Chapter reconstitution-of-a-partnership-firm-retirement-death-of-a-partner: Reconstitution of a Partnership Firm – Retirement/Death of a Partner Assertion-Reason Questions | accountancy Class 12 CBSE

Chapter reconstitution-of-a-partnership-firm-retirement-death-of-a-partner: Reconstitution of a Partnership Firm – Retirement/Death 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 retirement of a partner, the existing partnership deed comes to an end. Reason (R): The remaining partners must sign a new partnership deed to continue the business.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 2

Logic Check

Assertion (A): The gaining ratio is the ratio in which continuing partners acquire the retiring partner's share. Reason (R): Gaining ratio is always the same as the old profit sharing ratio.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 3

Logic Check

Assertion (A): Accumulated profits and reserves are distributed among all partners including the retiring partner in their old profit sharing ratio. Reason (R): These reserves were built up during the period when all partners were active in the firm.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 4

Logic Check

Assertion (A): On retirement, existing goodwill appearing in books is written off by debiting only the continuing partners' capital accounts. Reason (R): The retiring partner has no responsibility for writing off goodwill as he is leaving the firm.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 5

Logic Check

Assertion (A): A retiring partner is entitled to a share of goodwill at the time of retirement. Reason (R): Goodwill is earned by the firm with the combined efforts of all existing partners including the retiring partner.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 6

Logic Check

Assertion (A): Revaluation profit or loss at the time of retirement is shared by all partners in old profit sharing ratio. Reason (R): At the time of retirement, new profit sharing ratio does not yet apply.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 7

Logic Check

Assertion (A): When a partner retires in the middle of the year, Profit & Loss Suspense Account is used to record his share of profit. Reason (R): The final accounts cannot be prepared mid-year, so a suspense account is used to apportion profits.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 8

Logic Check

Assertion (A): On death of a partner, the amount due is transferred to the Executor's Account. Reason (R): A deceased partner cannot receive money directly, so his legal representative (executor) receives it.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 9

Logic Check

Assertion (A): In case of death of a partner, his share of profit is calculated from the date of last Balance Sheet to the date of death. Reason (R): Death can occur at any time during the year unlike retirement which usually occurs at year-end.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 10

Logic Check

Assertion (A): Hidden goodwill is the excess amount paid to a retiring partner over and above his adjusted capital balance. Reason (R): When goodwill is not separately valued but a lump sum is agreed upon, the excess represents the partner's share of goodwill.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 11

Logic Check

Assertion (A): Gaining ratio and new profit sharing ratio are always the same. Reason (R): Gaining ratio is derived from the new profit sharing ratio by subtracting the old shares.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 12

Logic Check

Assertion (A): Continuing partners compensate the retiring partner for goodwill in their gaining ratio. Reason (R): Gaining ratio reflects the extent to which each continuing partner benefits from the retiring partner's departure.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 13

Logic Check

Assertion (A): If a continuing partner's profit share decreases after retirement of a partner, he should be compensated for his sacrifice. Reason (R): A partner who sacrifices his profit share should receive goodwill compensation from the gaining partners.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 14

Logic Check

Assertion (A): Unrecorded liabilities are debited to the Revaluation Account. Reason (R): Unrecorded liabilities represent an obligation that must be recognised and its cost is charged through Revaluation Account to all partners.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 15

Logic Check

Assertion (A): Section 37 of the Indian Partnership Act 1932 gives an outgoing partner the option to receive interest at 6% p.a. or a share in profits earned with his money. Reason (R): This provision protects an outgoing partner when the firm delays payment.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 16

Logic Check

Assertion (A): Profit & Loss Suspense Account is eventually closed by transferring the amount to the gaining partners' capital accounts in their gaining ratio. Reason (R): The suspense account represents the retiring/deceased partner's share of profit which is ultimately borne by the partners who gain from his exit.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 17

Logic Check

Assertion (A): The balance of Retiring Partner's Loan Account is shown on the assets side of the Balance Sheet. Reason (R): A loan from a retiring partner represents money owed to him, which is a liability of the firm.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 18

Logic Check

Assertion (A): At the time of retirement, the capital accounts of all partners including the retiring partner are adjusted for revaluation profit or loss. Reason (R): Revaluation profit or loss relates to the period when all partners were in the firm.

Reasoning Options

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Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 19

Logic Check

Assertion (A): New profit sharing ratio and gaining ratio can be the same in some situations. Reason (R): When the retiring partner's share is acquired by continuing partners in their old profit sharing ratio, their new ratio equals their old ratio, and gaining ratio also equals the old ratio.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 20

Logic Check

Assertion (A): The deceased partner's share of goodwill is credited to his capital account. Reason (R): The deceased partner's capital account is credited with goodwill as continuing partners who gain from his share must compensate his estate.

Reasoning Options

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Chapter reconstitution-of-a-partnership-firm-retirement-death-of-a-partner: Reconstitution of a Partnership Firm – Retirement/Death of a Partner | Assertion-Reason

Assertion (A): On retirement of a partner, the existing partnership deed comes to an end. Reason (R): The remaining partners must sign a new partnership deed to continue the business.

Assertion (A): The gaining ratio is the ratio in which continuing partners acquire the retiring partner's share. Reason (R): Gaining ratio is always the same as the old profit sharing ratio.

Assertion (A): Accumulated profits and reserves are distributed among all partners including the retiring partner in their old profit sharing ratio. Reason (R): These reserves were built up during the period when all partners were active in the firm.

Assertion (A): On retirement, existing goodwill appearing in books is written off by debiting only the continuing partners' capital accounts. Reason (R): The retiring partner has no responsibility for writing off goodwill as he is leaving the firm.

Assertion (A): A retiring partner is entitled to a share of goodwill at the time of retirement. Reason (R): Goodwill is earned by the firm with the combined efforts of all existing partners including the retiring partner.

Assertion (A): Revaluation profit or loss at the time of retirement is shared by all partners in old profit sharing ratio. Reason (R): At the time of retirement, new profit sharing ratio does not yet apply.

Assertion (A): When a partner retires in the middle of the year, Profit & Loss Suspense Account is used to record his share of profit. Reason (R): The final accounts cannot be prepared mid-year, so a suspense account is used to apportion profits.

Assertion (A): On death of a partner, the amount due is transferred to the Executor's Account. Reason (R): A deceased partner cannot receive money directly, so his legal representative (executor) receives it.

Assertion (A): In case of death of a partner, his share of profit is calculated from the date of last Balance Sheet to the date of death. Reason (R): Death can occur at any time during the year unlike retirement which usually occurs at year-end.

Assertion (A): Hidden goodwill is the excess amount paid to a retiring partner over and above his adjusted capital balance. Reason (R): When goodwill is not separately valued but a lump sum is agreed upon, the excess represents the partner's share of goodwill.

Assertion (A): Gaining ratio and new profit sharing ratio are always the same. Reason (R): Gaining ratio is derived from the new profit sharing ratio by subtracting the old shares.

Assertion (A): Continuing partners compensate the retiring partner for goodwill in their gaining ratio. Reason (R): Gaining ratio reflects the extent to which each continuing partner benefits from the retiring partner's departure.

Assertion (A): If a continuing partner's profit share decreases after retirement of a partner, he should be compensated for his sacrifice. Reason (R): A partner who sacrifices his profit share should receive goodwill compensation from the gaining partners.

Assertion (A): Unrecorded liabilities are debited to the Revaluation Account. Reason (R): Unrecorded liabilities represent an obligation that must be recognised and its cost is charged through Revaluation Account to all partners.

Assertion (A): Section 37 of the Indian Partnership Act 1932 gives an outgoing partner the option to receive interest at 6% p.a. or a share in profits earned with his money. Reason (R): This provision protects an outgoing partner when the firm delays payment.

Assertion (A): The balance of Retiring Partner's Loan Account is shown on the assets side of the Balance Sheet. Reason (R): A loan from a retiring partner represents money owed to him, which is a liability of the firm.

Assertion (A): At the time of retirement, the capital accounts of all partners including the retiring partner are adjusted for revaluation profit or loss. Reason (R): Revaluation profit or loss relates to the period when all partners were in the firm.

Assertion (A): New profit sharing ratio and gaining ratio can be the same in some situations. Reason (R): When the retiring partner's share is acquired by continuing partners in their old profit sharing ratio, their new ratio equals their old ratio, and gaining ratio also equals the old ratio.

Assertion (A): The deceased partner's share of goodwill is credited to his capital account. Reason (R): The deceased partner's capital account is credited with goodwill as continuing partners who gain from his share must compensate his estate.

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