1 X, Y and Z are partners sharing profits in the ratio of 3:2:1.

They close their books of

accounts on December 31, every year. Y dies on May 31. Calculate the deceased partner’s
share of profits on the basis of the average of last three years profit, which amounts to Rs.
30,000, Rs. 25,000 and Rs. 17,000.
(a) Rs. 3,500 (b) Rs. 6,667 (c) Rs. 3,367 (d) Rs. 3,333
2 Which of the following items is debited to Retiring Partner’s Capital A/c?

(a) Share in goodwill (b) Interest on capital (c) Share in revaluation profits (d) Interest on
drawings
3 Which of the following is not deductible from the amount payable to a retiring partner?
(a) Share of losses earned during the year
(b) Balance lying to the credit of the current account
(c) Any interest on drawings due, if allowed by the partnership deed
(d) Share of accumulated losses
4 A, B and C share profits in the ratio of 5:3:2. Goodwill is to be calculated on the basis
of 2 years purchase of last 3 years average profits. Profits for last three years are Rs. 3,29,000;
Rs. 3,46,000 and Rs. 4,05,000. On A’s death, how much will B and C pay to A’s executor on
account of goodwill?
(a) B - Rs. 2,16,000 and C - Rs. 1,42,000
(b) B - Rs. 2,44,000 and C - Rs. 2,16,000
(c) B - Rs. 2,16,000 and C - Rs. 1,44,000
(d) B - Rs. 3,60,000 and C - Rs. 3,60,000
5 In the absence of a partnership agreement, representative of the deceased partner is entitled to
which of the following items?
I Profits till date
II Goodwill
III Joint Life Policy
IV Interest on Capital
V Share on revaluation of assets and liabilities
VI Capital
(a) I, II, III, IV and V (b) I, II, III, V and VI
(c) II, III, IV, V and VI (d) I, II, IV, V and VI
6 In which of the following ways is the claim of a retiring partner not payable?
(a) Fully in cash
(b) Fully transferred to loan account to be paid later with interest
(c) Partly in cash and partly as loan repayable later with agreed interest
(d) Partly in cash and partly transferred to Debtors A/c
7 The capitals of X, Y and Z are Rs. 1,00,000; Rs. 75,000 and Rs. 50,000. Profits are shared in
the ratio of 3:2:1. Y retires on the basis that his share is purchased by other partners, keeping
the total capital intact. The new ratio between X and Z is 3:1. Find the new capital of X and Z
after purchasing Y’s share.
(a) Rs. 1,50,000 and Rs. 1,00,000
 (b) Rs. 1,46,250 and Rs. 42,000
(c) Rs. 1,56,250 and Rs. 68,750
(d) Rs. 86,250 and Rs. 46,250
8 Retiring partner
(a) is not liable for any liabilities of the firm
(b) is only liable for obligations incurred before his retirement
(c) is only liable for obligations incurred with his consent

9 The Profit and Loss Suspense A/c should be closed by transferring its balance to
the___________
10 Why is revaluation account prepared?
(a) To bring assets and liabilities at their present value
(b) To bring assets and liabilities at their book value
(c) To bring assets and liabilities at their historical value
(d) To bring assets and liabilities at their cost value
11 Which of the following is not transferred to partners’ capital account at the time of retirement
of a partner?
(a) Workers’ provident fund
(b) Workmen’s compensation reserve
(c) Investment fluctuation reserve
(d) Balance of Profit and Loss A/c
12 Identify the account which is not credited to All Partners’ Capital A/c at the time of
retirement of a partner.
(a) Debit balance of Profit and Loss A/c
(b) General Reserve A/c
(c) Credit balance of Profit and Loss A/c
(d) Reserve Fund A/c
13 Funds for repayment to retiring partner may not be provided out of__________
(a) firm’s own resources (b) borrowings by the firm
(c) additional funds brought in by continuing partners (d) sale of fixed assets of the firm
14 A, B and C are partners sharing profits in the ratio 7:5:4. C died on 30th June, 2013 and
profits for the accounting year 2012−2013 were Rs. 24,000. How much share in profits for the
period 1st April 2013 to 30th June, 2013 will be credited to C’s Account?
(a) Rs. 6,000 (b) Rs. 1,500 (c) Rs. 2,000 (d) Rs. 1,800
15 Which of the following items will not be debited to Deceased Partner’s Capital A/c?
(a) His share of loss on revaluation of assets and liabilities
(b) His drawings and interest on drawings
(c) His share of loss from the last Balance Sheet till the date of his death
(d) His share in firm’s liabilities
16 State whether the Revaluation A/c will be debited or credited in the following cases.
(i) Increase in the value of machinery
(ii) Decrease in the value of bills payable
(iii) Transfer profit on revaluation
(iv) Decrease in provision for doubtful debts
 (a) (i) - Credit; (ii) - Credit; (iii) - Credit; (iv) – Credit
(b) (i) - Debit; (ii) - Credit; (iii) - Credit; (iv) – Debit
(c) (i) - Credit; (ii) - Debit; (iii) - Credit; (iv) – Debit
(d) (i) - Debit; (ii) - Debit; (iii) - Credit; (iv) - Debit
17 A, B and C are partners sharing profits in the ratio of 8:7:5. B retires and his share is taken
over by A and C in the ratio of 1:2. Calculate the new profit sharing ratio between A and C.
(a) 8:5 (b) 1:2 (c) 31:29 (d)1:1

18 The partnership may come to an end due to the:

(a) Death of a partner (b) Insolvency of partner
(c) By giving notice (d) All of the above (T)
19 In case of retirement of a partner full good will is credited to the accounts of:
(a) All partners (T) (b) Only retiring partner
(c) Only remaining partner (d) None of the above
20 Amount due to out going partner is shown in the balance sheet as his:
(a) Liability (b) Asset (c) Capital (d) Loan (T)
21. Fill in the blanks:
(a) The payment made to the retiring partner in installments is known as .________
(b) ____________ will be debited with the agreed value already shown in the books.
(c) Partnership is _______on the retirement or death of a partner.
(d) Formula for Gaining Ratio=_____________
(e) X, Y, and Z are partners sharing profits in the ratio of 5:3:2. If Y retires then new ratio will
be ___________.
22. Increase in the value of assets should be ___________ to profit and loss adjustment
account.
a) debited
b) credited
c) added
d) none of there
23. State True or False
(a) Gaining ratio means old ratio minus new ratio.(f)
(b) Retiring partner’s share in profit up to the date of his retirement will be debited to profit
and loss suspense account.(T)
(c) Amount due to a retiring partner if not paid, appears as his loan in the books of the
firm.(t)
(d) Revaluation account is also called Realisation account.(F)
(e) Retirement of a partner leads to dissolution of the firm unless otherwise agreed upon.(T)
(f) Profit on revaluation account is transferred to continuing partners’ capital account
only.(F)