Partnership accounts: admission, retirement, death, dissolution, insolvency - One Line Questions

1. If the profit-sharing ratio of existing partners is 3:2, and a new partner is admitted for 1/4th share, what is the sacrificing ratio if the new ratio is 2:1:1? — 3:2
2. The concept of 'Gaining Ratio' is primarily applied when: — A partner retires or dies.
3. What is 'Gan's Law' relevant to in partnership accounts? — Retirement of a partner.
4. The concept of 'Gudden's Rule' is related to: — Death of a partner.
5. When a partner retires and the firm continues, any balance in the 'General Reserve' is distributed among: — The retiring partner and continuing partners in the old profit-sharing ratio.
6. When a new partner is admitted, the revaluation profit or loss is shared by: — Old partners in the old profit-sharing ratio.
7. If the deed is silent, profit or loss on revaluation at the time of admission of a partner is shared among: — Old partners in the old profit-sharing ratio.
8. Under the doctrine of 'implied authority', partners can bind the firm for: — Acts necessary for carrying on the business of the kind carried on by the firm.
9. If a retiring partner is paid their dues through a loan, interest on this loan is charged: — At 6% per annum as per Indian Partnership Act, 1932, if deed is silent.
10. When a partnership is dissolved, the partners' loans are paid: — After external liabilities but before partners' capital.
11. Which account is opened to record the transactions related to the sale of assets and payment of liabilities during dissolution? — Realization Account
12. Which of the following is a liability of the firm during dissolution? — Outstanding expenses.
13. What is the accounting treatment for unrecorded investments sold during dissolution? — Credited to Realization Account.
14. When a partner retires, and their share is taken up by the remaining partners in a specific ratio, the remaining partners' capital accounts are: — Debited by their gain.
15. What is the accounting treatment for an unrecorded liability discovered during dissolution? — Debited to Realization Account.
16. When a partner's death occurs, and the firm has a 'Workmen's Compensation Fund' which is more than the claim, the excess is: — Distributed among all partners in the old profit-sharing ratio.
17. In the context of dissolution, 'Piecemeal distribution' refers to: — Distributing assets one by one as they are realized.
18. What is the primary accounting implication when a new partner is admitted into an existing partnership? — The goodwill of the firm is revalued and adjusted.
19. When a partnership firm is dissolved, the final payment is made to: — Partners' capital accounts.
20. Which account is debited when a partner withdraws goods for personal use during their admission, retirement, or death? — Partners' Capital Account
21. Which of the following is NOT a method for adjusting goodwill on admission of a new partner? — Goodwill adjusted through Revaluation Account.
22. Upon the death of a partner, if the partnership deed is silent on the valuation of goodwill, then: — Goodwill is valued as per the mutual agreement of the surviving partners.
23. What is the role of the 'Gaining Ratio' in partnership accounting? — It determines the share of profit gained by continuing partners when a partner retires or dies.
24. When a partner is insolvent and their private estate is insufficient to pay their private debts, the deficiency is called: — Capital deficiency
25. When a new partner is admitted, and the new partner brings in goodwill in cash, which account is credited? — Goodwill Account
26. Which ratio is used to distribute the profit or loss on realization during dissolution? — Old Profit-Sharing Ratio
27. In case of insolvency of a partner, the partner who is solvent has to bear the deficiency of the insolvent partner in their: — Gaining Ratio
28. If a partner's private assets are insufficient to pay their share of the firm's debts (in case of insolvency), the remaining solvent partners have to bear the deficiency in their: — Gaining ratio.
29. The 'Gaining Ratio' is calculated as: — New Ratio - Old Ratio
30. In the event of a partner's death, the legal representative is entitled to: — The deceased partner's share of profit up to the date of death and the value of goodwill.
31. In case of insolvency of a partner, if the firm's assets are insufficient to pay off external liabilities, the loss is borne by: — All partners, including the insolvent partner, in their profit-sharing ratio.
32. In case of dissolution, if a partner has taken over a specific asset at an agreed value, this asset is debited to: — Partners' Capital Account.
33. Upon the death of a partner, any unrecorded asset discovered or liability not provided for is adjusted through: — Revaluation Account.
34. When a partnership is dissolved, what is the order of settlement of accounts? — Assets realized, external liabilities, partners' loans, partners' capital.
35. The 'Realization Account' is a: — Nominal Account
36. The difference between the realizable value of assets and the payment of liabilities during dissolution is termed: — Loss on realization
37. The balance of the Realization Account at the end of dissolution represents: — Profit or loss on realization of all assets and liabilities.
38. If a partner's capital account shows a debit balance at the time of dissolution, they must: — Pay the amount to the firm.
39. When a partner retires, and their dues are settled in installments with interest, the principal amount is transferred to: — Retiring Partner's Loan Account.
40. When a new partner is admitted, and goodwill is not brought in cash, the adjustment is made through: — Partners' Capital Accounts in the sacrificing ratio
41. If a retiring partner's share of profit is taken by the remaining partners in a specific ratio, this is known as the: — Gaining Ratio
42. If a partner retires and their share is taken by one of the remaining partners, the capital accounts of the remaining partners are adjusted based on: — Gaining Ratio
43. Which of the following is a characteristic of partnership dissolution? — The business operations cease.
44. In case of death of a partner, if the profit is to be calculated on the basis of time, it is usually calculated on: — The profit of the current year up to the date of death.
45. When a partner dies, and their share of profit is to be calculated up to the date of death, it is usually based on: — The profit of the current year on a time or sales basis.
46. What is the treatment of 'Joint Life Policy' when a partner retires and the policy is surrendered? — The surrender value is distributed among partners in the old profit-sharing ratio.
47. What happens to the accumulated profits and reserves upon the admission of a new partner? — They are distributed among the old partners in their old profit-sharing ratio.
48. What is the primary reason for calculating the gaining ratio? — To determine how the outgoing partner's share is distributed among the remaining partners.
49. What is the primary purpose of the 'Revaluation Account' during admission or retirement? — To record the change in the value of assets and liabilities.
50. What is the main objective of revaluing assets and liabilities on the admission of a new partner? — To ascertain the true financial position for determining the share of incoming partner and adjusting old partners' rights.
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