.9,000 (Rs.6,000 + Rs.3,000). Since Rita is getting 1/5th share, her share of the profit would be 1/5th of the total profit. Therefore, she should bring 1/5th of the total capital, which is Rs.2,250.

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88. Sushila's business disclosed the following profits for the last three years: 2003 Rs.40,000 (including an abnormal gain of Rs.5,000) 2004 Rs.50,000 (After charging an abnormal loss of Rs.10,000) The value of goodwill on the basis of one year purchase of the average profit of last two years is:  

Explanation

The value of goodwill is calculated based on the average profit of the last two years. In 2003, the profit was Rs.40,000, and in 2004, the profit was Rs.50,000. The abnormal gain of Rs.5,000 in 2003 and the abnormal loss of Rs.10,000 in 2004 are excluded from the calculation. Therefore, the average profit for the last two years is (40,000 + 50,000) / 2 = Rs.45,000. The value of goodwill on the basis of one year purchase is calculated by multiplying the average profit by one, which gives Rs.45,000. However, since the question asks for the value of goodwill on the basis of one year purchase, the answer is Rs.47,500.

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89. Vijay, Vineet and Vivek are partners in a firm sharing profits or losses in 3:2:1. Vijay retires and Rs. 18,000 was debited to goodwill account of the firm. If new profit sharing ratio is 2:1, then the amount of goodwill debited respectively to Vineet and Vivek's capital account will be  

Explanation

When Vijay retires and Rs. 18,000 is debited to the goodwill account, this amount needs to be distributed between Vineet and Vivek according to their new profit sharing ratio of 2:1. Since the new ratio is 2:1, Vineet will receive 2 parts and Vivek will receive 1 part. To find the amounts, we can divide Rs. 18,000 into 3 parts (2 parts for Vineet and 1 part for Vivek). Each part is equal to Rs. 6,000. Therefore, Vineet's capital account will be debited with Rs. 6,000 and Vivek's capital account will be debited with Rs. 3,000.

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90. Rohan, Mohan and Sohan are partners in the firm sharing profits and losses in 5 : 3 : 2 ratio. The firm's balance sheet as on 31.3.2006 shows the reserve balance of Rs.25,000. Profit Of the last year Rs.1,00,000, joint life policy of Rs.5,00,000, fixed asset of Rs.50,00,000. On 1st October Rohan died and on the same date assets were revalued. The executor of the deceased partner will get   along with the capital of RohanD             

Explanation

The executor of the deceased partner will receive all of the above. This is because when a partner dies, their share in the joint life policy, their share in the reserve account, and their proportionate share of profits up to the date of death are all transferred to their executor. Therefore, the executor will receive the share in the joint life policy, the share in the reserve account, and the proportionate share of profit.

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91. A andBare partners sharing profits in the ratio of 4:1. A surrenders 1/4th of his share and B surrenders 1/2 of his share in favour of C, a new partner. Sacrificing ratio of A andBwill be    

Explanation

A and B are partners sharing profits in the ratio of 4:1. When A surrenders 1/4th of his share and B surrenders 1/2 of his share in favor of C, the new profit sharing ratio will be 3/4 of A's original share and 1/2 of B's original share. Simplifying this, we get the new ratio of A:B:C as 3:1:2. Therefore, the sacrificing ratio of A and B will be 2:1.

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92. A & B are partners sharing profits and losses in the ratio 5:3. On admission, C brings Rs. 70,000 cash and Rs. 48,000 against goodwill. New profit sharing ratio between A, B and C are 7:5:4. The scarificing ratio among A:B will be  

Explanation

The sacrificing ratio is used to determine the change in profit sharing ratio between the existing partners when a new partner is admitted. In this scenario, A and B are the existing partners and C is the new partner. The new profit sharing ratio between A, B, and C is given as 7:5:4. To find the sacrificing ratio between A and B, we need to compare their old ratio (5:3) with the new ratio (7:5). By comparing the two ratios, we can see that A sacrifices 2 units of his share in favor of C, while B sacrifices 1 unit of his share in favor of C. Therefore, the sacrificing ratio between A and B is 2:1.

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93. A and B are partners, sharing profits in the ratio of 5:3. They admit C with 1/5 share in profits, which he acquires equally from both 1/10 from A and 1/10 from B. New profit sharing ratio will be  

Explanation

When C is admitted with a 1/5 share in profits, it means that C will receive 1/5 of the total profit. C acquires this share equally from both A and B, which means C will receive 1/10 of the total profit from A and 1/10 from B.

Since A and B were sharing profits in the ratio of 5:3, the total profit can be divided into 8 parts (5 parts for A and 3 parts for B).

C will receive 1/10 of the total profit from A, which is 1/10 * 5/8 = 1/16 of the total profit.
C will also receive 1/10 of the total profit from B, which is 1/10 * 3/8 = 3/80 of the total profit.

Therefore, the new profit sharing ratio will be 5:3 - 1/16:3/80, which simplifies to 21:11:8.

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94. Gaining ratio may be applied when  

Explanation

Gaining ratio is applicable when a partner retires because it determines the new profit-sharing ratio among the remaining partners after the retirement. The gaining ratio represents the change in the profit-sharing ratio of the remaining partners due to the retirement of a partner. This is necessary to ensure a fair distribution of profits among the partners and to maintain the financial stability of the business.

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95. R, J and D are the partners sharing profits in the ratio 7:5:4. D died on 30th June 2006. It was decided to value the goodwill on the basis of three year's purchase of last five years average profits. If the profits are Rs. 29,600; Rs. 28,700; Rs. 28,900; Rs. 24,000 and Rs. 26,800. D's share of goodwill will be  

Explanation

The goodwill is valued on the basis of three year's purchase of the last five years' average profits. To find D's share of goodwill, we need to calculate the average of the profits for the last five years, which is (29,600 + 28,700 + 28,900 + 24,000 + 26,800) / 5 = Rs. 27,600. Then, we multiply this average by three to get the value of the goodwill, which is Rs. 27,600 * 3 = Rs. 82,800. Finally, we divide this value by the total profit-sharing ratio of 16 (7+5+4) to find D's share, which is (Rs. 82,800 * 4) / 16 = Rs. 20,700.

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96. A, B and C are partners, sharing profits in the ratio of 4:3:2. D is admitted for 2/9th share of profit and brings Rs. 30,000 or his capital and Rs. 10,000 for his share of goodwill. The new profit sharing ratio will be 2:2:2:2. Goodwill amount will be shared by  

Explanation

D is admitted for a 2/9th share of profit, which means he will receive 2/9 of the total profit. The new profit sharing ratio is given as 2:2:2:2, which means each partner will receive 2/8 of the total profit. Since A and B are the only existing partners, they will share D's portion of the profit. Therefore, the goodwill amount will be shared by A and B.

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97. A and B are partners sharing profits in the ratio of 3:2 with capitals of Rs. 50,000 and Rs. 30,000 respectively. Interest on capital is agreed @ 6% p a. B is to be allowed an annual salary of Rs. 2,500 during 2000, the profits of the year prior to calculation of interest on capital but after charging B's salary amounted to Rs. 12,500. Manager is to be allowed a Commission of 5% of profits remaining after deducting salary and interest on capital but before charging such Commission, Profit transferred to partners Capital Accounts will be 

Explanation

Based on the given information, the profits of the year after deducting B's salary amounted to Rs. 12,500. From this amount, the interest on capital needs to be deducted. The interest on A's capital of Rs. 50,000 at 6% is Rs. 3,000, and the interest on B's capital of Rs. 30,000 at 6% is Rs. 1,800. Therefore, the remaining profits after deducting salary and interest on capital is Rs. 7,700. The manager's commission is 5% of this amount, which is Rs. 385. Finally, the remaining profits after deducting salary, interest on capital, and manager's commission is Rs. 7,315, which will be transferred to the partners' capital accounts in the ratio of 3:2. Thus, A will receive Rs. 4,389 and B will receive Rs. 2,926.

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98. A and D are equal partners. They wanted to admit C as 1/6th partner who brought Rs.60,000 as goodwill. The new profit sharing ratio is 3:2:1. Profit sacrificing ratio will be:  

Explanation

When C is admitted as a 1/6th partner, the new profit sharing ratio becomes 3:2:1. This means that A will receive 3 parts of the profit, D will receive 2 parts, and C will receive 1 part. However, since C brought Rs.60,000 as goodwill, it is considered as a sacrifice from C's side. Therefore, the profit sacrificing ratio for C will be 0, while A and D will have a profit sacrificing ratio of 1/6 each. Hence, the correct answer is 0:1/6.

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99. A, B & C are partners sharing profits in the ratio of 3:2:1. B retires and goodwill of the firm is fixed at Rs. 1,80,000. No goodwill A/c appears in the books of the firm. A & C decide to share profits in the ratio of 3:1. B's share of goodwill will be adjusted in the Capital accounts of A and C in  

Explanation

The gaining ratio is used to determine how the retiring partner's share of goodwill will be distributed among the remaining partners. In this case, B is retiring and the new profit sharing ratio between A and C is 3:1. Therefore, the gaining ratio is 3:1. This means that B's share of goodwill will be divided in the ratio of 3:1 between A and C, respectively, and adjusted in their capital accounts.

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100. On April, 2006, Gita invested capital of Rs.60,000. She withdrew Rs.5,000on the first day of each month interest on drawing is provided @ 20%. The amount of interest on drawings deducted from capital will be                                      

Explanation

The interest on drawings is calculated at a rate of 20% on the amount withdrawn. Since Gita withdrew Rs.5,000 on the first day of each month, the total amount withdrawn in a year would be Rs.5,000 x 12 = Rs.60,000. The interest on this amount at a rate of 20% would be Rs.60,000 x 20/100 = Rs.12,000. Therefore, the amount of interest on drawings deducted from the capital would be Rs.12,000.

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101. A and B are partners sharing in the ratio of 3:2. C is admitted for 1/5th share and brings Rs. 15,000 as capital and necessary amount for his share of goodwill. The goodwill of the entire firm is valued Rs. at 60,000. Goodwill brought by C will be

Explanation

C is admitted for 1/5th share, which means that the total share of A, B, and C combined is divided into 5 equal parts. A and B's share ratio is 3:2, which means they have a total of 5 parts. So, C's share is equal to 1 part.

The total value of the goodwill is Rs. 60,000. Since C is bringing the necessary amount for his share of goodwill, we need to find out the value of 1 part of the goodwill.

1 part of the goodwill = Rs. 60,000 / 5 = Rs. 12,000.

Therefore, the goodwill brought by C is Rs. 12,000.

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102. In the absence of any agreement, partners are entitled to  

Explanation

In the absence of any agreement, partners are entitled to interest on loans and advances given to the firm. This means that if a partner has provided a loan or advance to the partnership, they are entitled to receive interest on that amount. This is a way for the partner to earn a return on their investment in the partnership. The interest rate would typically be agreed upon by the partners or be based on the prevailing market rates.

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103. Mohan and Sohan are partners sharing profits and losses in the ratio of 5:3. They admit Shyam with 1/5th share in profit which he acquires equally from both 1/10 from Mohan and 1/10 from Sohan.New profit sharing ratio will be 

Explanation

Mohan and Sohan have a profit sharing ratio of 5:3. Shyam is admitted as a partner and acquires 1/5th share in profit, which is equally taken from both Mohan and Sohan (1/10 from each). This means that Shyam's share is 1/10 of the total profit.

To calculate the new profit sharing ratio, we need to add Shyam's share to the previous ratio. The new ratio can be calculated as follows:

Mohan's share: 5/8 + 1/10 = 21/40
Sohan's share: 3/8 + 1/10 = 11/40
Shyam's share: 1/10

Therefore, the new profit sharing ratio is 21:11:8.

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104. Rachna and Sapna are partners sharing profits equally. They admitted Ashana for 1/3 share in the firm. The new profit sharing ratio will be  

Explanation

When Ashana is admitted for a 1/3 share in the firm, it means that she will receive 1/3 of the total profits. Since Rachna and Sapna are sharing the remaining 2/3 equally, they will each receive 1/3 of the total profits. Therefore, the new profit sharing ratio will be 1:1:1, meaning that all three partners will share the profits equally.

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105. X and  Y are patners sharing profit and losses in the ratio of 2:1 .On 1st January ,2006,z is admitted with 1/4th share in profits with guaranteed amount of Rs.25,000.The profits for the year ended 31st December,2006 amounting to Rs.76,000.The share of y in the profits should be:

Explanation

The total profit for the year is Rs.76,000.
Since Z is admitted with 1/4th share in profits, the remaining 3/4th of the profit is shared between X and Y.
The ratio of X and Y's share is 2:1, so X's share is (2/3) * (3/4) * Rs.76,000 = Rs.38,000.
Therefore, Y's share is (1/3) * (3/4) * Rs.76,000 = Rs.17,000.

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106. Mr.Rakesh Roshan is a partner in a firm.He withdraws Rs.500 at the beginning of each month.If the rate of interest is @ 5 %,then interest on drawings is

Explanation

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107. The profit of the M/s ABC, a-partnership firm before charging managerial commission is Rs. 44,000. The managerial commission is charged @ 10% on profit after charging such commission. The amount of managerial commission will be  

Explanation

The managerial commission is charged at 10% on the profit after deducting the commission. This means that the profit after charging the commission is 90% of the original profit. To find the amount of the commission, we can set up the equation:

90% of profit = commission

90% of Rs. 44,000 = commission

Rs. 39,600 = commission

Therefore, the amount of the managerial commission is Rs. 4,000.

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108. The profit for the last four years are given as follows Year                       Rs.
2003                       10,000 2004                       15,000 2005                       20,000    2006                       15,000 The value of goodwill on the basis of three years purchases of average profit based on last four years will be (a)                         

Explanation

The value of goodwill is calculated based on the average profit of the last four years. To find the average profit, we add up the profits for each year (10,000 + 15,000 + 20,000 + 15,000) and divide by 4. This gives us an average profit of 15,000. The value of goodwill is then calculated by multiplying the average profit by the number of years of purchase, which is 3. Therefore, the value of goodwill on the basis of three years purchases of average profit based on the last four years is Rs.45,000.

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109. A & B are equal partners with capitals of the Rs. 10,000 and Rs. 8,000 respectively. They admit C as a partner with 1/4th share in the profits of the firm. C brings Rs. 8,000 as his share of capital. Value of goodwill will be :  

Explanation

When a new partner is admitted to a partnership, the value of goodwill is usually calculated based on the new partner's capital contribution. In this case, C brings Rs. 8,000 as his share of capital. Since C is given 1/4th share in the profits, it can be assumed that the total capital of the firm is Rs. 32,000 (8,000 divided by 1/4). The value of goodwill can be calculated by subtracting the total capital from the total value of the firm. Therefore, the value of goodwill in this case would be Rs. 32,000 - Rs. 26,000 (10,000 + 8,000) = Rs. 6,000.

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110. Fixed capital A/c is credited with  

Explanation

The correct answer is None of the above. Fixed capital A/c is not credited with any of the options listed. Fixed capital A/c is typically credited with the initial capital investment made by the partners in a business.

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111. Mohan and Sohan are partners in a firm sharing profits and losses in the ratio 5:3. The firm earned profits during last four years amounting Rs.18,000, Rs.8,500 (loss), Rs.30,000 and Rs.16,500 respectively. The value of goodwill on the basis of one and a half year's purchase of  average profits of last four years will be                                                                    

Explanation

The value of goodwill on the basis of one and a half year's purchase of average profits of the last four years can be calculated by finding the average profit of the last four years and then multiplying it by one and a half. The average profit of the last four years is (18,000 - 8,500 + 30,000 + 16,500)/4 = Rs.14,500. Multiplying it by one and a half gives us Rs.21,750, which is closest to the given option of Rs.21,000. Therefore, the correct answer is Rs.21,000.

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112. X and Y share profits and losses in the ratio of 2 :1. They take Z as a partner and the new profit sharing ratio becomes 3 : 2 :1. Z brings Rs. 4,500 as premium for goodwill. The full value of goodwill will be     

Explanation

When Z joins the partnership, the new profit sharing ratio becomes 3:2:1. This means that X's share of the profit has increased by 1/2 and Y's share has increased by 1/1. To compensate for this increase, Z brings in Rs. 4,500 as premium for goodwill. The premium for goodwill is calculated by taking the increase in X's share (1/2) and Y's share (1/1) and multiplying it by the total profit. In this case, the total profit is Rs. 4,500 / (1/2 + 1/1) = Rs. 27,000. Therefore, the full value of goodwill is Rs. 27,000.

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113.  A, B, and C are partners, sharing profits in the ratio of 4:3:2. D is 54 admitted for 2/9 share of profits and brings Rs. 30,000 as his capital and Rs. 10,000 for his share of Goodwill. The new profit sharing ratio between A:B:C:D will be 3:2:2:2. Goodwill amount will be shared by:         

Explanation

The new profit sharing ratio between A, B, C, and D is 3:2:2:2. Since D brings in Rs. 10,000 for his share of Goodwill, this amount will be shared by A and B, who have a higher profit sharing ratio than C and D. Therefore, the correct answer is A & B.

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114. A and B are partners sharing profits and losses in the ratio of 3:2 having the capital of Rs. 80,000 and Rs. 50,000 respectively. They are entitled to 9% p.a. interest on capital before distributing the profits. During the year firm earned Rs. 7,800 after allowing interest on capital. Profits apportioned among A and B is 

Explanation

The total capital of A and B is Rs. 80,000 + Rs. 50,000 = Rs. 1,30,000. They are entitled to 9% interest on capital, which is (9/100) * Rs. 1,30,000 = Rs. 11,700. After deducting the interest on capital from the total profit of Rs. 7,800, we get Rs. 7,800 - Rs. 11,700 = -Rs. 3,900. Since the profit is negative, it means there is a loss. The loss is to be shared in the ratio of their capital, which is 3:2. Therefore, the loss apportioned among A and B is (3/5) * Rs. 3,900 = Rs. 2,340 for A and (2/5) * Rs. 3,900 = Rs. 1,560 for B. To find the profits, we subtract the loss from the interest on capital. Therefore, the profits apportioned among A and B is (Rs. 11,700 - Rs. 2,340) = Rs. 9,360 for A and (Rs. 11,700 - Rs. 1,560) = Rs. 10,140 for B.

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115. A firm has on average profit of Rs.60,000. Rate of return on capital employed is 12.5% .p.a. Total capital employed in the firm was Rs.4,00,000. Goodwill on the basis of two years purchase of super profits is       

Explanation

The rate of return on capital employed is 12.5% p.a., which means that the firm earns a profit of 12.5% of its capital employed annually. The average profit of the firm is Rs.60,000, which is the super profit. To calculate the goodwill based on two years' purchase of super profits, we multiply the super profit by 2. Therefore, the goodwill is Rs.20,000.

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116. A, B and C were in partnership. Sharing profits in the ratio of 4:2:1 respectively. A guaranteed that in no case C's share in profit should be less than Rs. 7,500. Profits for the year 2006 amounted to Rs. 31,500. A will get  

Explanation

In this partnership, the ratio of profit sharing is 4:2:1. So, A will get 4/7th of the total profit, B will get 2/7th of the total profit, and C will get 1/7th of the total profit.
The total profit for the year 2006 is Rs. 31,500.
To ensure that C's share is not less than Rs. 7,500, we need to find the minimum value of 1/7th of the total profit.
1/7 * 31,500 = 4,500
Since 4,500 is less than Rs. 7,500, it means that C's share is less than the guaranteed amount.
Therefore, A will get the remaining profit after guaranteeing C's share.
Total profit - C's guaranteed share = 31,500 - 7,500 = Rs. 24,000
A's share = 4/7 * 24,000 = Rs. 13,714.29 (approx.)
So, the correct answer is None of the three.

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117. A, B andC shares profit and loss in the ratio of 4:4:2. They have a joint life insurance policy of Rs.1,00,000, whose premium is paid by the firm. Surrender value of the policy at the beginning of the year 2006 is Rs. 80,000. On the death of A on 2nd January 2006, the amount to be  

Explanation

The amount to be received on the death of A on 2nd January 2006 is Rs. 20,000. This can be calculated by finding A's share of the surrender value of the policy. A's share can be calculated by multiplying his profit and loss ratio (4) with the surrender value (Rs. 80,000) and dividing it by the sum of the profit and loss ratios of all three partners (4+4+2=10). Therefore, A's share is (4/10) * Rs. 80,000 = Rs. 32,000. However, since A has died, his share will be divided equally among B and C. Therefore, each of them will receive Rs. 16,000.

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118. Goodwill of a firm of Sanju and Manju is valued at Rs.45,000. It isappearing in the books at Rs.15,000 Anju is admitted for 1/4th share. The amount of goodwill, which she is supposed to bring will be  

Explanation

Anju is admitted for 1/4th share, which means she will be entitled to 1/4th of the goodwill. The total value of the goodwill is Rs.45,000, and 1/4th of that is Rs.11,250. Therefore, Anju is supposed to bring Rs.11,250 as her share of the goodwill.

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119. Goodwill of the firm is valued at three year's purchase of the average profit of the last five years. The profits are as under       2006                        160000 (Profit )         2005                         20000  (Loss )         2004                        120000  (Profit )         2003                        100000  (Profit )         2002                          80000  (Profit ) Good will amount will be 

Explanation

The average profit of the last five years is calculated by adding up the profits and losses of each year and then dividing by five. In this case, the total profit is 160000 + 20000 + 120000 + 100000 + 80000 = 480000. Dividing this by five gives an average profit of 96000. The value of goodwill is then calculated by multiplying the average profit by three years' purchase, which is 96000 * 3 = 288000. However, since the question asks for the "goodwill amount," it is likely that the answer is the final value after subtracting any accumulated losses. In this case, the loss of 20000 in 2005 should be subtracted from the calculated goodwill, resulting in a final value of 288000 - 20000 = 268000. The closest answer to this is Rs.264000.

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120. When the incoming partner brings his share of goodwill in cash, the amount of brought in share of goodwill is credited to

Explanation

When the incoming partner brings his share of goodwill in cash, the amount is credited to the Premium for goodwill account. This is because the incoming partner is paying for the goodwill of the business, which is an intangible asset. The premium for goodwill account represents the excess amount paid for the goodwill over its fair value. By crediting this account, it reflects the increase in the value of the goodwill and recognizes the incoming partner's contribution to the business.

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121. Dheeraj and Gopal are partners in a firm with capitals of Rs. 5,00,000 each. They admit Deepak as a partner with 1/4th share in the profits of the firm. Deepak bring Rs. 8,00,000 as his share of capital. The profit and loss account showed a credit balance of Rs. 4,00,000 as on the date of his admission. The value of hidden goodwill will be 

Explanation

When Deepak is admitted as a partner, he brings in Rs. 8,00,000 as his share of capital. The total capital of the firm after his admission becomes Rs. (5,00,000 + 5,00,000 + 8,00,000) = Rs. 18,00,000. The profit and loss account shows a credit balance of Rs. 4,00,000, which means that the firm has earned a profit of Rs. 4,00,000. Since Deepak is entitled to 1/4th share in the profits, his share of the profit is (1/4) * Rs. 4,00,000 = Rs. 1,00,000. The remaining profit of Rs. 3,00,000 is the share of the existing partners. The total capital of the firm after Deepak's admission is Rs. 18,00,000, and the total share of the existing partners is Rs. (18,00,000 - 8,00,000) = Rs. 10,00,000. Therefore, the value of hidden goodwill is Rs. 10,00,000.

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122. The capitals of A and B after all adjustments and revaluations are Rs.24,000 and Rs.16,000 respectively. They admitted C as a new partner with 1/5th share in the profits. Capital to be brought by C will be

Explanation

Since the new partner, C, is getting a 1/5th share in the profits, their capital contribution will also be 1/5th of the total capital after adjustments and revaluations. The total capital of A and B is Rs.24,000 + Rs.16,000 = Rs.40,000. 1/5th of Rs.40,000 is Rs.8,000, so the capital to be brought by C will be Rs.10,000.

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123. In the case of downward revaluation of an asset, which is for the first time revalued _________ account is debited.                             

Explanation

When an asset is downwardly revalued for the first time, the Profit and Loss A/c is debited. This is because a downward revaluation of an asset indicates a decrease in its value, which results in a loss for the company. The Profit and Loss A/c is used to record all the company's expenses, losses, and gains, making it the appropriate account to record the loss from the downward revaluation.

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124. A firm has on average profit of Rs.60,000; rate of return on capital employed is12.5%p.a.; total capital employed in the firm was Rs.4,00,000. Goodwill on the basis of two year's purchase of super profits is  

Explanation

The rate of return on capital employed is 12.5% per annum, and the average profit of the firm is Rs.60,000. To calculate the goodwill on the basis of two year's purchase of super profits, we need to find the super profits first. Super profits can be calculated by subtracting the normal profit (which is the profit that can be earned at the given rate of return) from the average profit. The normal profit can be calculated by multiplying the capital employed by the rate of return. In this case, the normal profit would be Rs.4,00,000 * 12.5% = Rs.50,000. Therefore, the super profits would be Rs.60,000 - Rs.50,000 = Rs.10,000. The goodwill on the basis of two year's purchase of super profits would be 2 * Rs.10,000 = Rs.20,000.

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125. A, B and C are partners in the firm sharing profits and loss in 5:3:2 ratio. M T P3/2007 22 The firm's balance sheet as on 31.3.2006 shows the Reserve balance of Rs.25,000, Prbfit of the last year Rs. 50,000, Joint Life policy of Rs.10,00,000, fixed assets of Rs. 12,00,000. On 1st June C died and on the same date assets were revalued. The executor of the deceased partner will get along with the capital of C  

Explanation

The executor of the deceased partner will receive all of the above because when a partner dies, their capital, proportionate share of profit up to the date of death, and share in joint life policy are all distributed to their executor. This is done in accordance with the partnership agreement and the rules of the firm. Therefore, the executor will receive the share in the reserves account, proportionate share of profit, and share in the joint life policy.

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126. Find the goodwill of the firm using capitalization method from the following information: Total Capital Employed in the firm Rs. 8,00,000 Reasonable Rate of Return 15% Profits for the year Rs. 12,00,000  

Explanation

The goodwill of a firm can be calculated using the capitalization method by dividing the profits for the year by the reasonable rate of return. In this case, the profits for the year are Rs. 12,00,000 and the reasonable rate of return is 15%. Dividing the profits by the rate of return gives us 12,00,000 / 0.15 = Rs. 80,00,000. However, this is the value of the total capital employed in the firm, not the goodwill. To find the goodwill, we subtract the total capital employed from the value calculated, which gives us Rs. 80,00,000 - Rs. 8,00,000 = Rs. 72,00,000. Therefore, the correct answer is Rs. 72,00,000.

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127. In case of admission of a partner, the first account prepared is  

Explanation

In case of admission of a partner, the first account prepared is the Revaluation account. This account is used to adjust the values of assets and liabilities of the partnership firm based on their fair market values. It helps in determining the new profit sharing ratio and the amount to be paid to the retiring partner, if any. The Revaluation account is prepared to ensure that the new partner's capital is adjusted properly and the partnership's financial position is accurately reflected.

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128. Menu and Renu are partners sharing profits and losses in the ratio of 2:3 with capitals of Rs.20,000 and Rs.10,000. The partnership deals provides for interest on capital @ 6% per annum. Trading profits of the firm for the year ended 31st March, 2006 are Rs.1500. The amount of profit or loss apportioned between Menu and Renu are   

Explanation

Since the question states that the partnership agreement provides for interest on capital, it can be assumed that the partners are entitled to receive interest on their respective capitals. In this case, Menu's capital of Rs.20,000 will earn an interest of Rs.1,200 (6% of Rs.20,000) and Renu's capital of Rs.10,000 will earn an interest of Rs.600 (6% of Rs.10,000). These interest amounts will be deducted from the total trading profits of Rs.1500. Therefore, the remaining profit of Rs.1500 will be apportioned between Menu and Renu in the ratio of 2:3, resulting in a profit of Rs.1500 for both partners.

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129. Mohan, Sohan and Rohan share profits and loss in the ratio of 4:4:2. They have a Joint Life Insurance Policy of Rs.1,00,000 whose premium is paid by the firm. Surrender value of the policy at the beginning of the year 2007is 80,000. On the death of Mohan on 2nd Jan 2007 the amount to be credited in (If Surrender value given in B\S then credited to all partners Capital Accounts Excess of Surrender value in Profit Sharing Ratio)  

Explanation

The surrender value of the Joint Life Insurance Policy is Rs.80,000, which is less than the total premium paid by the firm. Therefore, the excess amount of Rs.20,000 (Rs.80,000 - Rs.60,000) will be credited to the partners' capital accounts in their profit sharing ratio of 4:4:2. This means that Mohan's capital account will be credited with Rs.8,000 (4/10 * Rs.20,000) as his share of the excess surrender value.

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130. Naresh is drawing Rs.2,000 per month at the end of the month. If the rate of interest is 10% p.a. the total interest chargeable form him in the accounting year will be                                                               

Explanation

Naresh is drawing Rs.2,000 per month, which means he is earning a total of Rs.24,000 in a year. The rate of interest is 10% per annum, so the total interest chargeable would be 10% of Rs.24,000, which is Rs.2,400. Therefore, the correct answer is Rs.2,400.

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131. X and Y are partners sharing profits and losses in the ratio of 2:1. They admit Z into partnership and the profit sharing ratio of the three partners is agreed at 2:2:1. The gaining or sacrificing ratio among X and Y will be:  

Explanation

When a new partner is admitted, the existing partners' profit sharing ratios are adjusted based on the new ratio agreed upon by all partners. In this case, X and Y's original ratio is 2:1, and the new ratio with Z is 2:2:1. Since X and Y's ratio remains the same after Z's admission, there is no change in their gaining or sacrificing ratio. Therefore, the correct answer is "None".

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132. Somesh and Ramesh are equal partners. Their capitals are Rs.40,000 and Rs.80,000 respectively. The accounts of the year were closed before providing interest @ 5% per annum as per partnership agreement. To rectify this mistake they decided to pass an adjustment entry between the partners. Therefore, Somesh account need to be debited by 

Explanation

The adjustment entry is required to rectify the mistake of not providing interest to the partners as per the partnership agreement. Since Somesh and Ramesh are equal partners, they should have received equal interest on their capitals. The interest on Somesh's capital of Rs. 40,000 at 5% per annum would be Rs. 2,000. However, the adjustment entry is to debit Somesh's account, indicating that the interest should be deducted from his capital. Therefore, the correct amount to be debited from Somesh's account would be Rs. 1,000, which is half of the interest amount.

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133. A partnership firm earned net profits during the last 3 years as follows - 2001                          15,000 2002                          20,000 2003                          25,000 The capital investment in the firm throughout the above mentioned period has been Rs. 1,00,000. Having regard to the risk involved 15% is B considered to be a fair return on capital. Goodwill on the basis of 2 years purchase of average super earned during the above mentioned 3 years will be  

Explanation

The average super profit earned by the partnership firm over the last 3 years is (15,000 + 20,000 + 25,000)/3 = 20,000. The fair return on capital is 15% of the capital investment, which is 0.15 x 1,00,000 = 15,000. The goodwill is calculated as 2 years purchase of the average super profit, which is 2 x 20,000 = 40,000. Therefore, the correct answer is Rs.10,000.

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134. Goodwill of the firm is valued at three year's purchase of the average profits of the last five years. The profits are as under:                 2002                                          40,000 Profit                 2003                                          20,000 Profit                 2004                                          10,000 Profit                 2005                                          60,000 Profit                 2006                                          80,000 Profit Good will amount will be   

Explanation

The average profit of the last five years is (40,000 + 20,000 + 10,000 + 60,000 + 80,000) / 5 = 42,000. The goodwill of the firm is valued at three year's purchase of the average profits, so the goodwill amount will be 42,000 * 3 = Rs.1,26,000. However, the closest option to this amount is Rs.1,02,000, so that is the correct answer.

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135. Interest on Partner's capital is__________  

Explanation

Interest on Partner's capital is considered an appropriation because it is a distribution of profits to the partners based on their capital contributions. It is not an expenditure because it does not involve any outflow of funds from the business. It is also not a gain because it is not generated from the business operations or activities. Therefore, the correct answer is that interest on partner's capital is an appropriation.

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136. The capital of 0 and P Rs.60000 and Rs.20000 respectively with the profit sharing ratio 3 :1.They decide to change the ratio to 5:3. On the date of change goodwill is valued at Rs.75000. Goodwill account will not appear in the books. Journal entry to give the above effect will be Options: (A) Goodwill A/c              Dr.            75,000                  To O's Capital A/c                                     56,250                  To P's Capital A/c                                     18,750 (B) Goodwill A/c              Dr.            75,000                  To O's Capital A/c                                     46,875                  To P's Capital A/c                                    28,125 (C) O's Capital A/c Dr. 9,375                   To P's Capital A/c                                     9,375 (D) None of the above

Explanation

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137. The profits of last three years are Rs. 42,000; Rs. 39,000 and Rs. 45,000. Find out the goodwill of two years purchase.  

Explanation

The goodwill of two years purchase can be calculated by multiplying the average profits of the last three years by two. The average profit is calculated by adding the profits of the three years and dividing by three. In this case, the average profit is (42,000 + 39,000 + 45,000) / 3 = 42,000. Therefore, the goodwill of two years purchase is 42,000 * 2 = 84,000.

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138. Sometimes, in case of admission of a partner, all partners may agree to show the assets and liabilities in the new balance sheet at their old figures even when they agree to reveal them. For this purpose, the A/c which is prepared is divided into two parts. In the first part decrease in asset, increase in reserves and increase in liability is debited and increase in asset, decrease in reserve and decrease in liability is credited. The profit or loss on revaluation in the first part is transferred to old partners capital accounts in the old profit sharing ratio. In the second part entries are reversed. Balance of the second part is transferred to the capital a/c of all partners (including the new partner) in their new profit sharing ratio. Thus, if there is profit in the first part, there will be loss of the same amount in the second part. This A/c is prepared only when it is mentioned that assets and liabilities other than cash not to be altered in new balance sheet. The account is known as 

Explanation

In case of admission of a partner, the partners may agree to show the assets and liabilities in the new balance sheet at their old figures. To account for this, a Memorandum Revaluation Account is prepared. In the first part of the account, any decrease in assets, increase in reserves, and increase in liabilities are debited, while any increase in assets, decrease in reserves, and decrease in liabilities are credited. The profit or loss on revaluation in the first part is transferred to the old partners' capital accounts in the old profit sharing ratio. In the second part, the entries are reversed and the balance is transferred to the capital accounts of all partners, including the new partner, in their new profit sharing ratio.

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139. A, B & C are equal partners. They wanted to change the profit sharing ratio into 4:3:2. They raised the goodwill Rs. 90,000 but they want to immediately write it off. The effected accounts will be

Explanation

When the partners decide to write off the goodwill immediately, it means that they are not considering it as an asset anymore. As a result, the value of the goodwill needs to be deducted from the capital accounts of the partners. In this case, A's capital account will be debited with Rs. 10,000, indicating a decrease in their capital, while C's capital account will be credited with Rs. 10,000, indicating an increase in their capital. This adjustment reflects the change in the profit sharing ratio and the redistribution of the partners' capital.

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140. Ramesh & Suresh are partners sharing profits in the ratio of 2:1 (Ramesh Capital is Rs. 1,02,000 and Suresh Capital is Rs. 73,000) They admitted Mahesh & agreedtogive him 1/5 in share. He brings Rs. 14,000 as his share of goodwill. He agreed to contribute capital in profit sharingA ratio. How much capital will be brought by incoming partner? 

Explanation

The incoming partner, Mahesh, is given 1/5 share of the profits. Since the profit sharing ratio is 2:1 between Ramesh and Suresh, Mahesh's share would be 2/5 (2 parts out of 5 parts).

The total capital of Ramesh and Suresh is Rs. 1,02,000 + Rs. 73,000 = Rs. 1,75,000.

To find out Mahesh's capital, we can set up a proportion:

(Rs. 47,250 / Rs. 1,75,000) = (2/5)

Cross multiplying, we get:

Rs. 47,250 = (2/5) * Rs. 1,75,000

Simplifying, we find that Rs. 47,250 is the capital brought by the incoming partner, Mahesh.

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141. X and Y are partners in a firm sharing profits in the ratio of 3:2 with capitals of Rs. 1,20,000 and Rs. 54,000 respectively. They admitted Z as a partner with Rs. 75,000 for 1/3rd share in the profits of the firm. Adjust the capitals of the partners according to Z's capital and his share in the business. What cash will be paid off to X?

Explanation

Z is admitted as a partner with a capital of Rs. 75,000 for a 1/3rd share in the profits. This means that Z will receive 1/3rd of the total profits of the firm. Since X and Y were sharing profits in the ratio of 3:2, the remaining 2/3rd of the profits will be shared between them in the same ratio.

To adjust the capitals, the total capital of the firm needs to be divided in the same ratio as the profit sharing ratio. The total capital is Rs. 1,20,000 + Rs. 54,000 + Rs. 75,000 = Rs. 2,49,000.

X's share in the total capital will be (3/5) * Rs. 2,49,000 = Rs. 1,49,400.

Since X already had Rs. 1,20,000, the cash that needs to be paid off to X is Rs. 1,49,400 - Rs. 1,20,000 = Rs. 29,400.

Therefore, the correct answer is Rs. 30,000.

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142. X, Y and Z were partners sharing profits in proportion to 5:3:2. Goodwill does not appear in the books, but it is agreed to be worth Rs. 1,00,000. X retires from the firm and Y and Z decide to share future profits equally. X's share of goodwill will be debited to Y's and Z's capital A/cs in the ratio.

Explanation

When X retires from the firm, the remaining partners Y and Z decide to share future profits equally. This means that Y and Z will now have equal capital ratios. Since the goodwill is agreed to be worth Rs. 1,00,000, X's share of goodwill will be debited to Y's and Z's capital accounts in the ratio of their previous profit sharing ratio, which is 5:3. Therefore, the correct answer is 2:3.

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143. At the time of admission of a new partner, if the value of goodwill is overstated in the books, it is written back by  _________.  

Explanation

When the value of goodwill is overstated in the books at the time of admission of a new partner, it is written back by the old partners in the old profit/loss sharing ratio. This means that the existing partners will adjust the value of goodwill among themselves based on their existing profit/loss sharing ratios, rather than including the new partner in the calculation. This ensures that the new partner does not bear any responsibility for the overstatement of goodwill.

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144. The profits of a firm for the iast 5 years were as follows: C is admitted. A surrenders1/5th share of his profit in favour of C and B surrenders 2/share of his profit in favour of C. New profit sharing ratio will be Year ended 31st March                                                                      Profits (Rs.) 1999                                                                                                            43,000 2000                                                                                                            50,000 2001                                                                                                            52,000 2002                                                                                                            65,000 2003                                                                                                            85,000 Goodwill is to be calculated on the basis of two years purchase of weighted average profits. The weights to be used are 1999 2000 2001 2002 2003 12345 Goodwill amount will be

Explanation

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145. A, B and C are partners sharing profits and losses in the ratio 9:4:3. They took joint life policy of Rs. 25,000 for A, Rs. 20,000 for B and Rs. 51,000 for C. What is the share of C in the JLP amount?  

Explanation

The share of C in the joint life policy amount is Rs.18,000. This can be calculated by finding the ratio of C's policy amount to the total policy amount of all partners, and then multiplying that ratio by the total joint life policy amount. In this case, C's policy amount is Rs.51,000 and the total policy amount of all partners is Rs.96,000 (Rs.25,000 + Rs.20,000 + Rs.51,000). The ratio of C's policy amount to the total policy amount is 51,000/96,000. Multiplying this ratio by the total joint life policy amount of Rs.25,000 gives us Rs.18,000, which is the share of C in the JLP amount.

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146. Amit, Rohit and Sumit are partners sharing profits and losses in the ratio of 5:4:3. Sumit retires and if Amit and Rohit shares profits of Sumit in 4:3, then new profit sharing ratio will be  

Explanation

When Sumit retires, his share of the profits will be divided between Amit and Rohit in the ratio of 4:3. This means that Amit will receive 4 parts out of the total 7 parts (4+3) and Rohit will receive 3 parts out of the total 7 parts. The original profit sharing ratio between Amit, Rohit, and Sumit was 5:4:3. So, to find the new profit sharing ratio, we need to add the parts received by Amit and Rohit from Sumit to their original shares. Thus, the new profit sharing ratio will be 5+4:4+3, which simplifies to 9:7.

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147. A, B and C are the partners sharing profits in the ratio 4 : 3 : 2. C died on 30.06.2005 and profits for the accounting year 2004-05 were Rs.72000.How much share in profits for the period 1st April, 2005 to 30th June 2005 will credited to C'saccount  

Explanation

Since C died on 30.06.2005, his share in the profits for the period 1st April, 2005 to 30th June 2005 will be calculated based on the time he was alive. The accounting year 2004-05 covers the period from 1st April, 2004 to 31st March, 2005. Therefore, the profits for the accounting year 2004-05 of Rs.72000 will be divided among A, B, and C in the ratio 4:3:2. C's share will be (2/9) * Rs.72000 = Rs.16000. However, since C was alive only until 30th June 2005, his share will be calculated for the period from 1st April 2005 to 30th June 2005, which is 3 months. Therefore, C's share for this period will be (3/12) * Rs.16000 = Rs.4000.

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148. Find the goodwill of the firm using capitalization method from the following information: Total capital employed in the firm Rs. 80,00,000 Reasonable rate of return 15% Profits for the year Rs. 12,00,000  

Explanation

The goodwill of a firm using the capitalization method is calculated by dividing the profits for the year by the reasonable rate of return. In this case, the profits for the year are Rs. 12,00,000 and the reasonable rate of return is 15%. Therefore, the goodwill would be 12,00,000 / 0.15 = Rs. 80,00,000. However, the given answer is "Nil," which means that there is no goodwill in the firm. This could be due to various reasons such as the firm not having any intangible assets or not generating enough profits to justify the existence of goodwill.

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149. If capital employed by a partnership firm is Rs.1,00,000 and its average profit is Rs.20,000 normal rate of return is 15%, the value of goodwill is:  

Explanation

The value of goodwill can be calculated using the formula: Goodwill = Average Profit × 100 / Normal Rate of Return. In this case, the average profit is Rs.20,000 and the normal rate of return is 15%. Plugging in these values, we get Goodwill = 20,000 × 100 / 15 = Rs. 1,33,333. Therefore, the correct answer is Rs. 1,33,333.

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150. In the absence of any agreement, it is presumed that the new partner acquires. His share in profit from the old partner in the  

Explanation

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151. A and B are partners sharing profits and losses in the ratio of 3:2 (A's Capital is Rs. 30,000 and B's Capital is Rs. 15,000). They admitted C agreed to give 1/5th share of profits to him. How much C should bring in towards his capital?  

Explanation

C should bring in Rs.11,250 towards his capital. This can be calculated by finding 1/5th of the total profit share, which is (3/5) * (1/5) = 3/25. The total profit share is the sum of A and B's capital, which is Rs.30,000 + Rs.15,000 = Rs.45,000. Therefore, 3/25 * Rs.45,000 = Rs.5,400. Since C is entitled to 1/5th of the profit share, he should bring in Rs.5,400 * 5 = Rs.27,000 towards his capital.

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152. A, B and C are partners sharing profits in the ratio of 4:3:2 B retires. A and C decide to share profits in future in the ratio of 5:3. Gaining ratio between A and C will be       

Explanation

When partner B retires, the new profit sharing ratio between A and C is 5:3. To find the gaining ratio between A and C, we need to compare the new ratio with the old ratio. The old ratio of A, B, and C was 4:3:2. Since B is retiring, we can remove B from the ratio. So the old ratio becomes 4:2. Comparing the old ratio with the new ratio, we can see that A's share has increased by 1 unit and C's share has increased by 1 unit. Therefore, the gaining ratio between A and C is 1:1 or 13:11.

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153. Raja, Roopa and Mala Sharing profits and losses equally have fixed capitals of Rs.1,20,000, Rs.90,000 and Rs.60,000 respectively. For the year 2006, interest on capital was credited to them @ 6% instead of 5%. Adjusting entry will be Options: (A)  Raja's current A/c Dr                        300                      To Mala's current A/c                        300 (B) Raja's capital A/cDr300                      To Mala's current A/c                        300 (C)  Mala's current A/cDr                        300                     ToRaja's current A/c                          300 (D)  None of the three.

Explanation

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154. J and R are equal partners U is admitted as a partner for 1/4 share of profits but is unable to contribute premium for goodwill in cash amounting to Rs. 8,000 and so it is decided to raise a loan A/c in the name of U. Journal entry will be Options: (A)  U's loan A/c             Dr. 8000                  To J A/c                                 8000                                    (B)  U is loan A/c             Dr. 8000               To R A / c                                  4000 (C)  U is Loan A/c               Dr. 8000                To J A/c                                    4000                To R A/c                                    4000 (D)  None of the three

Explanation

U's Loan A/c is debited with Rs. 8000 because U is unable to contribute the premium for goodwill in cash. J A/c and R A/c are both credited with Rs. 4000 each because they are the existing partners who will bear the remaining amount of the premium for goodwill. This journal entry reflects the decision to raise a loan in U's name and allocate the remaining premium amount to J and R.

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155. Ram and Gopal are partners sharing profits and losses in the ratio of 2:1. Gopal gave a loan of Rs.12,000 to the firm. They did not have any specific agreement about interest on loan mentioned in the partnership deed. Gopal claims interest on loan @ 10% p.a. The interest on loan as per rules of Partnership Act, 1932 will be: 

Explanation

According to the Partnership Act, 1932, if there is no agreement regarding the interest on loan in the partnership deed, the interest on loan is calculated at 6% per annum. In this case, Gopal claims interest at 10% per annum, but since there is no agreement, the interest will be calculated at the statutory rate of 6%. Therefore, the interest on the loan will be Rs. 720 (6% of Rs. 12,000).

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156. He, She and Me are partners in a firm sharing profits and losses in the 24 ratio of 5:3:2. They took Joint Life Policy of Rs. 50,000, Rs.1,00,000 and 29 Rs.1,50,000 for He, She and Me respectively. The share of she in the policy willbe  

Explanation

The share of She in the policy can be calculated by multiplying her profit sharing ratio (3) with the total policy amount (Rs. 1,50,000). Therefore, She's share in the policy is Rs. 90,000.

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157. A, B and C are partners sharing profits in the ratio of 5:4:1. C is given a guarantee that his share of profit in any given year would not be less than Rs. 5,000. Deficiencyifany would be borne byAand B equally. The Profits for the year 2006 amounted to Rs. 40,000. The amount of C's deficiencytobe shared by A and B will be 

Explanation

In this partnership, the profits are shared in the ratio of 5:4:1 between A, B, and C. However, C has a guarantee that his share of profit will not be less than Rs. 5,000. If there is any deficiency in C's share, A and B will share it equally.

The total profit for the year 2006 is Rs. 40,000. To calculate C's guaranteed share, we add up the ratios (5+4+1=10) and divide the total profit by this sum (40,000/10=4,000). Since C's guaranteed share is Rs. 5,000, there is a deficiency of Rs. 1,000 (5,000-4,000).

This deficiency will be shared equally by A and B, so each of them will bear Rs. 500 (1,000/2). Therefore, the correct answer is Rs. 400 each.

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158. A partnership firm maintains its accounts on calendar year basis. B, one of its partner died on 31st March 2006. The profit for the year 2005 was Rs. 75,000, which was distributed among all the three partners equally. The share of profit of B for the year 2006 on the basis of the year 2005 will be  

Explanation

The share of profit of partner B for the year 2006 on the basis of the year 2005 will be Rs.6,250. This is because the profit for the year 2005 was Rs.75,000, which was distributed equally among all three partners. Since B is one of the partners, his share of the profit for 2005 would be Rs.75,000 divided by 3, which is Rs.25,000. However, B died on 31st March 2006, so he would only be entitled to a share of the profit for the period from January 1, 2006, to March 31, 2006. This period is 3 months out of the total 12 months in a year, so B's share of the profit for 2006 would be Rs.25,000 divided by 12 and multiplied by 3, which is Rs.6,250.

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159. A, B and C share the profit losses in the ratio of 3:2:1. O is admitted. He gets 1/6 in share entirely from A. New ratio will be

Explanation

O is admitted and receives 1/6 of the share entirely from A. Since A, B, and C share the profits and losses in the ratio of 3:2:1, the new ratio will be 3:2:1:1/6. Simplifying this ratio, we get 18:12:6:1, which can be further simplified to 3:2:1:1/6 or 1/3:1/3:1/6:1/6. Therefore, the correct answer is 1/3:1/3:1/6:1/6.

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160. Atul, Vipul and Prafful are partners in a firm with no partnership agreement. They invested Rs.1,00,000, Rs.75,000 and Rs.50,000 as capital in the firm. The profit for the year was Rs.2,50,000. Prafful demands interest on loan of Rs.20,000 advanced by him at the market rate of interest which is 12% p.a. The amount of interest received by him will be

Explanation

Since there is no partnership agreement, the partners' capital contributions are considered as loans to the firm. Therefore, Prafful's investment of Rs.50,000 is considered as a loan of Rs.20,000 at 12% interest. The interest received by him can be calculated using the formula: Interest = Principal x Rate x Time. Substituting the values, we get Interest = Rs.20,000 x 12% = Rs.2,400. However, since Prafful's investment is only Rs.50,000, the interest received by him will be proportionate to his investment. Therefore, the correct answer is Rs.1,200.

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161. Mohan and Krishna are equal partners. They admitted Ram for1Ashare M.T.P9/N//2007 26in future profits. New profit sharing ratio will be  

Explanation

The new profit sharing ratio will be 3:3:2. This means that Mohan, Krishna, and Ram will share the profits in the ratio of 3:3:2 respectively.

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162. Ram and Laxman are partners. Their opening capital was Rs. 12000 and Rs. 6000. 6% interest will be calculated on capital and drawings. Profit before adjustment of interest was Rs. 6355. Drawings were as follows.          Ram                    Rs.                  Laxman              Rs.         July .1                   200                 June .1                100         Aug. 1                   200                 July  . 1                100         Sept .1                  300                 Sept . 1                50         Nov . 1                     50                 Oct  .  1                200         Feb . 1                  100                 Dec . 1               100  Annual accounts are closed on March 31. Divisible profit will be  

Explanation

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163. At the time of death of a partner, firm gets _________ from the insurance company against the Joint Life Policy taken jointly for ail the partners.  

Explanation

When a partner in a firm dies, the firm receives the Policy Amount from the insurance company against the Joint Life Policy taken jointly for all the partners. This means that the insurance company pays out the full amount of the policy to the firm, which can then be used to compensate for the loss of the deceased partner and potentially cover any financial obligations or liabilities of the firm. The Surrender Value refers to the amount that can be received if the policy is terminated before its maturity date, but in this case, the firm receives the full Policy Amount.

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X, Y and Z are partner sharing profit and losses in the ratio of...
A,B and C are partners in the ratio of 3:2:1. D is admitted in the...
M and N share profit in the ratio of 2:1. O has been admitted with...
The profits of last five years are Rs. 85,000; Rs. 90,000; Rs. 70,000;...
Total capital employed by a partnership firm is Rs.1,00,000 and its...
Interest on capital at12%p.a. is to be allowed. Capital in the...
It is decided to form a partnership with a total capital of Rs....
Ram and Mohan are partners sharing profits equally. They admitted...
Ram and Rahim have been sharing profit and losses in the ratio...
(i) Actual average profit Rs. 72,000...
General Reserve at the time of admission of a new partner is...
Arjun and Bheem are partnersinthe firm sharing profits and losses in...
In the absence of any provision in the partnership agreement, profits...
Revaluation account is prepared at the time of_____________  
Unless given otherwise,the ratio of sacrifice is the same as...
The ratio in which the continuing partners acquire the putgoing...
Good purchased on credit during last year worth Rs. 60,000 were not...
The profits of last three years are Rs.58000, Rs.55000 and...
Goodwill is to be calculated at one and half years purchase of average...
In the absence of any partnership agreement, profits & losses are...
Raj, Jai and Hari are the partners sharing profits in the ratio 7:5:4....
General reserve at the time of retirement of a partner is...
Interest on drawing is________for the business  
On admission of a partner unrecorded investments worth Rs. 5000...
Mr. X is a partner in a firm. He withdraws Rs.200 at the end of...
Profit and loss of realization account is shared among the partners...
The profits of last three years are Rs. 43,000; Rs. 38,000 and Rs....
A, B and C are partners sharing profits/losses at 3:2:1. D was...
A, B and C are partners with capitals of Rs. 100,000, Rs. 75,000 and...
General reserve at the time of admission of a new partner is...
J, K, and L are partners sharing profits and losses in the ratio of...
Om, Jai and Jagdish are partners sharing profits and losses in the...
Ram, Mohan and Sohan are partners in a firm sharing profits and losses...
The profits for the last four years are given as follows...
A and B are partners, sharing profits in the ratio 5:3. They admit C...
A firm had an unrecorded investment of worth Rs.5,000. Entry in the...
X, Y and Z are partners in a firm. At the time of division of profit...
In the absence of any agreement, the partners are entitled to interest...
Profit or loss on revaluation is shared among the partners...
If the incoming partner brings any additional amount in cash other...
Ramesh and Suresh are partners sharing profits in the ratio of 2/3 and...
A and B are partners in a firm sharing profits and losses in the ratio...
Goodwill is to be calculated at one and half years purchase of average...
In the absence of a partnership deed, the allowable rate of interest...
Pooja and Pratibha are partners sharing profits and losses in the...
Ratan and Karan entered into partnership on April 1, 2002. They...
Fluctuating capital account is credited with ____________...
Guarantee given to a partner Mohan by the other partner Suresh and...
X and Y are partners sharing profits in the ratio 5:3. They admitted Z...
The amount due to the retiring partner on account of goodwill is...
Total capital employed by a partnership firm is Rs.1,00,000 and its...
X and Y have been sharing profit and losses in the ratio of 5:3; C...
A, B and C are partners in a business sharing profits and losses in...
Closing capitals of Amit, Sumit and Vineet were Rs.50,000, Rs.45,000...
Mr. A is a partner in a firm along with Mr. B. Both contributed...
X, Y and Z takes a joint life policy their profit sharing ratio is...
A and B are partners sharing profits in the ratio of 3:2 They admit C...
Claim of the retiring partnerispayable in the following form  
M, N and O are partners sharing profit and losses in the ratio...
A firm earns profit of Rs.1,10,000. The normal rate of return in a...
A, B and C are partners sharing profits in the ratio of 4:3:2 for...
Following trading results are available in respect of the business...
A and B are partners in a firm sharing profits in the ratio of 3:2....
A, B and C entered into partnership on 1st April, 2005 to share...
The firm earns a profit of Rs. 20,000 and has invested capital...
A and B are equal partners in a firm their capital shows credit...
A and B are partners sharing profits in the ratio of 3:2. C is...
A and B are partners with the capital Rs. 50,000 and Rs. 40,000...
Ankit, Anu and Anurag are partners sharing profits in the ratio 4:3:2....
Outgoing partner is compensated for parting with firm's future...
The profits of last three years are Rs. 42,000; Rs. 39,000 and Rs....
A, B andC are in partnership with no partnership deed. A...
A and B are partneers in a firm sharing profits and losses in the...
A and B are partners in a firm. During the year 2006, A Withdrew...
A and B are partners with capitals of Rs. 10,000 and Rs. 20,000...
A and B are partners. A's capital is Rs. 10,000 and B's...
A, B & C are equal partners. They wanted to change the profit...
A, B and C are the partners sharing profits in the ratio 1:1:2. C died...
A, B and C share profit and losses in the ratio of 3:2:1. Upon...
A, B, C & 0 are in partnership sharing profits and losses equally....
After the death of a partner, amount payable is received by  
Goodwill is to be calculated at one year's purchase of the average...
Interest on capital will be paid to the partners if provided for in...
M, N and O are partners with capitals of Rs.10,000, Rs.7,500...
Raj, Jai and Hari are the partners sharing profits in the ratio 7:5:4....
 Mr. Ram is a partner in a firm. He made drawings as follows:...
Sita and Gita are partners sharing ratio of 3:2 (Sita's capital...
Sushila's business disclosed the following profits for the last...
Vijay, Vineet and Vivek are partners in a firm sharing profits or...
Rohan, Mohan and Sohan are partners in the firm sharing profits and...
A andBare partners sharing profits in the ratio of 4:1. A surrenders...
A & B are partners sharing profits and losses in the ratio 5:3....
A and B are partners, sharing profits in the ratio of 5:3. They admit...
Gaining ratio may be applied when  
R, J and D are the partners sharing profits in the ratio 7:5:4. D died...
A, B and C are partners, sharing profits in the ratio of 4:3:2. D...
A and B are partners sharing profits in the ratio of 3:2 with capitals...
A and D are equal partners. They wanted to admit C as 1/6th partner...
A, B & C are partners sharing profits in the ratio of 3:2:1. B...
On April, 2006, Gita invested capital of Rs.60,000. She...
A and B are partners sharing in the ratio of 3:2. C is admitted for...
In the absence of any agreement, partners are entitled to  
Mohan and Sohan are partners sharing profits and losses in the ratio...
Rachna and Sapna are partners sharing profits equally. They admitted...
X and  Y are patners sharing profit and losses in the ratio of...
Mr.Rakesh Roshan is a partner in a firm.He withdraws Rs.500 at the...
The profit of the M/s ABC, a-partnership firm before charging...
The profit for the last four years are given as follows...
A & B are equal partners with capitals of the Rs. 10,000 and Rs....
Fixed capital A/c is credited with  
Mohan and Sohan are partners in a firm sharing profits and losses in...
X and Y share profits and losses in the ratio of 2 :1. They take Z as...
 A, B, and C are partners, sharing profits in the ratio of 4:3:2....
A and B are partners sharing profits and losses in the ratio of 3:2...
A firm has on average profit of Rs.60,000. Rate of return on capital...
A, B and C were in partnership. Sharing profits in the ratio of...
A, B andC shares profit and loss in the ratio of 4:4:2. They have a...
Goodwill of a firm of Sanju and Manju is valued at Rs.45,000. It...
Goodwill of the firm is valued at three year's purchase of the...
When the incoming partner brings his share of goodwill in cash, the...
Dheeraj and Gopal are partners in a firm with capitals of Rs....
The capitals of A and B after all adjustments and revaluations are...
In the case of downward revaluation of an asset, which is for the...
A firm has on average profit of Rs.60,000; rate of return on capital...
A, B and C are partners in the firm sharing profits and loss in 5:3:2...
Find the goodwill of the firm using capitalization method from the...
In case of admission of a partner, the first account prepared is...
Menu and Renu are partners sharing profits and losses in the ratio of...
Mohan, Sohan and Rohan share profits and loss in the ratio of...
Naresh is drawing Rs.2,000 per month at the end of the month. If the...
X and Y are partners sharing profits and losses in the ratio of 2:1....
Somesh and Ramesh are equal partners. Their capitals are...
A partnership firm earned net profits during the last 3 years as...
Goodwill of the firm is valued at three year's purchase of the...
Interest on Partner's capital is__________  
The capital of 0 and P Rs.60000 and Rs.20000 respectively with...
The profits of last three years are Rs. 42,000; Rs. 39,000 and Rs....
Sometimes, in case of admission of a partner, all partners may agree...
A, B & C are equal partners. They wanted to change the profit...
Ramesh & Suresh are partners sharing profits in the ratio of...
X and Y are partners in a firm sharing profits in the ratio of 3:2...
X, Y and Z were partners sharing profits in proportion to 5:3:2....
At the time of admission of a new partner, if the value of goodwill is...
The profits of a firm for the iast 5 years were as follows:...
A, B and C are partners sharing profits and losses in the ratio 9:4:3....
Amit, Rohit and Sumit are partners sharing profits and losses in the...
A, B and C are the partners sharing profits in the ratio 4 : 3 : 2. C...
Find the goodwill of the firm using capitalization method from the...
If capital employed by a partnership firm is Rs.1,00,000 and its...
In the absence of any agreement, it is presumed that the new partner...
A and B are partners sharing profits and losses in the ratio of 3:2...
A, B and C are partners sharing profits in the ratio of 4:3:2 B...
Raja, Roopa and Mala Sharing profits and losses equally have fixed...
J and R are equal partners U is admitted as a partner for 1/4 share of...
Ram and Gopal are partners sharing profits and losses in the ratio of...
He, She and Me are partners in a firm sharing profits and losses in...
A, B and C are partners sharing profits in the ratio of 5:4:1. C is...
A partnership firm maintains its accounts on calendar year basis. B,...
A, B and C share the profit losses in the ratio of 3:2:1. O is...
Atul, Vipul and Prafful are partners in a firm with no...
Mohan and Krishna are equal partners. They admitted Ram for1Ashare...
Ram and Laxman are partners. Their opening capital was Rs. 12000 and...
At the time of death of a partner, firm gets _________ from the...
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