Chapter reconstitution-of-a-partnership-firm-admission-of-a-partner: Reconstitution of a Partnership Firm – Admission of a Partner Assertion-Reason Questions | accountancy Class 12 CBSE

Chapter reconstitution-of-a-partnership-firm-admission-of-a-partner: Reconstitution of a Partnership Firm – Admission of a Partner Assertion-Reason Questions | accountancy Class 12 CBSE | ByteNotes.in

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 1

Logic Check

Assertion (A): On admission of a new partner, the old firm is said to be reconstituted. Reason (R): Admission of a new partner results in an end of the existing agreement and a new agreement comes into being.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 2

Logic Check

Assertion (A): A new partner can be admitted into the firm without the consent of all existing partners. Reason (R): The Partnership Act 1932 allows majority decision for admission of a new partner.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 3

Logic Check

Assertion (A): Goodwill is an intangible asset. Reason (R): Goodwill has no physical existence but represents the value of a firm's reputation and its ability to earn super profits.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 4

Logic Check

Assertion (A): Premium for goodwill brought in by the new partner is shared by old partners in their old profit sharing ratio. Reason (R): Old partners always sacrifice in their old profit sharing ratio unless otherwise specified.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 5

Logic Check

Assertion (A): Revaluation of assets and liabilities at the time of admission benefits only the old partners. Reason (R): Any gain or loss arising from revaluation is distributed among the old partners in their old profit sharing ratio.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 6

Logic Check

Assertion (A): Accumulated profits (General Reserve) are distributed to all partners including the new partner at the time of admission. Reason (R): The new partner is entitled to share in profits that were earned before his admission.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 7

Logic Check

Assertion (A): When a new partner does not bring goodwill in cash, his current account is debited. Reason (R): The new partner is still liable to compensate the sacrificing old partners for their loss of share in super profits.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 8

Logic Check

Assertion (A): As per AS-26, internally generated goodwill can be shown as an asset in the balance sheet. Reason (R): AS-26 requires all intangible assets to be recognised and shown in the balance sheet.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 9

Logic Check

Assertion (A): Goodwill existing in the books is written off when a new partner is admitted. Reason (R): Goodwill should not appear in the balance sheet according to the principles of Accounting Standard 26.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 10

Logic Check

Assertion (A): When there is a change in profit sharing ratio among existing partners, only goodwill adjustment is required. Reason (R): Change in profit sharing ratio also necessitates adjustments for undistributed profits, reserves, and revaluation of assets and liabilities.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 11

Logic Check

Assertion (A): The weighted average profits method gives more importance to recent years' profits than earlier years. Reason (R): Recent profits are considered better indicators of future earning capacity of the firm.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 12

Logic Check

Assertion (A): A firm with losses has very high goodwill. Reason (R): Goodwill depends on super profits, and a loss-making firm cannot have super profits.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 13

Logic Check

Assertion (A): On admission of a partner, revaluation profit is shared in the new profit sharing ratio. Reason (R): The revaluation profit belongs only to partners who were members of the firm at the time of revaluation.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 14

Logic Check

Assertion (A): A monopoly situation increases the value of goodwill of a firm. Reason (R): Under monopoly conditions, the firm earns higher profits, which increases super profits and hence goodwill.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 15

Logic Check

Assertion (A): When goodwill is paid privately by the new partner to old partners, journal entries are passed in the books of the firm. Reason (R): Private payment does not pass through the firm's books and hence no entry is required.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 16

Logic Check

Assertion (A): Capital accounts of old partners are adjusted for goodwill in their sacrificing ratio. Reason (R): Sacrificing ratio shows the extent to which each old partner gives up his share of profit in favour of the new partner.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 17

Logic Check

Assertion (A): An unrecorded asset found at the time of admission is credited to the Revaluation Account. Reason (R): Bringing an unrecorded asset into books increases the net assets of the firm, which is a gain.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 18

Logic Check

Assertion (A): If new profit sharing ratio of old partners is given, sacrificing ratio is calculated by subtracting new share from old share. Reason (R): Sacrifice = Old share of profit − New share of profit.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 19

Logic Check

Assertion (A): In the Average Profits Method, goodwill is the product of average profits and the number of years' purchase. Reason (R): The assumption is that the buyer pays in advance for the profits he is likely to earn for the first few years.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 20

Logic Check

Assertion (A): The Super Profits Method gives a higher value of goodwill than the Average Profits Method. Reason (R): Super profits are always higher than average profits.

Reasoning Options

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Chapter sections

Chapter reconstitution-of-a-partnership-firm-admission-of-a-partner: Reconstitution of a Partnership Firm – Admission of a Partner | Assertion-Reason

Assertion (A): On admission of a new partner, the old firm is said to be reconstituted. Reason (R): Admission of a new partner results in an end of the existing agreement and a new agreement comes into being.

Assertion (A): A new partner can be admitted into the firm without the consent of all existing partners. Reason (R): The Partnership Act 1932 allows majority decision for admission of a new partner.

Assertion (A): Goodwill is an intangible asset. Reason (R): Goodwill has no physical existence but represents the value of a firm's reputation and its ability to earn super profits.

Assertion (A): Premium for goodwill brought in by the new partner is shared by old partners in their old profit sharing ratio. Reason (R): Old partners always sacrifice in their old profit sharing ratio unless otherwise specified.

Assertion (A): Revaluation of assets and liabilities at the time of admission benefits only the old partners. Reason (R): Any gain or loss arising from revaluation is distributed among the old partners in their old profit sharing ratio.

Assertion (A): Accumulated profits (General Reserve) are distributed to all partners including the new partner at the time of admission. Reason (R): The new partner is entitled to share in profits that were earned before his admission.

Assertion (A): When a new partner does not bring goodwill in cash, his current account is debited. Reason (R): The new partner is still liable to compensate the sacrificing old partners for their loss of share in super profits.

Assertion (A): As per AS-26, internally generated goodwill can be shown as an asset in the balance sheet. Reason (R): AS-26 requires all intangible assets to be recognised and shown in the balance sheet.

Assertion (A): Goodwill existing in the books is written off when a new partner is admitted. Reason (R): Goodwill should not appear in the balance sheet according to the principles of Accounting Standard 26.

Assertion (A): When there is a change in profit sharing ratio among existing partners, only goodwill adjustment is required. Reason (R): Change in profit sharing ratio also necessitates adjustments for undistributed profits, reserves, and revaluation of assets and liabilities.

Assertion (A): The weighted average profits method gives more importance to recent years' profits than earlier years. Reason (R): Recent profits are considered better indicators of future earning capacity of the firm.

Assertion (A): A firm with losses has very high goodwill. Reason (R): Goodwill depends on super profits, and a loss-making firm cannot have super profits.

Assertion (A): On admission of a partner, revaluation profit is shared in the new profit sharing ratio. Reason (R): The revaluation profit belongs only to partners who were members of the firm at the time of revaluation.

Assertion (A): A monopoly situation increases the value of goodwill of a firm. Reason (R): Under monopoly conditions, the firm earns higher profits, which increases super profits and hence goodwill.

Assertion (A): When goodwill is paid privately by the new partner to old partners, journal entries are passed in the books of the firm. Reason (R): Private payment does not pass through the firm's books and hence no entry is required.

Assertion (A): Capital accounts of old partners are adjusted for goodwill in their sacrificing ratio. Reason (R): Sacrificing ratio shows the extent to which each old partner gives up his share of profit in favour of the new partner.

Assertion (A): An unrecorded asset found at the time of admission is credited to the Revaluation Account. Reason (R): Bringing an unrecorded asset into books increases the net assets of the firm, which is a gain.

Assertion (A): If new profit sharing ratio of old partners is given, sacrificing ratio is calculated by subtracting new share from old share. Reason (R): Sacrifice = Old share of profit − New share of profit.

Assertion (A): In the Average Profits Method, goodwill is the product of average profits and the number of years' purchase. Reason (R): The assumption is that the buyer pays in advance for the profits he is likely to earn for the first few years.

Assertion (A): The Super Profits Method gives a higher value of goodwill than the Average Profits Method. Reason (R): Super profits are always higher than average profits.

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