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Punjab (PTB) · Quarter book test · Free

2nd Year Principles of Accounting 3rd Quarter Book Paper

40 marks · 1 hour · 28 questions. Covers: CHAP 7: Partnership Accounts Admission of a Partner, CHAP 8: Partnership Accounts Retirement and Death, CHAP 9: Partnership Accounts Dissolution of the Firm.

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2nd Year Principles of Accounting 3rd Quarter Book Paper

2nd Year · Principles of Accounting · Punjab (PTB)

Name: ____________Roll No: ________Class/Section: ________Date: ________Total marks: 40Time: 1 hour

Q1. Multiple choice questions (Attempt all · 12 × 1 = 12)

  1. The journal entry, for assets taken over by a partner, in case of dissolution will be:

    1. Partner’s capital a/c …Dr To realization a/c

    2. Realization a/c …Dr To liabilities a/c

    3. Cash a/c ..Dr To realization a/c

    4. Realization a/c…Dr To assets a/c

  2. The entry for goodwill raised but written off, in case of retirement should be:

    1. Retiring partner’s capital A/c….Dr To Goodwill A/c

    2. Remaining partner’s capital A/c….Dr To Goodwill A/c

    3. Goodwill A/c….Dr To All Partner’s capital A/c

    4. All Partner’s capital A/c….Dr To Goodwill A/c

  3. X,Y and Z are partners in a firm, if B is to be admitted as a new partner:

    1. Old partnership has to be dissolved

    2. Old firm has to be dissolved

    3. Both old firm and partnership have to be dissolved

    4. Neither firm nor partnership needs to be dissolved

  4. The journal entry, for sale of various assets for cash, in case of dissolution will be:

    1. Liabilities a/c  …Dr To cash a/c

    2. Cash a/c  ..Dr To realization a/c

    3. Cash a/c …Dr To asset a/c

    4. Asset a/c …Dr To realization a/c

  5. In case of retirement amount of general reserve or any other profit is credited to all the partners in:

    1. Old profit sharing ratio

    2. New profit sharing ratio

    3. Sacrifice ratio

    4. Gaining ratio

  6. Old  profit sharing ratio minus new profit sharing ratio is equal to:

    1. Sacrificing ratio

    2. Gaining ratio

    3. Distributing ratio

    4. None of these

  7. Dissolution due to completion of venture, death of partner, insolvency of partner or expiry of the terms fixed is called:

    1. Dissolution by agreement

    2. Dissolution of notice

    3. Dissolution on the happening of certain contingencies

    4. Dissolution by court

  8. On the death of a partner, the amount received from joint policy should be credited to:

    1. Deceased partner’s capital accounts in the old profit sharing ratio

    2. Remaining partners’ capital accounts in the old profit sharing ratio

    3. All partners’ capital account equally

    4. All partners’ capital account in the old profit sharing ratio

  9. On the admission of a new partner in partnership:

    1. Old partnership has to be dissolved

    2. Old firm has to be dissolved

    3. “a” and “b”

    4. None of the above

  10. In case of dissolution, the payment of liabilities should be credited to:

    1. Realization

    2. Cash account

    3. Profit and loss account

    4. Liabilities account

  11. Interest on retiring partner loan in the absence of an agreement is paid @ rate of:

    1. 3% p.a

    2. 5% p.a

    3. 6% p.a

    4. 8% p.a

  12.  X and Y are sharing profits in the ratio of 4:3, Z joins and the new ratio among X,Y and Z is 7:4:3, the sacrificing ratio between X and Y will be:

    1. Equal

    2. 4:3

    3. 2:1

    4. 1:2

Q2. Short questions (Attempt any 8 of 12 · 8 × 2 = 16)

  1. What is the treatment of Reserves and undistributed profit in case of retirement of a partner?

  2. Pass journal entry, for sale of unrecorded asset in case of dissolution of firm.

  3. What is premium method for the treatment of goodwill on the admission of a new partner?

  4. Pass the journal entry for interest on capital of deceased’s partner.

  5. Pass journal entry, for transfer of undivided profit in case of dissolution of firm.

  6. What is memorandum revaluation method for the treatment of goodwill on the admission of a new partner?

  7. Suppose A, B and C are partners sharing profit in the ratio of 4:5:7. A dies on 31st March 2016. The sales and profit during 2015 were Rs.2, 40, 000 and 60,000 respectively. The sales upto March 31st, 2016 amounted to Rs.80, 000. Calculate A’s share in profit on sales basis?

  8. Pass journal entry, for closing various liabilities account in case of dissolution of firm.

  9. Why the necessity of the valuation of goodwill arises?

  10. What will be the new profit sharing ratio, if a partner retires and there is no fresh agreement?

  11. Pass journal entry, for transferring loss on realization in case of dissolution of firm.

  12. What is revaluation method for the treatment of goodwill on the admission of a new partner?

Q3. Long questions (Attempt any 3 of 4 · 3 × 4 = 12)

  1. Zufiqar and Fayyaz are partners in a firm sharing profits and losses as Zulfiqar 3/4 and Fayyaz 1/4 on 1st January, 2022, their positions was as given below:

    Assets Rs. Liabilities Rs.
    Plant 80,000 Capital accounts:  
    Stock 20,000 Zulfiqar      100,000  
    Debtors 60,000 Fayyaz      60,000 80,000
    Cash at bank 40,000 Sundry creditors 40,000
      200,000   200,000

    Riaz is now to join the partnership. He agrees to pay the partners Rs.40,000 by way of goodwill and introduce 3/5 of the combined capital of the two existing partners after depreciating plant and stock at 20% and 10% respectively and raising a reserve of 10% against Sundry Debtors. The new partner is to be allowed 1/4th share of the profits of the firm.
    You are asked to record the above transactions in the books of the firm and give the resultant balance sheet of the new firm.

  2. A, B and C are partners, sharing profits equally. The balance sheet on December 31st 2022 is as follows:

    Balance Sheet
    Assets Rs. Liabilities Rs.
    Cash at bank 4000 Sundry creditors 4000
    Bills receivable 3000 Capitals:  
    Sundry debtors 20000   A 12,000
    Less: Reserve for bad debts  1,000 19,000 B 18000
    Stock 18,000 C 7500
    Fixtures 3500 Reserve 6000
      47,500   47,500

    B retires on that date and following adjustments are to be made for the purpose:
    (a) Goodwill of the firm is valued at Rs 12,000
    (b) Fixtures to be Depreciated by 5%
    (c) Stock to be appreciated to be 10%
    (d) Reserve for bad debts to be increased by rs. 500.
    Draw up the revaluation account, Capital Accounts of partners and opening balance sheet of the continuing partners.

  3. The balance sheet of O, P, Q and R showed the following position on dissolution:

    Dr.   Cr.  
    Assets Rs. Liabilities Rs.
    Cash at bank 34,000 Creditors 10,000
    Q’s Capital a/c 10,000 O’s capital 15,000
    R’s Capital a/c 3000 P’s Capital 10,000
        Realisation profit 12,000
      47,000   47,000

    Show the final adjustment among the partners assuming that R is insolvent.

  4. Mukhtar and Munir were partners in a firm sharing profits equally. Their business position as on 31st June 2022 was as follows:

    Balance Sheet
    Assets Rs. Liabilities Rs.
    Cash in hand 300 Sundry creditors 12000
    Stock 7200 Bank overdraft 3000
    Sundry debtors 12400 Mukhtar’s capital 4200
    Furniture 1200 Munir’s capital 3200
    Investments 1300    
      22,400   22,400

    It is agreed to take Mobeen into partnership and to make the following adjustments:
    (1) Bad debts to be written off for Rs. 3,200.
    (2) Value of the furniture to be reduced to Rs. 800.
    (3) Depreciate stock at 10%.
    (4) Write of 20% on investments.
    (5) Raise goodwill for Rs. 2,000.
    Mobeen introduced Rs. 2,000 as capital for his 1/3 share. Other partners’ capitals should be adjusted according to the new partner’s capital.
    Pass necessary journal entries and prepare the balance sheet of the new firm.