CLASS XII - ACCOUNTANCY

CHANGE IN PSR
MCQ QUESTIONS

Q.1. Rohan, Mohan & Sohan are partners sharing profits in the ration 3:2:1. With
effect from 1st April 2021, it was decided that Sohan will get 1/5 share of Rohan &
1/15 share from Mohan. New PSR will be:
(a) 1:2:3 (c) 6:4:5
(b) 6:5:4 (d) 9:8:13

Q.2. X & Y are partners sharing profits equally. They decided to change the PSR to 2:1
w.e.f. 1st April 2021. Balance Sheet as at 31st March 2021 showed P&L (Dr.) of
₹1,20,000, which the partners decided, would not be distributed, i.e. it will be
carried to the reconstituted balance sheet at this value. The adjustment entry to
give effect to same will be:
(a) X’s Capital A/c Dr. 1,20,000
To Y’s Capital A/c 1,20,000
(b) X’s Capital A/c Dr. 20,000
To Y’s Capital A/c 20,000
(c) Y’s Capital A/c Dr. 1,20,000
To X’s Capital A/c 1,20,000
(d) Y’s Capital A/c Dr. 20,000
To X’s Capital A/c 20,000

Q.3. Which of the following is not reconstitution of partnership firm?

(a) change in profit sharing ratio
(b) dissolution of partnership
(c) dissolution of partnership firm
(d) amalgamation of two or more partnership firms

Q.4. Karan & Arjun shared profits & losses in the ratio of 1:2. W.e.f. 1st April 2021,
they agreed to share profits in the ratio of 5:4. Goodwill of the firm is valued at
₹27,000. The adjustment entry will be:
 (a) Karan’s Capital A/c Dr. 60,000
To Arjun’s Capital A/c 60,000
(b) Karan’s Capital A/c Dr. 6,000
To Arjun’s Capital A/c 6,000
(c) Karan’s Capital A/c Dr. 27,000
To Arjun’s Capital A/c 27,000
(d) Arjun’s Capital A/c Dr. 27,000
To Karan’s Capital A/c 27,000

Q.5. Ram & Lakhan are in a partnership business. They decided to change their PSR
from 4:1 to 1:4. Lakhan was to carry out the work of reconstitution at an agreed
remuneration of ₹10,000 (including expenses). Actual expenses paid by Lakhan
was ₹12,000. Journal entry will be:
(a) Revaluation A/c Dr. 12,000
To Lakhan’s Capital A/c 12,000
(b) Revaluation A/c Dr. 12,000
To Lakhan’s Capital A/c 10,000
To Cash A/c 2,000
(c) Revaluation A/c Dr. 10,000
To Cash A/c 10,000
(d) Revaluation A/c Dr. 10,000
To Lakhan’s Capital A/c 10,000

Q.6. Ajay & Vijay are partners, sharing profits in the ratio of 3:2. On 31st March 2021,
their balance sheet showed Workmen Compensation Reserve at ₹5,000. On 1st
April 2021, they decided to change their PSR to 2:3. Claim of Workmen
Compensation came out to be ₹8,000. Which of the following is the correct
accounting treatment to be followed?

(a) WCR of ₹5,000 will be distributed to Ajay & Vijay in 3:2

(b) WCR of ₹5,000 will be distributed to Ajay & Vijay in 2:3

(c) Revaluation Loss of ₹3,000 will be debited to Ajay’s & Vijay’s capital in 3:2 &
claim of ₹8,000 will be shown as liability in the reconstituted balance sheet.
 (d) Revaluation Loss of ₹3,000 will be debited to Ajay’s & Vijay’s capital in 3:2 &
claim of ₹3,000 will be shown as liability in the reconstituted balance sheet.

Q.7. X, Y & Z are partners sharing profits in the ratio of 5:4:1. They decided to change
their PSR to 2:2:1 w.e.f. 01.04.2021. Following is an extract of Balance Sheet on
31.3.2021:

Liabilities ₹ Assets ₹
Investment Fluctuation 15,000 Investment (Market Value 1,00,000
Reserve ₹95,000)

Correct accounting treatment will be?

(a) IFR A/c Dr. 15,000

To Investment A/c 5,000
To X’s Capital A/c 5,000
To Y’s Capital A/c 4,000
To Z’s Capital A/c 1,000

(b) IFR A/c Dr. 10,000

To X’s Capital A/c 5,000
To Y’s Capital A/c 4,000
To Z’s Capital A/c 1,000

(c) IFR A/c Dr. 15,000

To Investment A/c 5,000
To X’s Capital A/c 4,000
To Y’s Capital A/c 4,000
To Z’s Capital A/c 2,000

(d) IFR A/c Dr. 10,000

To X’s Capital A/c 4,000
To Y’s Capital A/c 4,000
To Z’s Capital A/c 2,000

Q.8. Calculate the amount to be debited to Revaluation A/c on account of provision

for doubtful debts from the following information:
 Balance Sheet of XYZ & Co as at 31.03.2021 (Extract)
Liabilities ₹ Assets ₹
Sundry Debtors 1,00,000
Less: Provision (7,500) 92,500

Bad Debts amounted to ₹7,000. Provision for doubtful debts is to be maintained

at 10%.
(a) ₹10,000
(b) ₹8,800
(c) ₹9,300
(d) ₹9,250

Q.9. Revaluation A/c is a:

(a) Real A/c
(b) Temporary A/c
(c) Nominal A/c
(d) Personal A/c

Q.10. Mohan, Rohan & Sohan are in a partnership business. They decided to change
their PSR from 5:4:1 to 2:2:1. The capital balances after making all adjustments
were:
Mohan - ₹5,00,000
Rohan - ₹2,50,000
Sohan = ₹2,50,000
They further decided that their capital will be adjusted according to their new
PSR, and necessary cash will be brought or paid by the partners, as the case may
be. Select the most appropriate answer in respect of Rohan:
(a) Cash to be paid to Rohan - ₹1,50,000
(b) Cash to be brought by Rohan - ₹50,000
(c) Cash to be paid to Rohan - ₹1,00,000
(d) Cash to be brought by Rohan - ₹1,50,000

Answers:
1 2 3 4 5 6 7 8 9 10
(c) (d) (c) (b) (d) (c) (a) (b) (c) (d)