The retirement of a partner is a situation for the continuing partners which is known as
Ans – a) Explanation:- When a partner retires, the partnership agreement is dissolved, but firm continues.
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Assertion (A): At the time of retirement of a partner, the remaining partners may decide to adjust their capital in their new profit sharing ratio.
Ans – d) Explanation:- the remaining partners may adjust their capitals in the new profit-sharing ratio and sum total of partners’ adjusted capital is treated as the total capital of the new firm.
At the time of retirement of a partner, if there is undistributed profit in the Balance Sheet of the firm, it
Ans – c) Explanation:- undistributed are the parts of the past year’s profits. that is earned in the old profit-sharing ratio by all the partners. Thus it is distributed among all the partners in the old profit-sharing ratio.
Capital Balances of X, Y and Z sharing profits and losses in proportion to their capitals stood as follows:
Ans – c) Solution:- Old ratio of X, Y and Z = 10,00,000 : 15,00,000 : 10,00,000 2 : 3 : 2 X retired New ratio of Y and Z = 1 : 1 Calculation of Gaining Ratio Y =…
X, Y and Z are partners sharing profits and losses in the ratio of 4/9 : 1/3 : 2/9. Y retires and gives 1/9th of his share in favour of X and remaining in favour of Z. The new profit sharing ratio will be
Ans – a) Explanation:- Old ratio of X, Y and Z is 4/9 : 1/3 : 2/9 after making base equal 4/9 : 1/3 × 3/3 : 2/9 = 4 : 3 : 2 Y gives 1/9 of his share…
Retiring partner is compensated for sacrificing profit share in favour of remaining partners. In what ratio do the remaining partners contribute to such compensation amount?
Ans – c) Explanation:- Retiring partners share is acquired by continuing partners in gaining ratio. Thus all continuing partners compensate retiring partner in gaining ratio.
Assertion (A): At the time of retirement of a partner, if the retiring partner is paid more amount than due to him, the difference amount is goodwill paid based on valuation.
Ans – c) The difference between amount due and paid to the retiring partners is the share in goodwill paid on valuation. Thus Assertion is correct. The gaining partners compensate the amount of goodwill due to the retiring partners in…
Assertion (A): Amount due to the retiring partner is always transferred to his loan account.
Ans – d) Explanation:- Amount due to the partner may be paid immediately in cash and is transferred to the loan and paid in installments later.
Assertion (A): At the time of retirement of a partner, assets are revalued and liabilities are reassessed to ensure that the retiring partner is neither at an advantage nor at loss due to change in values of assets and liabilities.
Ans – a) Explanation:- The assets and liabilities are revalued at the current prices and net profit or loss on revaluation is either credited or debited to all the partners in the old profit-sharing ratio, ensuring no one remains in…
Assertion (A): At the time of retirement of a partner, the combined profit share of the remaining or continuing partners increases.
Ans – a) When a partner retired, the combined profit share of continuing partners increases as the individual profit share of continuing partners increases after acquiring the retiring partner’s share.