By DeeCee – Divine Classes

Practice Sheet Accounts

Q 1. The profits for last 3 years were:

1st year = 6,000 (including abnormal gain (2,000)

2nd year = 4,000 (after charging abnormal loss 3,000)

3rd year = 2,500 (including abnormal income 1,500

Calculate goodwill on the basis of 3 years' purchase of last 3 years profits and losses.

(a) 12,500 (b) 12,000 (c) 13,000 (d) 16,000

Q 2. Capital employed in a business is 2,00,000. Normal Rate of Return on capital employed is 15%. During the
year, the firm earned a profit of 48,000, Calculate goodwill on the basis of 3 years' purchase of Super Profit.

(a) 54,000 (b) 60,000 (c) 50,000 (d) 48,000

Q 3. A firm earns 1,20,000 as its annual profits. The normal rate of profit being 10%. Assets of firm are 14,40,000
and liabilities are 4,40,000. Find value of goodwill by Capitalisation Method.

(a) 4,00,000 (b) 2,80,000 (c) 2,00,000 (d) 3,60,000

Q 4. Average profit of firm is 3,00,000. Total tangible assets in the firm are 28,00,000 and outside liabilities are
8,00,000. In same type of business, normal rate of return is 10% of capital employed. Calculate goodwill by
Capitalisation of Super Profit Method.

(a) 14,00,000 (b) 16,00,000 (c) 18,00,000 (d) 10,00,000

Q 5. Sacrificing ratio is calculated as:

(a) New share-Old share (b) Old share-New share (c) Gaining share -Old share (d) New share-Gaining share

Q 6. A and B are partners in a firm sharing profit and losses 2: 3 with effect from 1st April, 2021, they decided to
share profits and loss equally. What will be B's gain/sacrifice?

(a) Gain 1/5 (b) Sacrifice 1/5 (c) Gain 1/10 (d) Sacrifice 1/10

Q 7. A, B and C are partners in a firm sharing profits in ratio of 2:1:3. They decided to share profits in the ratio of
4:5:3. What was A's gain/sacrifice?

(a) No gain/sacrifice (b) Sacrifice 2/6 (c) Gain 2/12 (d) Gain 2/6

Q 8. 'A', 'B' and 'C' share profits and losses in the ratio of 3:2:1. 'D' is admitted with 1/6th share which he gets
entirely from 'A' New ratio will be:

(a) 2:2:1:1 (b) 3:1:1:1 (c) 2:2:2:1 (d) None of these

Q 9. 'X' and 'Y' are partners sharing profits equally. 'Z was admitted for 1/5 share. Calculate new profit sharing
ratio.

(a) 2:3:1 (b) 3:3:1 (c) 6:5:2 (d) 2:2:1

Q 10. 'A' and 'B are partners sharing profits and losses in the ratio of 5:3. On admission, 'C' brings 70,000 cash and
48,000 against goodwill. New profit sharing ratio among 'A', 'B' and 'C' is 7:5:4. The sacrificing ratio between 'A'
and 'B' is:

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(a) 4:1 (b) 4:7 (c) 5:4 (d) 3:1

Q 11. A and B are partners sharing profits in the ratio of 3: 1. They admit C for 1/4th share in the future profits. The
new profit-sharing ratio between A, B and C will be:

(a) 9:3:4 (b) 8:4:4 (c) 10:2:4 (d) 8:9:10

Q 12. X and Y share profits in the ratio of 3:2. Z was admitted as a partner who gets 1/5 share. New profit sharing
ratio, if Z acquires 3/20 from X and 1/20 from Y would be:

(a) 9:7:4 (b) 8:8:4 (c) 6:10:4 (d) 10:6:4

Q 13. A, B and C were partners in a firm sharing profits in 3:2:1 ratio. They admitted D for 10% profits. Calculate
New Profit-Sharing Ratio

(a) 15:9:8:7 (b) 31:14:10:15 (c) 9:6:3:2 (d) 13:10:7:5

Q 14. X and Y are partners sharing profits in the ratio of 3:2. Z is admitted for 1/4th share in profits which he
acquires equally from X and Y. The new ratio will be:

(a) 9:6:5 (b) 19:11:10. (c) 3:3:2 (d) None of these

Q 15. A and B share profits and losses in the ratio of 3:1. C is admitted into the partnership for 1/4th share. The
sacrificing ratio of A and B is:

(a) Equal (b) 3:1 (c) 2:1 (d) 3:2

Q 16. A and B are partners in a firm sharing profits and losses in the ratio of 3:2. A new partner C is admitted. A
surrenders 1/5th share of his profit in favour of C and B surrenders 2/5th of his share in favour of C.

The new ratio will be:

(a) 8:4:3 (b) 12:6:7 (c) 4:8:3 (d) 26:42:7

Q 17. Ram and Sita are partners sharing profits in the ratio of 5: 4. They admit Lakshman as a partner for 1/10th
share of profits which he acquires in equal proportion from Ram and Sita. The new ratio of the partners will be:

(a) 5:4:1 (b) 31:30:8 (c) 91:18:71 (d) 91:71:18

Q 18. A and B are partners sharing profits and losses in the ratio of 4:3. They admit C with 3/7th share, which he
gets 2/7th from A and 1/7th from B. The new ratio of partners would be:

(a) 1:1:1 (b) 2:3:2 (c) 3:2:2 (d) 2:2:3

Q 19. A and B are partners sharing profits and losses in the ratio of 7:5. They agree to admit C, their manager into
the partnership who is to get 1/6th share in the profits. He acquires this share as 1/24th from A and 1/8th from B.
The new profit-sharing ratio will be:

(a) 13:7:4 (b) 7:13:4 (c) 7:5:6 (d) 5:7:6

Q 20. Harit and Leela are partners in a firm sharing profits and losses in the ratio of 2:3. Yash was admitted as a
new partner for 1/5th share in the profits of the firm. Yash acquires his share from Leela. The new profit-sharing
ratio of Harit Leela and Yash will be:

(a) 2:3:5 (b) 2:2:1 (c) 5:3:2 (d) 3:5:1

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Q 21. Retiring partner is compensated for parting with the firm's future profits favouring remaining partners. The
remaining partners contribute to such compensation amount in:

(a) Gaining Ratio (b) Capital Ratio (c) Sacrificing Ratio (d) Profit-Sharing Ratio

Q 22. Gaining Ratio' means:

(a) Old Ratio - New Ratio (b) New Ratio - Old Ratio (c) Old Ratio - Sacrificing Ratio (d) New Ratio - Sacrificing
Ratio

Q 23. How will you calculate New profit sharing ratio?

(a) New Share = Old Share + acquired gaining share (b) New Share = Sacrificing share + acquired gaining share

(c) New Share = Gaining share + acquired gaining ratio (d) New Share = Old Share + acquired sacrificing share

Q 24. Name the profit sharing ratio in which the continuing partners share future profits after retiring partners
leaves the firm.

(a) Sacrificing ratio (b) Old ratio (c) New profit sharing ratio (d) Gaining ratio

Q 25. Some adjustments are to be made at the time of retiring partner.

(i) New profit sharing ratio of continuing partners

(ii) Accounting treatment of Goodwill

(iii) Sacrificing ratio of continuing partners

(iv) Accounting treatment of Accumulated Profits

Which of the above adjustments are to be done?

(a) (i), (ii) and (iv) (b) (i), (iii), (ii) (c) (i), (ii), (iii), (iv) (d) (ii), (iii) and (iv)

Q 26. A, B and C are three partners sharing profit and loss in the ratio of 3:2: 1. B retires from the firm. Suppose A
and C purchase the share of retiring partners equally. What is the new profit-sharing ratio?

(a) 2:2 (b) 2:5 (c) 1:5 (d) 2:1

Q 27. For the following particulars, calculate the new profit sharing of the partners.

Shiv, Mohan and Hari were partners in a firm, sharing profits in the ratio of 5:5:4. Finally, Mohan retired, and his
share was divided equally between Shiv and Hari.

(a) 12:15 (b) 15:13 (c) 12:11 (d) 10:14

Q 28. X, Y and Z are partners sharing profits and losses in the ratio of 3:2:1. Y retired from the firm. The new profit-
sharing ratio between X and Z is 5:3. What is the gaining ratio of the partners X and Z?

(a) 2:5 (b) 3:5 (c) 4:8 (d) 5:2

Q 29. X, Y and Z are partners sharing profits in the ratio of 5:2:1. If the new ratio on the retirement of X is 3:2, what
will be the gaining ratio?

(a) 11: 14 (b) 3:2 (c) 2:3 (d) 14:11

Q 30. A, B and C are partners sharing profits in the ratio of 4:3: 2. B retires and his share was taken up by A and C in
the ratio 3:2. New profit-sharing ratio will be:

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(a) 16:29 (b) 29:16 (c) 3:2 (d) 2:3

Q 31. Weighted Average Profit Method of calculating goodwill is useful when

(a) Profits are not similar over the years. (b) Profits show a trend either rising or falling

(c) Profits are higher in one year and lower in another (d) Profits are similar in all the years

Q 32. Average profit of a business over the last five years was 60,000. The normal yield on capital invested in such
a business is estimated at 10% pa. Capital invested in the business is 5,00,000. Amount of goodwill, if it is based on
3 years purchase of last 5 years super profits will be:

(a) 1,00,000 (b) 1,80,000 (c) 30,000. (d) 1,50,000.

Q 33. Under Capitalisation Method of valuation of Goodwill, the formula for calculating goodwill is:

(a) Super profits multiplied by the rate of return (b) Average profits multiplied by the rate of return

(c) Super profits divided by the rate of return. (d) Average profits divided by the rate of return

Q 34. Total Capital employed in the firm is 8,00,000, Normal Rate of Return is 15% and profit for the 1,20,000.
Value of goodwill as per Capitalisation Method would be

(a) 8,20,000 (b) 1,20,000. (c) Nil (d) 4,20,000.

Q 35. A firm earns profit of 1,10,000. The Normal Rate of Return is 10%. Assets of the firm are 11,00,000 and
liabilities 1,00,000 Value of goodwill by Capitalisation of Average Profit will be

(a) 2,00,000. (b) 10,000 (c) 5,000. (d) 1,00,000.

Q 36. Under Super Profit Method, goodwill is calculated by:

(a) Number of years' Purchase x Average Profit. (b) Number of years' Purchase x Super Profit.

(c) Super Profit+ Normal Rate of Return. (d) Super Profit-Normal Profit.

Q 37. M/s. Supertech India has assets of 5,00,000, whereas Liabilities are: Partners' Capitals- 3,50,000, General
Reserve-60,000 and Sundry Creditors- 90,000. If Normal Rate of Return is 10% and Goodwill of the firm is valued at
90,000 at 2 years purchase of Super Profit, the Average Profit of the firm will be

(a) 46,000. (b) 86,000. (c) 1,63,000. (d) 23,000.

Q 38. A firm earned 60,000 as profit, the normal rate of return being 10%. Assets of the firm are 7,20,000
(excluding goodwill) and Liabilities are 2,40,000. Find the value of Goodwill by Capitalisation of Average Profit
Method.

(a) 2,40,000 (b) 1,80,000 (c) 1,20,000 (d) 60,000

Q 39. Jagat and Kamal are partners in a firm. Their Capitals are: Jagat 3,00,000 and Kamal 2,00,000. During the year
ended 31st March; 2022 the firm earned a profit of 1,50,000. The normal rate of return is 20%. Calculate the value
of Goodwill of the Firm by Capitalisation Method.

(a) 2,00,000 (b) 5,00,000 (c) 3,50,000 (d) 2,50,000

Q 40. Tangible Assets of the firm are 14,00,000 and outside liabilities are 4,00,000, Profit of the firm is 1,50,000
and normal rate of return is 10%. The amount of capital employed will be

(a) 10,00,000 (b) 1,00,000 (c) 50,000 (d) 20,000

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Q 41. Jain, Sharma and Verma were partners in a firm sharing profits in the ratio of 1 : 2 : 1. On
31st March, 2018 their firm was dissolved. It was agreed that Sharma will look after the
dissolution work and will be paid ₹ 15,000 as remuneration. The dissolution expenses were ₹
5,000. ₹ 2,84,000 were paid to the creditors in full settlement of their claim of ₹ 3,00,000.
Dissolution of the firm resulted into a loss of ₹ 18,000. Pass necessary journal entries for the
above transactions.
Q 42. Gaurav, Saurabh and Vaibhav were partners in a firm sharing profits and losses in the
ratio of 2 : 2 : 1. They decided to dissolve the firm on 31st March, 2018. After transferring
sundry assets (other than cash in hand and cash at bank) and third party liabilities to realisation
account, the assets were realised and liabilities were paid-off as follows
(i) A machinery with a book value of ₹ 6,00,000 was taken over by Gaurav at 50% and stock
worth ₹ 5,000 was taken over by a creditor of ₹ 9,000 in full settlement of his claim.
(ii) Land and building (book value ₹ 3,00,000) was sold for ₹ 4,00,000 through a broker who
charged 2% commission.
(iii) The remaining creditors were paid ₹ 76,000 in full settlement of their claim and the
remaining assets were taken over by Vaibhav for ₹ 17,000.
(iv) Bank loan of 3,00,000 was paid along with interest of ₹ 21,000.
Pass necessary journal entries for the above transactions in the books of the firm.