Chapter MCQ Test 2 — Retirement and Death of a Partner
10 Questions • 12 min • Chapter MCQ
12:00
Question 1 of 10
A, B, C share 4:3:2. B retires; A and C continue in 4:2. The gaining ratio of A and C is:
2:1
4:2
1:1
3:2
Explanation: A gains 6/9−4/9 = 2/9; C gains 3/9−2/9 = 1/9 → 2:1.
Question 2 of 10
Goodwill of the firm is Rs 1,08,000; the retiring partner B's share was 1/3. A and C (gaining 2:1) are debited:
A Rs 24,000; C Rs 12,000
A Rs 18,000; C Rs 18,000
A Rs 12,000; C Rs 24,000
Equally Rs 18,000
Explanation: B's goodwill = 1,08,000 × 1/3 = 36,000; debited 2:1 → 24,000 and 12,000.
Question 3 of 10
Why do ALL partners (including the retiring one) share the revaluation profit, unlike a new partner who does not?
The gain arose under the old arrangement that still included the retiring partner
The retiring partner is senior
It is a legal gift
Survivors refuse it
Explanation: Revaluation reflects values during the period the retiring partner was a member, so he shares it in the old ratio.
Question 4 of 10
B's dues are Rs 2,00,000, paid Rs 50,000 now and the rest in 3 equal annual instalments with 10% interest. The first instalment (principal) is:
Rs 50,000
Rs 1,50,000
Rs 66,667
Rs 15,000
Explanation: Balance 1,50,000 in 3 equal principal instalments = 50,000 each (plus interest on the outstanding balance).
Question 5 of 10
A partner with a 1/4 share dies on 30 June (year ends 31 March). Sales to 30 June were Rs 6,00,000; last year sales Rs 24,00,000 gave a profit of Rs 4,00,000. His profit share on the sales basis is:
Rs 25,000
Rs 1,00,000
Rs 6,250
Rs 16,667
Explanation: Profit rate 4,00,000/24,00,000 = 1/6; profit to date = 6,00,000 × 1/6 = 1,00,000; his 1/4 = 25,000.
Question 6 of 10
On the death of a partner, his share of goodwill is adjusted by:
Debiting the gaining partners and crediting the deceased partner's capital
Raising a goodwill account
Crediting all partners
Debiting cash
Explanation: As in retirement, the gainers bear it via a capital-to-capital adjustment (no goodwill account).
Question 7 of 10
If the continuing partners decide to continue in their OLD mutual ratio after a retirement, the gaining ratio equals:
Their old ratio
1:1
The retiring partner's share
The sacrificing ratio
Explanation: With no change in their mutual proportions, they gain in the same ratio they already shared.
Question 8 of 10
An accumulated loss (debit P&L balance) at retirement is:
Debited to all partners in the old ratio
Credited to all partners
Borne by the retiring partner alone
Ignored
Explanation: Like reserves, an accumulated loss belongs to all partners in the old ratio — here debited.
Question 9 of 10
The Executor's Account is essentially the deceased partner's:
Loan/payable account that the firm settles over time
Capital introduced
Drawings account
Goodwill account
Explanation: It carries the amount owed to the estate, paid in full or by instalments with interest.
Question 10 of 10
Total goodwill of a firm is Rs 1,50,000 and a partner with a 2/5 share retires. The maximum his capital can be credited for goodwill is:
Rs 60,000
Rs 1,50,000
Rs 90,000
Rs 37,500
Explanation: His share of goodwill = 1,50,000 × 2/5 = 60,000.