CBSE Test Paper 03

Ch-3 Change in Profit sharing ratio of Partners

1. Accounting Standard ____ requires goodwill should be recorded in the books of

accounts only when some money or money’s worth is paid for it.
a. 27
b. 10
c. 26
d. 23
2. When revaluation account is prepared the assets and liabilities appear in the balance
sheet of new firm at their _______ figure
a. Market
b. Old
c. Revised
d. Place
3. Which of the following is responsible for the Reconstitution of Partnership?
a. Change in the value of Debtors
b. Both Change in existing profit sharing ratio and Retirement/death of a partner
c. Change in existing profit sharing ratio
d. Retirement/death of a partner
4. Who is a sacrificing partner:
a. Whose share has increase as a result of change
b. Whose share has does not get affected as a result of change
c. Whose share has increase as well as decrease as a result of change
d. Whose share has decrease as a result of change
5. What is gaining ratio:
a. In which profit sharing ratio of gaining partners increase
b. In which profit sharing ratio of gaining partners decrease
c. In which profit sharing ratio of sacrificing partners increase
d. In which profit sharing ratio of sacrificing partners decrease
6. X, Y and Z are sharing profits in the ratio of 50%; 40% and 10% respectively. Now, they
have decided to share future profits equally. Identify the gainer partner.
a. Y is gainer

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 b. Both X and Y are gainer
c. Z is gainer
d. X is gainer

7. At the time of change in profit sharing ratio among existing partners, if there is an
unrecorded liability, where will you record the same?

8. Ram, Shyam and Mohan are sharing profits and losses in the ratio of 5:3:2. Calculate
the sacrificing ratio when they decide to share future profit & loss equally.

9. Define the term Sacrificing partner and gaining partner.

10. State the ratio in which the partners share profits or losses on the revaluation of
assets and liabilities when there is a change in profit sharing ratio amongst the
existing partners.

11. A, B and C who are presently sharing profits and losses in the ratio of 5 : 3 : 2 decide to
share future profits and losses in the ratio of 2 : 3 : 5. Give the Journal entry to
distribute Investment Fluctuation Reserve of Rs. 20,000 at the time of change in profit-
sharing ratio, when investment (market value Rs. 95,000) appears in the books at Rs.
1,00,000.

12. A,B,C and D are in partnership sharing profits and losses equally. They mutually
agreed to change the profit sharing ratio to 3:3:2:2. Give the necessary journal entry.

13. A,B and C are in partnership sharing profits and losses in ratio of 4:3:3. they decide to
change the profit sharing ratio to 7:7:6. Goodwill of the firm is valued at Rs.20000.
Calculate the sacrifice/gain by the partner and make the necessary journal entry.

14. R, S and T were partners in a firm sharing profits in 1 : 2 : 3 ratio. Their balance sheet
as at 31st March, 2015 was as follows

Balance Sheet
as at 31st March, 2015

Liabilities Amounts (Rs) Assets Amount (Rs)

Creditors 50,000 Land 50,000

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 Bills 20,000 Building 50,000

General Reserve 30,000 Plant 1,00,000

Capital A/cs Stock 40,000

R 1,00,000 Debtors 30,000

S 50,000 Bank 5,000

T 25,000 1,75,000

2,75,000 2,75,000

From 1st April. 2015 R, S and T decided to share the future profits equally. For this
purpose it was decided that

i. Goodwill of the firm be valued at Rs.1,50,000.

ii. Land be revalued at Rs.80,000 and building be depreciated by 6%.
iii. Creditors of Rs.6,000 were not likely to be claimed and hence be written-off.

Prepare revaluation account, partners’ capital accounts and the balance sheet of the
reconstituted firm.

15. A, B and C are partners sharing profits and losses in the ratio of 5 : 3 : 2. Their Balance
Sheets as at 31st March, 2019 Stood as follows-

Liabilities Rs. Assets Rs.

Capital A/cs: Land and Building 3,50,000

A 2,50,000 Machinery 2,40,000

B 2,50,000 Computers 70,000

Investments (Market Value

C 2,00,000 7,00,000 1,00,000
Rs. 90,000)

General Reserve 60,000 Sundry Debtors 50,000

Investment Fluctuation
30,000 Cash in Hand 10,000
Reserve

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 Sundry Creditors 90,000 Cash at Bank 55,000

Advertisement Suspense 5,000

Total 8,80,000 Total 8,80,000

They decide to share profits equally w.e.f. 1st April, 2019. They also agreed that-

i. Value of Land and Building be decreased by 5%.

ii. Value of Machinery be increased by 5%.
iii. A Provision for Doubtful Debts be created @ 5% on Sundry Debtors.
iv. A Motor Cycle valued at Rs. 20,000 was unrecorded and is now to be recorded in
the books.
v. Out of Sundry Creditors, Rs. 10,000 is not payable.
vi. Goodwill is to be valued at 2 years' purchase of last 3 years profits. Profits being
for 2018 - 19 - Rs. 50,000 (Loss); 2017-18 - Rs. 2,50,000 and 2016 - 17 - Rs. 2,50,000.
vii. C was to carry out the work for reconstituting the firm at a remuneration
(including expenses) of Rs. 5,000. Expenses came to Rs. 3,000.

Pass Journal entries and prepare Revaluation Account.

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