CH–4:

MCQsCHANGEI
NPROFI
TSHARI
NGRATI
O

A. Mul
ti
pleChoi
ceQuest
ions
1. Anychange inthe rel
ati
onshi
p ofexi
sti
ng par
tner
s whi
ch r
esul
tsi
n an
end oft
he exi
sti
ngagr
eementandenf
orcesmaki
ngofnew·agr
eementi
s
cal
l
ed:
(
a) Rev
aluat
ionofpar
tner
shi
p
(
b) Reconst
it
uti
onofpar
tner
shi
p
(
c) Real
i
sat
ionofpar
tner
shi
p
(
d) Noneoft
heabov
e
2. Ther
ati
oinwhi
chapar
tnersur
render
shi
sshar
einf
avourofapar
tneri
s
knownas:
(
a) Newpr
ofi
t-
shar
ingr
ati
o
(
b) Sacr
if
ici
ngRat
io
(
c) Gai
ningRat
io
(
d) Capi
tal
Rat
io
3. Ther
ati
oinwhi
chapar
tnerr
ecei
vesar
isei
nhi
sshar
eofpr
ofi
tsi
sknownas:
(
a) NewRat
io
(
b) Sacr
if
ici
ngRat
io
(
c) Capi
tal
Rat
io
(
d) Gai
ningRat
io

4. Reser
ves and accumul
ated pr
ofi
ts ar
etr
ansf
err
ed t
o par
tner
s'capi
tal
account
satt
het
imeofr
econst
it
uti
oni
n:
(
a) Ol
dpr
ofi
t-
shar
ingr
ati
o
(
b)Sacr
if
ici
ngRat
io
(
c) Gai
ningr
ati
o
(
d) New pr
ofi
t-
shar
ingr
ati
o
5. I
ncr
easeanddecr
easei
nthev
alueofasset
sandl
i
abi
l
iti
esar
erecor
ded
t
hrough:
(
a) Par
tner
s'Capi
tal
Account
(
b) Rev
aluat
ionAccount
(
c) Pr
ofi
tandLossAppr
opr
iat
ionNe
(
d)Bal
anceSheet
6. I
nwhi
choft
hef
oll
owi
ngcase,
rev
aluat
ionaccounti
sdebi
ted?
 (
a) I
ncr
easei
nval
ueofasset
(
b) Decr
easei
nval
ueofasset
(
c) Decr
easei
nval
ueofl
i
abi
l
ity
(
d) Nochangei
nval
ueofasset
s
7. I
nwhi
choft
hef
oll
owi
ngcases,
rev
aluat
ionaccounti
scr
edi
ted?
(
a) Decr
easei
nval
ueofl
i
abi
l
ity
(
b) I
ncr
easei
nval
ueofl
i
abi
l
ity
(
c) Decr
easei
nval
ueofasset
(
d) Nochangei
nval
ueofl
i
abi
l
ity
8. Par
tner
'scapi
tal
accounti
scr
edi
tedwhent
her
eis
(
a) Pr
ofi
tonr
eval
uat
ion
(
b) t
ransf
erofgener
alr
eser
ve
(
c) t
ransf
erofaccumul
atedpr
ofi
ts
(
d)Al
loft
heabov
e
9. Sacr
if
ici
ngr
ati
oist
hedi
ff
erencebet
ween:
(
a) Newr
ati
oandol
drat
io
(
b) Ol
drat
ioandnewr
ati
o
(
c) Newr
ati
oandgai
ningr
ati
o
(
d) Ol
drat
ioandgai
ningr
ati
o

10. AandBar
epar
tner
sinaf
ir
mshar
ingpr
ofi
tsi
nther
ati
oof3:
2.They
deci
dedt
oshar
efut
urepr
ofi
tsequal
l
y.Cal
cul
ateA’
sgai
norsacr
if
ice
(
a)2/
10(
sacr
if
ice)
(
b)5/
10(
gai
n)
(
c)1/
10(
Gai
n)
(
d)1/
10(
sacr
if
ice)
11. I
ncaseofchangei
npr
ofi
t-
shar
ingr
ati
o,t
hegai
ningpar
tnermust
compensat
ethesacr
if
ici
ngpar
tner
sbypayi
ngt
hepr
opor
ti
onalamount
of
(
a) capi
tal
(b)cash
(
c) goodwi
l
l
(
d) noneoft
heabov
e
12. I
ncaseofchangei
npr
ofi
t-
shar
ingr
ati
o,t
heaccumul
atedpr
ofi
tsar
e
di
str
ibut
edt
othepar
tner
sin
(
a) new r
ati
o
(
b) ol
drat
io
(
c) sacr
if
ici
ngr
ati
o
(
d) equal
rat
io
13 R;
SandTshar
ingpr
ofi
tsandl
ossesi
nther
ati
oof1:
2:3,
deci
dedt
oshar
e
f
utur
epr
ofi
tandl
ossesequal
l
y.Theyal
sodeci
dedt
oadj
ustt
hef
oll
owi
ng
accumul
ated pr
ofi
ts,l
ossesand r
eser
veswi
thoutaf
feci
ng t
hei
rbook
f
igur
es,
bypassi
ngasi
ngl
eadj
ust
mentent
ry:
Gener
alReser
ve 40000
Pr
ofi
tandLossA/
c 30000
Shar
e.I
ssueexpenses 10000
Thenecessar
y.adj
ust
mentent
rywi
l
lbe:
(
a) Dr
.RandCr
.Tby<I0,
000
(
b) Dr
.TandCr
.Rby<10,
000
(
c) Dr
.SandCr
.Rby<10,
000
(
d) Dr
.RandCr
.Sby<10,
000

14. UVandW ar
epar
tner
sshar
ingpr
ofi
tsi
nther
ati
onof2:
3:5.Theyal
so
deci
de t
o r
ecor
d t
he ef
fect of t
he f
oll
owi
ng r
eval
uat
ions and
r
eassessment
swi
thoutaf
fect
ingt
hebookv
aluesofasset
sandl
i
abi
l
iti
es
bypassi
ngasi
ngl
eadj
ust
mentent
ry:

BookVal
ue(
Rs) Revi
sedVal
ue(
Rs)
LandandBui
l
ding 3,
00,
000 3,
50,
000
Fur
nit
ure 1,
50,
000 1,
00,
000
Sundr
yCr
edi
tor
s 60,
000 20,
000
Out
standi
ngSal
ari
es 10,
000 15,
000

Thesi
ngl
eadj
ust
mentent
rywi
l
l
(
a) Dr
.W andCr
.Uby 10,
500
(
b) Dr
.UandCr
.W byRs.10,
500
 (
c) Dr
.VandCr
.UbyRs.10,
500
(
d) Dr
.W andCr
.VbyRs.10,
500
15. X,
YandZar
epar
tner
sshar
ingpr
ofi
tsandl
ossesi
nther
ati
oof5:
3:2.
They
deci
det
oshar
ethef
utur
epr
ofi
tsi
nther
ati
oof3:
2:1.Wor
kmencompensat
ion
r
eser
veappear
ing i
nthebal
ancesheeton t
hedat
eifno i
nfor
mat
ion i
s
av
ail
abl
efort
hesamewi
l
lbe:
a)Di
str
ibut
edamongt
hepar
tner
sinol
dpr
ofi
tshar
ingr
ati
o
b)Di
str
ibut
edamongt
hepar
tner
sinnewpr
ofi
tshar
ingr
ati
o
c)Di
str
ibut
edamongt
hepar
tner
sincapi
tal
rat
io
d)
Car
ri
edf
orwar
dtonewbal
ancesheetwi
thoutanyadj
ust
ment
16.
A,BandCwer
ear
epar
tner
sinaf
ir
m shar
ingpr
ofi
tsi
nther
ati
oof3:
4:1.
They
deci
dedt
oshar
epr
ofi
tsequal
l
yw.
e.ff
rom 1.
4.2019.Ont
hatdat
ethepr
ofi
t
andl
ossaccountshowedt
hecr
edi
tbal
anceof96,
000.
inst
eadofcl
osi
ngt
he
pr
ofi
tand l
oss account,
i
twas deci
ded t
orecor
d an adj
ust
mentent
ry
r
efl
ect
ingt
hechangei
npr
ofi
tshar
ingr
ati
o.I
nthej
our
nal
ent
ry:
a)Dr
.Aby4,
000;
Dr.Bby16,
000;
CrCby20,
000
b)Cr
.Aby4,
000;
Cr.Bby16,
000;
DrCby20,
000
c)Cr
.Aby16,
000;
Cr.Bby4,
000;
DrCby20,
000
d)Dr
.Aby16,
000;
Dr.Bby4,
000;
CrCby20,
000
17.…….
.shoul
dcompensat
e………….
.i
nthecaseofr
econst
it
uti
onoft
hef
ir
m.
18.
Incr
easei
nthev
alueofasset
sanddecr
easei
nthev
alueofl
i
abi
l
iti
esr
esul
tin
…….
.f
ort
heexi
sti
ngpar
tner
sandshoul
dbe……….
toP/
LAdj
ust
menta/
c
St
atewhet
herTr
ueorFal
se
19.
Apar
tner
shi
pisr
econst
it
utedduet
ochangei
npr
ofi
tshar
ingr
ati
o
20.A,
BandCar
eshar
ingpr
ofi
tsi
nther
ati
oof3:
2:1.Theydeci
dedt
oshar
eequal
l
yin
f
utur
e.B’
shasnei
thersacr
if
icednorgai
ned.

[
Ans.I
.(
b),
2.(
b)3.(
d),
4.(
a)5.(
b)6.(
b),
7.(
a),
8.(
d),
9..(
b),
10.(
d),
11.
(c)
,12.
(
b) 13(
a) 14.(
b) 15,
(a) 16(
b) 17.
Gai
ning par
tner
,Sacr
if
ici
ng par
tner
18.
gai
n,
credi
ted 19.
tr
ue 20.
True