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Reconstitution: Change in Profit-Sharing Ratio — Practice Worksheet
Chapter: Reconstitution: Change in Profit-Sharing Ratio
Topic: Reconstitution: Change in Profit-Sharing Ratio
Maximum Marks: 35
Time: 30 minutes
Name: ____________________ Roll No.: __________ Date: ____________

General Instructions

  • All questions are compulsory.
  • Choose the correct option (A, B, C or D) for each question.
  • The answer key is at the end — try the paper first!
Section A — Multiple Choice (1 mark each) 15 × 1 = 15 marks
1.
A change in the profit-sharing ratio is a form of:
  • A.Dissolution
  • B.Reconstitution
  • C.Liquidation
  • D.Amalgamation
2.
Sacrificing ratio =
  • A.New − Old
  • B.Old − New
  • C.Old × New
  • D.Old + New
3.
Gaining ratio =
  • A.New − Old
  • B.Old − New
  • C.Old + New
  • D.Old ÷ New
4.
A and B share 3:2 and change to 1:1. A's position is:
  • A.Gain 1/10
  • B.Sacrifice 1/10
  • C.No change
  • D.Gain 1/5
5.
On a change in PSR, the gaining partner:
  • A.Receives goodwill
  • B.Compensates the sacrificing partner
  • C.Leaves
  • D.Pays nothing
6.
The goodwill adjustment entry debits the:
  • A.Sacrificing partner's capital
  • B.Gaining partner's capital
  • C.Goodwill A/c
  • D.Bank A/c
7.
Goodwill Rs 40,000; B gains 1/4. Adjustment amount =
  • A.Rs 10,000
  • B.Rs 40,000
  • C.Rs 4,000
  • D.Rs 1,000
8.
Self-generated goodwill is not raised in the books because of:
  • A.AS-26
  • B.AS-3
  • C.The Companies Act
  • D.GST law
9.
Accumulated reserves are distributed in the ____ ratio on a change in PSR.
  • A.New
  • B.Old
  • C.Gaining
  • D.Equal
10.
An accumulated loss (debit P&L balance) is ____ the old partners.
  • A.Credited to
  • B.Debited to
  • C.Ignored for
  • D.Paid by outsiders to
11.
An increase in an asset is ____ in the Revaluation Account.
  • A.Debited
  • B.Credited
  • C.Ignored
  • D.A liability
12.
An increase in a liability is ____ in the Revaluation Account.
  • A.Credited
  • B.Debited
  • C.Ignored
  • D.A gain
13.
Creating a provision for doubtful debts is ____ in Revaluation.
  • A.A gain (credit)
  • B.A loss (debit)
  • C.Ignored
  • D.An asset
14.
An unrecorded asset brought into account is:
  • A.A loss (debit)
  • B.A gain (credit)
  • C.Ignored
  • D.A liability
15.
Revaluation profit/loss is shared in the:
  • A.New ratio
  • B.Old ratio
  • C.Gaining ratio
  • D.Capital ratio
Section B — Challenge / Olympiad (2 marks each) 10 × 2 = 20 marks
16.
A, B and C share 4:3:2 and decide to share equally. C's change is:
  • A.Gain 1/9
  • B.Sacrifice 1/9
  • C.No change
  • D.Gain 2/9
17.
Goodwill is Rs 90,000. A sacrifices 1/6 and B gains 1/6. The adjustment entry is:
  • A.B's Capital Dr 15,000; To A's Capital 15,000
  • B.A's Capital Dr 15,000; To B's Capital 15,000
  • C.Goodwill Dr 90,000
  • D.No entry
18.
Why are accumulated reserves distributed BEFORE applying the new ratio?
  • A.They were earned under the old arrangement and belong to the old ratio
  • B.The new ratio is illegal
  • C.Reserves are liabilities
  • D.To increase goodwill
19.
Building up Rs 60,000, plant down Rs 20,000, an unrecorded creditor Rs 5,000. The net revaluation result is a:
  • A.Profit of Rs 35,000
  • B.Loss of Rs 35,000
  • C.Profit of Rs 85,000
  • D.Loss of Rs 25,000
20.
If only the GAINING partner is to bear the goodwill and the partners agree NOT to revalue, the workmen compensation reserve (no claim) is still:
  • A.Distributed to all old partners in the old ratio
  • B.Given to the gainer only
  • C.Ignored
  • D.Carried forward
21.
A and B (3:2) change to 2:3. Goodwill Rs 1,00,000. The single adjustment entry is:
  • A.B's Capital Dr 20,000; To A's Capital 20,000
  • B.A's Capital Dr 20,000; To B's Capital 20,000
  • C.B's Capital Dr 40,000; To A 40,000
  • D.No entry
22.
When assets and liabilities are NOT to be shown at revalued figures, the alternative used is:
  • A.A single adjustment entry through capitals (memorandum revaluation)
  • B.No adjustment ever
  • C.Closing the firm
  • D.Raising goodwill permanently
23.
Total sacrifice in any change of ratio must always equal the total:
  • A.Gain
  • B.Capital
  • C.Goodwill
  • D.Reserve
24.
A debit balance of Profit & Loss Account (accumulated loss) of Rs 25,000 on a change in ratio (old 3:2) is:
  • A.Debited to A 15,000 and B 10,000
  • B.Credited to A and B
  • C.Ignored
  • D.Borne by the gainer only
25.
The Revaluation Account is also known as the:
  • A.Profit & Loss Adjustment Account
  • B.Realisation Account
  • C.Appropriation Account
  • D.Executor's Account

Answer Key

Section A — Multiple Choice (1 mark each)
  1. (B) Reconstitution
  2. (B) Old − New
  3. (A) New − Old
  4. (B) Sacrifice 1/10
  5. (B) Compensates the sacrificing partner
  6. (B) Gaining partner's capital
  7. (A) Rs 10,000
  8. (A) AS-26
  9. (B) Old
  10. (B) Debited to
  11. (B) Credited
  12. (B) Debited
  13. (B) A loss (debit)
  14. (B) A gain (credit)
  15. (B) Old ratio
Section B — Challenge / Olympiad (2 marks each)
  1. (A) Gain 1/9
  2. (A) B's Capital Dr 15,000; To A's Capital 15,000
  3. (A) They were earned under the old arrangement and belong to the old ratio
  4. (A) Profit of Rs 35,000
  5. (A) Distributed to all old partners in the old ratio
  6. (A) B's Capital Dr 20,000; To A's Capital 20,000
  7. (A) A single adjustment entry through capitals (memorandum revaluation)
  8. (A) Gain
  9. (A) Debited to A 15,000 and B 10,000
  10. (A) Profit & Loss Adjustment Account
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