Partnership and LLP Accounts
108 Practice MCQs available for CA Foundation
Paper
Paper 1: Accounting
Exam Weightage
15-20%
Key Topics
Admission, Retirement, Death, Shares, Debentures
This chapter covers Admission, Retirement, Death, Shares, Debentures and is part of Paper 1: Accounting in the CA Foundation exam.
Exam Strategy Tip
This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.
Key Terms
Partnership Deed
A written agreement between partners detailing the terms and conditions of the partnership (profit sharing ratio, interest on capital, etc.).
Limited Liability Partnership (LLP)
A corporate business vehicle that provides the benefits of limited liability while allowing its members the flexibility of organizing their internal structure as a partnership.
Goodwill
An intangible asset representing the good reputation, brand name, customer loyalty, and earning capacity of a business over and above its net tangible assets. It arises in accounting during partnership changes or business acquisitions.
Comparison Tables
All 108 Questions
4824
Following are the details of Assets and Liabilities of Mr. Sarthak for the year ended 31 March,
2023 and 31 March, 2024:
31.03.2023 31.03.2024
Assets
Buildings
Furniture
Inventory
Sundry debtors
Cash at bank
Cash in hand
Liabilities:
Loans
Sundry Creditors
2,00,000
75,000
1,05,000
68,000
72,500
2,400
1,50,000
58,400
?
?
1,95,000
94,000
86,800
3,800
1,25,000
79,500
It was decided to depreciate Building by 5% p.a. and Furniture by 10% p.a. On 1st June, 2023
an additional capital of 40,000 was brought in the business. Proprietor has withdrawn @ ₹
2,500 p.m. for meeting the family expenses. Prepare Statement of Affairs as on 31 March,
2023 and 31 March, 2024. Find the profit or loss earned by Mr. Sarthak for the year ended
31st March, 2024. [Jan. 2025, 5 Marks]
Subjective4825
What is Piecemeal payments method under Partnership Dissolution? Briefly explain the two
methods followed for determining the order in which the payments are made?
[CA Inter May 2010, 2 Marks]
Subjective4826
Explain Garner v. Murray rule applicable in the case of partnership firms. State, when is this
rule not applicable? [CA Inter May 2013, 4 Marks]
Subjective4827
Explain the Limitations of Liability of Limited Liability Partnership is of Liability of Limited
Liability (LLP) and its partners.
Subjective4828
Under what circumstances, an LLP can be wound up by the Tribunal.
[CA Inter May 2015, 4 Marks]
Subjective4829
Rules applicable in absence of partnership deed
OR
Discuss the rules if there is no Partnership Agreement. [Jan. 2021, 5 Marks]
Subjective4830
Meaning of Limited Liability Partnership
Subjective4831
Salient features of LLP?
Subjective4832
Essential elements to incorporate LLP
Subjective4833
Partnership and Joint Venture
Subjective4834
A partner who devotes more time to a business than other partners is entitled to get a salary.
Subjective4835
Partners can share profits or losses in their capital ratio, when there is no agreement.
Subjective4836
The business of partnership firm must be carried on by all the partners.
Subjective4837
Goodwill brought in by an incoming partner in cash for joining a partnership firm is taken
away by the old partners in their new profit sharing ratio.
Subjective4838
Goodwill is fictitious asset.
Subjective4839
Goodwill is in the nature of personal account.
Subjective4840
If a partner retires, then other partners have a gain in their profit sharing ratio.
Subjective4841
Minor can be admitted to the benefits of LLP.
Subjective4842
The objective of taking a joint life policy by the partnership firm is to secure the lives of the
existing partners of the firm.
Subjective4843
LLP has no separate legal entity.
Subjective4844
LLP Partners act as agents of LLP and other partners.
Subjective4845
When there is no partnership deed prevails, the interest on loan of a partner to be paid @ 6%.
[May 2018, 2 Marks]
Subjective4846
Limited Liability Partnership (LLP) is governed by Indian Partnership Act, 1932.
Subjective4847
A Partnership firm cannot own any Assets.
Subjective4848
In case of admission of a new partner in a partnership firm, the profit/ loss on revaluation
account is transferred to all partners in their new profit sharing ratio.
[Nov. 2020, 2 Marks]; [MTP Jan. 2025]
Subjective4849
Business of partnership comes to an end on death of a partner. [July 2021, 2 Marks]
Subjective4850
The court has the option to order dissolution of a firm where a partner has becomes of
unsound mind.
Subjective4851
In case of dissolution of a firm a revaluation account is prepared.
Subjective4852
Maximum loss method is the only method of piecemeal distribution.
Subjective4853
Revaluation Account is also known as Profit and Loss Adjustment account.
Subjective4854
Legal heirs of a deceased partner are entitled to his capital account balance only.
[Sep. 2024, 2 Marks]
Subjective4855
Goodwill is intangible asset therefore it cannot be valued. [RTP Jan. 2025]
Subjective4856
The firm will receive surrender value of the joint life policy on the death of the partner.
[RTP Jan. 2025]
Subjective4857
M/s. TB is a partnership firm with the partners A, B and C sharing profits and losses in the
ratio of 3:2:5. The balance sheet of the firm as on 30th June, 2020 was as under:
Balance Sheet of M/s. TB as on 30-6-2020
Liabilities Amount Assets Amount
A's Capital A/c
B's Capital A/c
C's Capital A/c
Long Term Loan
Bank Overdraft
Trade Payables
1,24,000
96,000
1,60,000
4,20,000
64,000
2,13,000
Land
Building
Plant & Machinery
Investments
Inventories
Trade Receivables
1,20,000
2,20,000
4,00,000
42,000
1,36,000
1,59,000
10,77,000 10,77,000
It was mutually agreed that B will retire from partnership and in his place D will be admitted
as a partner with effect from 1st July, 2020. For this purpose, following adjustments are to be
made :
(a) Goodwill of the firm is to be valued at ₹ 3 lakhs due to the firm's location advantage
but the same will not appear as an asset in the books of the reconstituted firm.
(b) Building and Plant & Machinery are to be valued at 95% and 80% of the respective
balance sheet values. Investments are to be taken over by the retiring partner at ₹
46,000. Trade receivables are considered good only upto 85% of the balance sheet
figure. Balance to be considered bad.
(c) In the reconstituted firm, the total capital will be * 4 lakhs, which will be contributed
by A, C and D in their new profit sharing ratio, which is 3:4:3.
(d) The amount due to retiring partner shall be transferred to his loan ac- count.
You are required to prepare Revaluation Account and Partners' Capital Accounts after
reconstitution, along with working notes.
[Nov. 2020, 10 Marks]; [RTP Jan. 2025; Modified]
Subjective4858
Rama, Krishna and Raghu shared profits and losses in the ratio of 5:3:2. They took out a Joint
Life Policy in 2017 for 50,000, a premium of ₹ 3,000 being paid annually on 10th June. The
surrender value of the policy on 31st December of various years was as follows:
2017 - Nil
2018 - 900
2019 - 2,000
2020 - 3,600
Rama retired on 15th April, 2021 and the policy was surrendered. You are required to prepare
Joint Life Policy Account from 2017 to 2021 (assuming the Policy Account is maintained at
surrendered value basis). [July 2021, 5 Marks]; [MTP Jan. 2025]
Subjective4859
Mr. X gives the following particulars in respect of business carried on by him:
Particulars Amount
Capital Invested in business 9,00,000
Market rate of interest on investment 8%
Rate of risk return on capital invested in business 3%
Remuneration per annum from alternative employment of proprietor
if he was not engaged in business
36,000
The business earned profits of 2,40,000, 2,16,000 and 3,00,000 in the years 2018, 2019 and
2021 respectively but made a loss of 36,000 in the year 2020.
Compute the value of Goodwill on the basis of 6 years' purchase of super profits of the
business, calculated on the basis of average profit of last four years.
[June 2022, 5 Marks]; [MTP Jan. 2025]
Subjective4860
X and Y were partners in a firm, sharing profit and losses in the ratio of 3:2. They admit Z for
1/6th share in profits and guaranteed that his share of profits will not be less than 50,00,000.
Total profits of the firm for the year ended 31st March, 2022 were 1,80,00,000.
Calculate share of profit for each partner when:
(i) Guarantee is given by firm
(ii) Guarantee is given by A and B equally. [June 2023, 5 Marks]
Subjective4861
A, B and C were trading in partnership sharing profits and losses in the proportion of 4:3:3.
The balances in the books of the firm as on 31st December, 2022 subject to final adjustment
were as under:
Debit Credit
Capital Accounts:
A
B
C
Current Accounts:
A
B
C
Land and Building
Furniture and Fixtures
Stock
Debtors
Bank Account
Profit for the year before charging interest
Creditors
36,000
54,000
54,000
1,80,000
33,750
2,81,250
45,000
90,000
2,25,000
1,12,500
1,35,000
2,34,000
67,500
Total 7,74,000 7,74,000
Regarding Goodwill may be made separately, instead of through Revaluation Account C died
on 30th June, 2022. The partnership deed provided that:
(a) Interest was credited on Capital Account of Partners as @ 12% per annum on the balance
at the beginning of the year.
(b) On the death of partner:
(i) Goodwill was to be valued at three years purchase of average annual profits of three
years up to the death, after deducting inter- est on capital employed at 10% p.a. and a fair
remuneration for each of the partners.
(ii) Fixed assets were to be valued by an independent valuer and all other assets and
liabilities to be taken at book value, and
(c) Whenever necessary, profit or loss should be apportioned on a time basis. You ascertain
that:
(i) Profit for three years, before charging partners' interest were:
2019 2,52,000
2020 2,83,500
2021 2,70,000
(ii) The independent valuation on the date of death revealed:
Land and Building 2,25,000
Furniture and Fixtures 22,500
(iii) For valuation of goodwill a fair remuneration for each of the partners would be ₹ 56,250
per annum and that the capital employed in the business to be taken as 5,85,000
throughout.
It was agreed between the partners that:
(1) Goodwill was not be shown as an asset of the firm as on 31st December, 2022.
Therefore, adjustment for goodwill was to be made in Capital Accounts.
(2) The amount due to C's Estate was to remain as loan with the firm carrying interest at
12% p.a.
(3) A and B would share profits equally from the date of death of C.
(4) Depreciation on revised value of assets would be ignored.
You are required to prepare:
(A) Partners' Capital Account and Current Account; and
(B) Balance Sheet of the firm as on 31st December, 2022.
Working should be done correct to the nearest rupee [June 2023, 20 Marks]
Subjective4862
P, Q, R and S had been carrying on business in partnership sharing profits & losses in the ratio
of 4:3:2:1. They decided to dissolve the partnership on the basis of following Balance Sheet as
on 30th April, 2011:
Liabilities Amount Assets Amount
Capital Accounts
P
Q
General reserve
Capital reserve
Sundry creditors
Mortgage loan
1,68,000
1,08,000
95,00
25,000
36,000
1,10,000
'Land & building
Furniture & fixtures
Stock
Debtors
Cash in hand
Capital overdrawn:
R
S
2,46,000
65,000
1,00,000
72,500
15,500
25,000
18,000
5,42,000 5,42,000
(i) The assets were realized as under:
Land & building 2,30,000
Furniture & fixtures 42,000
Stock 72,000
Debtors 65,000
(ii) Expenses of dissolution amounted to 7,800.
(iii) Further creditors of 18,000 had to be met.
(iv) R became insolvent and nothing was realized from his private estate.
Applying the principles laid down in Garner Vs. Murray, prepare the Realisation Account,
Partners' Capital Accounts and Cash Account. [MTP Jan. 2025; Modified]
Subjective4863
P, Q and R are the 3 partners in partnership firm. Partnership deed includes the following:
(i) R is entitled to get salary of 10,000 p.a.
(ii) P, Q and R are to get interest @ 6% on their respective capital of 2,50,000; 1,50,000
and 1,00,000.
(iii) R is to get extra benefit of 10% of profit in excess of 50,000 after providing for (i) and
(ii) mentioned above.
(iv) Q is entitled to 10% of profits after providing all the amounts in paras (i), (ii) and (iii)
mentioned above.
(v) The balance of profits will be shared by P, Q and R is ratio of 5:3: 2.
The profits for the year before providing above items are 3,50,000.
You are required to prepare Profit and Loss Appropriation Account. [Dec. 2023, 5 Marks]
Subjective4864
X, Y and Z were partners sharing profit and losses in the ratio of 5: 3 2. Their Balance Sheet as
on 31st March 2023 is as follows:
Balance Sheet as on 31st March 2023
Liabilities Amount Assets Amount
Capital Accounts
X
Y
Z
General Reserve
Trade Creditors
4,25,000
2,55,000
1,40,000
25,000
30,000
Building
Machinery
Debtors
Stock
Bank
2,00,000
3,50,000
1,95,000
1,05,000
25,000
8,75,000 8,75,000
Y retired from the business on 1st April 2023 on the following terms;
(i) To appreciate building by 20% and to depreciate machinery by 5%.
(ii) Provision for doubtful debts is to create at 10%.
(iii) Goodwill of the firm is valued at 1,60,000 and Goodwill is not to be raised in the
books of account. New profit sharing ratio will be 5 : 3.
(iv) Entire sum payable to Y should be brought by X and Z in such a way to make their
capital ratios according to new profit ratio. Balance of Y to be paid immediately.
You are required to prepare Revaluation Account, Partners Capital Accounts and Balance
Sheet after retirement. [Dec. 2023, 10 Marks]
Subjective4865
P, Q and R were partners sharing profit & losses in the ratio of 3:2:1. They decided to dissolve
the business as on 31st March, 2024 when their Balance Sheet was as follows:
Liabilities Amount Assets Amount
Capital Accounts
P
Q
R
General Reserve
Employee Provident Fund
Trade Creditors
3,55,000
2,20,000
1,25,000
1,50,000
60,000
1,24,000
Land & Building
Machinery
Furniture
Stock
Trade Debtors
Cash & Bank
4,85,000
1,88,000
1,05,000
55,800
1,56,000
44,200
10,34,000 10,34,000
The following information is given to you:
(i) There was an unrecorded investment which was sold for ₹ 30,000.
(ii) One of the creditors agreed to take over some items of furniture of Books value
25,000 at 24,000. The rest of the creditors were paid at a discount of 5%.
(iii) Out of the Debtors ₹ 9,000 proved bad, remaining were fully realized.
(iv) The other assets were realised as under:
Land & Building 5,25,000
Machinery 1,70,000
Furniture Remaining taken over by P at 75,000
Stock 60,000
(v) Expenses of dissolution amounted to 18,700.
(vi) There was an outstanding bill for repairs which had to be paid for ₹ 3,500
You are required to prepare
(1) Realisation A/c
(2) Cash & Bank A/c
(3) Partner's Capital A/c in the books of partnership firm. [June 2024, 8 Marks]
Subjective4866
Anu and Manu are carrying on business in partnership and sharing profits & losses in the ratio
of 5:3. The firm's Balance Sheet as on 31st March, 2024 was as follows:
Balance Sheet as on 31st March, 2024
Liabilities Amount Assets Amount
Capital Accounts
Anu
Manu
Long Term Loan
Capital Accounts
Trade Payables
Outstanding Liabilities
2,80,000
2,50,000
2,00,000
1,19,500
16,200
Building
machinery
furniture
trade Receivables
inventories
investments
Cash at Bank
3,80,000
1,43,000
85,000
1,64,000
48,400
15,000
30,100
8,65,700 8,65,700
They decided to admit Ranu as a partner with effect from 1st April, 2024 on the following
terms:
(i) Ranu will be paid 1/5 share in the future profits and new profit sharing ratio would
be 5: 3: 2.
(ii) Ranu will bring 1,00,000 as his capital.
(iii) Goodwill of firm is to be valued at 2 years' purchase of average profit of past 3 years
and Ranu will bring his share of goodwill in cash. The profits of past 3 years ending
on 31st March were as under:
31st March, 2022 87,000
31st March, 2023 1,06,000
31st March, 2024 1,22,000
(iv) It was also agreed that the partners will not withdraw their share of goodwill nor
will the goodwill appear in the books of account.
(v) It was also decided to value the assets:
Building is to be appreciated by 2 50,000 and Machinery is to be depreciated by
10%. Furniture is revalued at 80,000, Investments at Inventories at 47,500.
16,000 and Provision for doubtful debts is to be created on debtors @ 5%.
You are required to prepare Revaluation Account, Partners' Capital Accounts and Balance
Sheet of the reconstituted firm as on 1st April, 2024. [June 2024, 12 Marks]
Subjective4867
The following is the Balance Sheet of Krish and Bala, sharing profit and loss in the ratio 3: 2
Liabilities Amount Assets Amount
Capital Accounts
krish
Bala
General Reserve
Workmen compensation reserve
Creditors
Employees provident fund
25,000
15,000
30,000
10,000
10,000
8,000
Land & Building
Plant & machinery
Stock
Debtors
Less : Provision
Bank
Advertisement Expenditure
28,000
15,000
10,000
25,000
(4,000)
20,000
4,000
8,65,700 8,65,700
On admission of Sobha for 1/6th share in the profits, it was decided that:
(1) Value of land and buildings to be increased by ₹ 5,000.
(2) Value of stock to be increased by ₹ 3,500.
(3) Provision of doubtful debts to be increased by ₹ 1,500.
(4) Liabilities of workmen's compensation reserve was determined to be 8,000.
(5) Sobha was to bring in further cash of 25,000 as her capital.
(6) Sobha brought in her share of goodwill 12,000 in cash.
Prepare the Revaluation Account, the Capital Account and the Balance Sheet of the new firm.
[Sept. 2024, 10 Marks]
Subjective4868
X, Y and Z were in a firm sharing profit and loss as 3:2:1. Their Bal- ance Sheet on 31st March,
2024 was as follows:
Liabilities Amount Assets Amount
X's Capital
Y's Capital
Z's Capital
Investment Fluctuation Fund
Workmen's Compensation
Trade Creditors
Employee's Provident Fund
78,000
42,000
31,000
6,000
12,000
31,000
12,000
Goodwill
Patents
Machinery
Investment
(Market value 27,600)
Stock
Debtors 50,000
Less: Provision for
doubtful debts (4,000)
Cash at Bank
12,000
30,000
60,000
25,000
46,000
8,350
2,12,000 2,12,000
Z retired on the above date on the following terms:
(1) Goodwill of the firm was valued at 60,000.
(2) Value of patents was to be reduced by 20% and that of machinery to 90%.
(3) Provision for doubtful debts was to be raised to 10%.
(4) Liability on account of Provident fund was only 6,000.
(5) Liability for workmen compensation to the extent of 6,000 is to be created.
(6) Z took over the investment at market value.
(7) Amount due to Z is to be settled on the following basis-
50% on retirement, 50% of the balance within one year and the balance by a bill of
exchange (without interest) at 3 months.
You are required the following:
(i) Show entries for the treatment of goodwill,
(ii) Prepare Revaluation Account,
(iii) Partner Capital Account, &
(iv) Balance Sheet. [Sept. 2024, 10 Marks]
Subjective4869
Akbar and Bali are partners in a firm sharing profits and losses equally. On 1st April, 2023 the
balance of their Capital Accounts were: Akbar 50,000 and Bali 40,000. On that date the
balances of their Current Accounts were: Akbar 10,000 (credit) and Bali 3,000 (debit). Interest
@ 5% p.a. is to be allowed on the balance of Capital Accounts as on 1.4.2023. Ball is to get
annual salary of 3,000 which had not been withdrawn. Drawings of Akbar and Ball during the
year were 1,000 and 2,000 respectively. The profit for the year ended 31st March, 2024 before
charging interest on capital but after charging Bali salary was ₹ 70,000. It is decided to
transfer 10% of divisible profit to a Reserve Account. Prepare Profit & Loss Appropriation
Account for the year ended 31st March, 2024 and show Capital and Current Accounts of the
Partners for the year. [RTP Jan. 2025]
Subjective4870
Neptune, Jupiter, Venus and Pluto had been carrying on business in partnership sharing
profits and losses in the ratio of 3:2:1: 1. They decide to dissolve the partnership on the basis
of the following Balance Sheet as on 30th April, 2024:
Liabilities Amount Assets Amount
Capital Account:
Neptune
Jupiter
General Reserve
Capital Reserve
Sundry Creditors
Mortgage Loan
1,00,000
60,000
56,000
14,000
20,000
80,000
Premises
Furniture
Stock
Debtors
Bank
Capital Over drawn:
Venus
Pluto
1,20,000
40,000
1,00,000
40,000
8,000
10,000
12,000
3,30,000 3,30,000
(i) The assets were realised as under:
Debtors 24,000
Stock 16,000
Furniture 60,000
Premises 90,000
(ii) Expenses of dissolution amounted to 34,000.
(iii) Further creditors of 12,000 had to be met.
(iv) General Reserve unlike Capital Reserve was built up by appropriation of profits.
You are required to draw up the Realisation Account; Partners' Capital Accounts and the Bank
Account assuming that Venus became insolvent and nothing was realised from his private
estate. Apply the principles laid down in Garner vs Murray. [RTP Jan. 2025]
Subjective4871
The following information given below:
(i) Total Assets 10,00,000
(ii) External Liabilities 1,80,000
(iii) Normal Rate of Return 10%
(iv) Average Net Profit of last five years 1,00,000
You are required to calculate goodwill by applying:
(i) Capitalization Method and
(ii) 3 year's purchase of super profits. [RTP Jan. 2025]
Subjective4872
The following is the Balance Sheet of M/s. Krishna Bros as at 31st March, 2024, they share
profit and losses equally:
Balance Sheet as at 31st March, 2024
Liabilities Amount Assets Amount
Capital
Amit
Lalit
Sumit
General Reserve
Trade payables
24,000
24,000
27,000
9,000
14,100
Machinery
Furniture
Fixture
Cash
Inventories
Trade receivables
Less: Provision for
Doubtful debts
30,000
16,800
12,600
9,000
5,700
27,000
(1,800)
99,300 99,300
Sumit died on 1st April, 2024 and the following agreement was to be put into effect.
(a) Assets were to be revalued:
Machinery to 35,100; Furniture to 13,800; Inventory to 4,500.
(b) Goodwill was valued at 18,000 and was to be credited with his share, without using a
Goodwill Account.
(c) 6,000 is to be paid to the executors of the dead partner on 5th April, 2024.
(d) After death of Sumit, Amit and Lalit shares the profit equally.
You are required to prepare:
(i) Journal Entry for Goodwill adjustment.
(ii) Revaluation Account, Capital Accounts of the partners and Balance Sheet after the death
of Sumit. [MTP Jan. 2025]
Subjective4873
The Balance Sheet of a Partnership Firm M/s Dutch and Associates consisted of two partners
P and Q who were sharing Profits and Losses in the ratio of 5:3 respectively. The position as
on 31st March, 2024 was as follows:
Liabilities Amount Assets Amount
P's Capital
Q's Capital
Profit & Loss A/c
Trade Creditors
4,10,000
3,30,000
1,12,000
54,800
Land & Building
Plant & Machinery
Furniture
Stock
Sundry debtors
Cash at Bank
3,80,000
1,70,000
1,09,480
1,45,260
60,000
42,060
9,06,800 9,06,800
On the above date, R was admitted as a partner on the following terms:
(a) R should get 1/5th of share of profits.
(b) R brought 2,40,000 as his capital and 32,000 for his share of Good- will.
(c) Plant and Machinery would be depreciated by 15% and Land & Buildings would be
appreciated by 40%.
(d) A provision for doubtful debts to be created at 5% on sundry debtors.
(e) An unrecorded liability of ₹ 6,000 for repairs to Buildings would be recorded in the
books of account.
(f) Immediately after R's admission, Goodwill brought by him would be adjusted among
old partners. Thereafter, the capital accounts of old partners would be adjusted
through the current accounts of partners in such a manner that the capital accounts of
all the partners would be in their profit sharing ratio.
Prepare revaluation A/c, capital Accounts of the partners, new profit sharing ratio and
Balance Sheet of the firm after the admission of R. [MTP Jan. 2025]
Subjective4874
X and Y are partners sharing profits and losses in the ratio of their effective capital. As on 1st
April, 2023, they had ₹ 2,80,000 and ₹ 1,60,000 respectively in their Capital Accounts.
X introduced a further capital of 20,000 on 1 June, 2023 and another 15,000 on 1st October,
2023. On 31 January, 2024, X withdrew 25,000. On 1 August, 2023 Y Introduced further capital
of ₹ 30,000.
During the Financial year 2023-24, the partners drew the following amounts in anticipation
of profit:
X drew 5,000 at the beginning of each quarter and Y drew 1,500 per month at the end of each
month beginning from April, 2023
As per partnership agreement, the profits were to be shared in capital ratio. The interest on
Capital @ 12% p.a. is allowable and interest on drawings @ 10% p.a. is chargeable.
You are required to calculate (i) Profit-sharing ratio; (ii) Interest on capital; and (iii) interest
on drawings. [Jan. 2025, 5 Marks]
Subjective4875
A, B and C are partners sharing profits & losses in the ratio of 3:2:1. The following is the
Balance Sheet of their firm M/s. ABC Trading Corpo- ration as on 31 March, 2024:
Balance Sheet as on 31st March 2024
Liabilities Amount Assets Amount
Capital Accounts:
A
B
C
General Reserve
Trade Payables
2,80,000
1,90,000
1,50,000
1,35,000
97,400
Land & Building
Machinery
Furniture & Fixtures
Trade Receivables 1,55,200
Less: Provision for
Doubtful debts 5,700
Stock
Joint Life Policy
Cash & Bank
2,40,000
1,50,000
1,05,000
1,49,500
85,600
90,000
32,300
8,52,400 8,52,400
C died on 30th June, 2024. As per Partnership deed the following arrangement was to be put
into effect:
i. Goodwill of firm was to be valued at 2 years' purchase of average profit of four years
to 31st March preceding the death of partner. The profits were as under:
31st March, 2021 1,14,000
31st March, 2022 1,22,000
31st March. 2023 1,19,000
31st March, 2024 1,25,000
Goodwill Account will not be opened in the books of account and C was to be credited
with his share. The new profit-sharing ratio of A and B will be 5:3.
ii. Profit till the date of death to be ascertained on the basis of average profit of
previous four years and share of C was to be credited to his capital account.
iii. Assets were to be revalued: Land & Building was appreciated by 15%, Machinery to
be depreciated by 5%, Furniture & Fixtures to be revalued at ₹ 1,00,000 and the
value of Stock to be taken at ₹ 90,000.
iv. Provision for doubtful debts to be increased by ₹ 1,800.
v. A sum of 2,40,000 was received from insurance company against Joint Life Policy.
vi. Amount due to C was paid to the executors.
You are required to prepare Revaluation Account, Partners Capital Accounts and Balance
Sheet as on 30th June, 2024, along with necessary workings. [Jan. 2025, 15 Marks]
Subjective4876
How may a Company utilize its Securities Premium Reserve as per Companies Act, 2013?
Subjective4877
Nominal and Registered Capital
Subjective5157
Following are the details of Assets and Liabilities of Mr. Sarthak for the year ended 31 March,
2023 and 31 March, 2024:
31.03.2023 31.03.2024
Assets
Buildings
Furniture
Inventory
Sundry debtors
Cash at bank
Cash in hand
Liabilities:
Loans
Sundry Creditors
2,00,000
75,000
1,05,000
68,000
72,500
2,400
1,50,000
58,400
?
?
1,95,000
94,000
86,800
3,800
1,25,000
79,500
It was decided to depreciate Building by 5% p.a. and Furniture by 10% p.a. On 1st June, 2023
an additional capital of 40,000 was brought in the business. Proprietor has withdrawn @ ₹
2,500 p.m. for meeting the family expenses. Prepare Statement of Affairs as on 31 March,
2023 and 31 March, 2024. Find the profit or loss earned by Mr. Sarthak for the year ended
31st March, 2024. [Jan. 2025, 5 Marks]
Subjective5158
What is Piecemeal payments method under Partnership Dissolution? Briefly explain the two
methods followed for determining the order in which the payments are made?
[CA Inter May 2010, 2 Marks]
Subjective5159
Explain Garner v. Murray rule applicable in the case of partnership firms. State, when is this
rule not applicable? [CA Inter May 2013, 4 Marks]
Subjective5160
Explain the Limitations of Liability of Limited Liability Partnership is of Liability of Limited
Liability (LLP) and its partners.
Subjective5161
Under what circumstances, an LLP can be wound up by the Tribunal.
[CA Inter May 2015, 4 Marks]
Subjective5162
Rules applicable in absence of partnership deed
OR
Discuss the rules if there is no Partnership Agreement. [Jan. 2021, 5 Marks]
Subjective5163
Meaning of Limited Liability Partnership
Subjective5164
Salient features of LLP?
Subjective5165
Essential elements to incorporate LLP
Subjective5166
Partnership and Joint Venture
Subjective5167
A partner who devotes more time to a business than other partners is entitled to get a salary.
Subjective5168
Partners can share profits or losses in their capital ratio, when there is no agreement.
Subjective5169
The business of partnership firm must be carried on by all the partners.
Subjective5170
Goodwill brought in by an incoming partner in cash for joining a partnership firm is taken
away by the old partners in their new profit sharing ratio.
Subjective5171
Goodwill is fictitious asset.
Subjective5172
Goodwill is in the nature of personal account.
Subjective5173
If a partner retires, then other partners have a gain in their profit sharing ratio.
Subjective5174
Minor can be admitted to the benefits of LLP.
Subjective5175
The objective of taking a joint life policy by the partnership firm is to secure the lives of the
existing partners of the firm.
Subjective5176
LLP has no separate legal entity.
Subjective5177
LLP Partners act as agents of LLP and other partners.
Subjective5178
When there is no partnership deed prevails, the interest on loan of a partner to be paid @ 6%.
[May 2018, 2 Marks]
Subjective5179
Limited Liability Partnership (LLP) is governed by Indian Partnership Act, 1932.
Subjective5180
A Partnership firm cannot own any Assets.
Subjective5181
In case of admission of a new partner in a partnership firm, the profit/ loss on revaluation
account is transferred to all partners in their new profit sharing ratio.
[Nov. 2020, 2 Marks]; [MTP Jan. 2025]
Subjective5182
Business of partnership comes to an end on death of a partner. [July 2021, 2 Marks]
Subjective5183
The court has the option to order dissolution of a firm where a partner has becomes of
unsound mind.
Subjective5184
In case of dissolution of a firm a revaluation account is prepared.
Subjective5185
Maximum loss method is the only method of piecemeal distribution.
Subjective5186
Revaluation Account is also known as Profit and Loss Adjustment account.
Subjective5187
Legal heirs of a deceased partner are entitled to his capital account balance only.
[Sep. 2024, 2 Marks]
Subjective5188
Goodwill is intangible asset therefore it cannot be valued. [RTP Jan. 2025]
Subjective5189
The firm will receive surrender value of the joint life policy on the death of the partner.
[RTP Jan. 2025]
Subjective5190
M/s. TB is a partnership firm with the partners A, B and C sharing profits and losses in the
ratio of 3:2:5. The balance sheet of the firm as on 30th June, 2020 was as under:
Balance Sheet of M/s. TB as on 30-6-2020
Liabilities Amount Assets Amount
A's Capital A/c
B's Capital A/c
C's Capital A/c
Long Term Loan
Bank Overdraft
Trade Payables
1,24,000
96,000
1,60,000
4,20,000
64,000
2,13,000
Land
Building
Plant & Machinery
Investments
Inventories
Trade Receivables
1,20,000
2,20,000
4,00,000
42,000
1,36,000
1,59,000
10,77,000 10,77,000
It was mutually agreed that B will retire from partnership and in his place D will be admitted
as a partner with effect from 1st July, 2020. For this purpose, following adjustments are to be
made :
(a) Goodwill of the firm is to be valued at ₹ 3 lakhs due to the firm's location advantage
but the same will not appear as an asset in the books of the reconstituted firm.
(b) Building and Plant & Machinery are to be valued at 95% and 80% of the respective
balance sheet values. Investments are to be taken over by the retiring partner at ₹
46,000. Trade receivables are considered good only upto 85% of the balance sheet
figure. Balance to be considered bad.
(c) In the reconstituted firm, the total capital will be * 4 lakhs, which will be contributed
by A, C and D in their new profit sharing ratio, which is 3:4:3.
(d) The amount due to retiring partner shall be transferred to his loan ac- count.
You are required to prepare Revaluation Account and Partners' Capital Accounts after
reconstitution, along with working notes.
[Nov. 2020, 10 Marks]; [RTP Jan. 2025; Modified]
Subjective5191
Rama, Krishna and Raghu shared profits and losses in the ratio of 5:3:2. They took out a Joint
Life Policy in 2017 for 50,000, a premium of ₹ 3,000 being paid annually on 10th June. The
surrender value of the policy on 31st December of various years was as follows:
2017 - Nil
2018 - 900
2019 - 2,000
2020 - 3,600
Rama retired on 15th April, 2021 and the policy was surrendered. You are required to prepare
Joint Life Policy Account from 2017 to 2021 (assuming the Policy Account is maintained at
surrendered value basis). [July 2021, 5 Marks]; [MTP Jan. 2025]
Subjective5192
Mr. X gives the following particulars in respect of business carried on by him:
Particulars Amount
Capital Invested in business 9,00,000
Market rate of interest on investment 8%
Rate of risk return on capital invested in business 3%
Remuneration per annum from alternative employment of proprietor
if he was not engaged in business
36,000
The business earned profits of 2,40,000, 2,16,000 and 3,00,000 in the years 2018, 2019 and
2021 respectively but made a loss of 36,000 in the year 2020.
Compute the value of Goodwill on the basis of 6 years' purchase of super profits of the
business, calculated on the basis of average profit of last four years.
[June 2022, 5 Marks]; [MTP Jan. 2025]
Subjective5193
X and Y were partners in a firm, sharing profit and losses in the ratio of 3:2. They admit Z for
1/6th share in profits and guaranteed that his share of profits will not be less than 50,00,000.
Total profits of the firm for the year ended 31st March, 2022 were 1,80,00,000.
Calculate share of profit for each partner when:
(i) Guarantee is given by firm
(ii) Guarantee is given by A and B equally. [June 2023, 5 Marks]
Subjective5194
A, B and C were trading in partnership sharing profits and losses in the proportion of 4:3:3.
The balances in the books of the firm as on 31st December, 2022 subject to final adjustment
were as under:
Debit Credit
Capital Accounts:
A
B
C
Current Accounts:
A
B
C
Land and Building
Furniture and Fixtures
Stock
Debtors
Bank Account
Profit for the year before charging interest
Creditors
36,000
54,000
54,000
1,80,000
33,750
2,81,250
45,000
90,000
2,25,000
1,12,500
1,35,000
2,34,000
67,500
Total 7,74,000 7,74,000
Regarding Goodwill may be made separately, instead of through Revaluation Account C died
on 30th June, 2022. The partnership deed provided that:
(a) Interest was credited on Capital Account of Partners as @ 12% per annum on the balance
at the beginning of the year.
(b) On the death of partner:
(i) Goodwill was to be valued at three years purchase of average annual profits of three
years up to the death, after deducting inter- est on capital employed at 10% p.a. and a fair
remuneration for each of the partners.
(ii) Fixed assets were to be valued by an independent valuer and all other assets and
liabilities to be taken at book value, and
(c) Whenever necessary, profit or loss should be apportioned on a time basis. You ascertain
that:
(i) Profit for three years, before charging partners' interest were:
2019 2,52,000
2020 2,83,500
2021 2,70,000
(ii) The independent valuation on the date of death revealed:
Land and Building 2,25,000
Furniture and Fixtures 22,500
(iii) For valuation of goodwill a fair remuneration for each of the partners would be ₹ 56,250
per annum and that the capital employed in the business to be taken as 5,85,000
throughout.
It was agreed between the partners that:
(1) Goodwill was not be shown as an asset of the firm as on 31st December, 2022.
Therefore, adjustment for goodwill was to be made in Capital Accounts.
(2) The amount due to C's Estate was to remain as loan with the firm carrying interest at
12% p.a.
(3) A and B would share profits equally from the date of death of C.
(4) Depreciation on revised value of assets would be ignored.
You are required to prepare:
(A) Partners' Capital Account and Current Account; and
(B) Balance Sheet of the firm as on 31st December, 2022.
Working should be done correct to the nearest rupee [June 2023, 20 Marks]
Subjective5195
P, Q, R and S had been carrying on business in partnership sharing profits & losses in the ratio
of 4:3:2:1. They decided to dissolve the partnership on the basis of following Balance Sheet as
on 30th April, 2011:
Liabilities Amount Assets Amount
Capital Accounts
P
Q
General reserve
Capital reserve
Sundry creditors
Mortgage loan
1,68,000
1,08,000
95,00
25,000
36,000
1,10,000
'Land & building
Furniture & fixtures
Stock
Debtors
Cash in hand
Capital overdrawn:
R
S
2,46,000
65,000
1,00,000
72,500
15,500
25,000
18,000
5,42,000 5,42,000
(i) The assets were realized as under:
Land & building 2,30,000
Furniture & fixtures 42,000
Stock 72,000
Debtors 65,000
(ii) Expenses of dissolution amounted to 7,800.
(iii) Further creditors of 18,000 had to be met.
(iv) R became insolvent and nothing was realized from his private estate.
Applying the principles laid down in Garner Vs. Murray, prepare the Realisation Account,
Partners' Capital Accounts and Cash Account. [MTP Jan. 2025; Modified]
Subjective5196
P, Q and R are the 3 partners in partnership firm. Partnership deed includes the following:
(i) R is entitled to get salary of 10,000 p.a.
(ii) P, Q and R are to get interest @ 6% on their respective capital of 2,50,000; 1,50,000
and 1,00,000.
(iii) R is to get extra benefit of 10% of profit in excess of 50,000 after providing for (i) and
(ii) mentioned above.
(iv) Q is entitled to 10% of profits after providing all the amounts in paras (i), (ii) and (iii)
mentioned above.
(v) The balance of profits will be shared by P, Q and R is ratio of 5:3: 2.
The profits for the year before providing above items are 3,50,000.
You are required to prepare Profit and Loss Appropriation Account. [Dec. 2023, 5 Marks]
Subjective5197
X, Y and Z were partners sharing profit and losses in the ratio of 5: 3 2. Their Balance Sheet as
on 31st March 2023 is as follows:
Balance Sheet as on 31st March 2023
Liabilities Amount Assets Amount
Capital Accounts
X
Y
Z
General Reserve
Trade Creditors
4,25,000
2,55,000
1,40,000
25,000
30,000
Building
Machinery
Debtors
Stock
Bank
2,00,000
3,50,000
1,95,000
1,05,000
25,000
8,75,000 8,75,000
Y retired from the business on 1st April 2023 on the following terms;
(i) To appreciate building by 20% and to depreciate machinery by 5%.
(ii) Provision for doubtful debts is to create at 10%.
(iii) Goodwill of the firm is valued at 1,60,000 and Goodwill is not to be raised in the
books of account. New profit sharing ratio will be 5 : 3.
(iv) Entire sum payable to Y should be brought by X and Z in such a way to make their
capital ratios according to new profit ratio. Balance of Y to be paid immediately.
You are required to prepare Revaluation Account, Partners Capital Accounts and Balance
Sheet after retirement. [Dec. 2023, 10 Marks]
Subjective5198
P, Q and R were partners sharing profit & losses in the ratio of 3:2:1. They decided to dissolve
the business as on 31st March, 2024 when their Balance Sheet was as follows:
Liabilities Amount Assets Amount
Capital Accounts
P
Q
R
General Reserve
Employee Provident Fund
Trade Creditors
3,55,000
2,20,000
1,25,000
1,50,000
60,000
1,24,000
Land & Building
Machinery
Furniture
Stock
Trade Debtors
Cash & Bank
4,85,000
1,88,000
1,05,000
55,800
1,56,000
44,200
10,34,000 10,34,000
The following information is given to you:
(i) There was an unrecorded investment which was sold for ₹ 30,000.
(ii) One of the creditors agreed to take over some items of furniture of Books value
25,000 at 24,000. The rest of the creditors were paid at a discount of 5%.
(iii) Out of the Debtors ₹ 9,000 proved bad, remaining were fully realized.
(iv) The other assets were realised as under:
Land & Building 5,25,000
Machinery 1,70,000
Furniture Remaining taken over by P at 75,000
Stock 60,000
(v) Expenses of dissolution amounted to 18,700.
(vi) There was an outstanding bill for repairs which had to be paid for ₹ 3,500
You are required to prepare
(1) Realisation A/c
(2) Cash & Bank A/c
(3) Partner's Capital A/c in the books of partnership firm. [June 2024, 8 Marks]
Subjective5199
Anu and Manu are carrying on business in partnership and sharing profits & losses in the ratio
of 5:3. The firm's Balance Sheet as on 31st March, 2024 was as follows:
Balance Sheet as on 31st March, 2024
Liabilities Amount Assets Amount
Capital Accounts
Anu
Manu
Long Term Loan
Capital Accounts
Trade Payables
Outstanding Liabilities
2,80,000
2,50,000
2,00,000
1,19,500
16,200
Building
machinery
furniture
trade Receivables
inventories
investments
Cash at Bank
3,80,000
1,43,000
85,000
1,64,000
48,400
15,000
30,100
8,65,700 8,65,700
They decided to admit Ranu as a partner with effect from 1st April, 2024 on the following
terms:
(i) Ranu will be paid 1/5 share in the future profits and new profit sharing ratio would
be 5: 3: 2.
(ii) Ranu will bring 1,00,000 as his capital.
(iii) Goodwill of firm is to be valued at 2 years' purchase of average profit of past 3 years
and Ranu will bring his share of goodwill in cash. The profits of past 3 years ending
on 31st March were as under:
31st March, 2022 87,000
31st March, 2023 1,06,000
31st March, 2024 1,22,000
(iv) It was also agreed that the partners will not withdraw their share of goodwill nor
will the goodwill appear in the books of account.
(v) It was also decided to value the assets:
Building is to be appreciated by 2 50,000 and Machinery is to be depreciated by
10%. Furniture is revalued at 80,000, Investments at Inventories at 47,500.
16,000 and Provision for doubtful debts is to be created on debtors @ 5%.
You are required to prepare Revaluation Account, Partners' Capital Accounts and Balance
Sheet of the reconstituted firm as on 1st April, 2024. [June 2024, 12 Marks]
Subjective5200
The following is the Balance Sheet of Krish and Bala, sharing profit and loss in the ratio 3: 2
Liabilities Amount Assets Amount
Capital Accounts
krish
Bala
General Reserve
Workmen compensation reserve
Creditors
Employees provident fund
25,000
15,000
30,000
10,000
10,000
8,000
Land & Building
Plant & machinery
Stock
Debtors
Less : Provision
Bank
Advertisement Expenditure
28,000
15,000
10,000
25,000
(4,000)
20,000
4,000
8,65,700 8,65,700
On admission of Sobha for 1/6th share in the profits, it was decided that:
(1) Value of land and buildings to be increased by ₹ 5,000.
(2) Value of stock to be increased by ₹ 3,500.
(3) Provision of doubtful debts to be increased by ₹ 1,500.
(4) Liabilities of workmen's compensation reserve was determined to be 8,000.
(5) Sobha was to bring in further cash of 25,000 as her capital.
(6) Sobha brought in her share of goodwill 12,000 in cash.
Prepare the Revaluation Account, the Capital Account and the Balance Sheet of the new firm.
[Sept. 2024, 10 Marks]
Subjective5201
X, Y and Z were in a firm sharing profit and loss as 3:2:1. Their Bal- ance Sheet on 31st March,
2024 was as follows:
Liabilities Amount Assets Amount
X's Capital
Y's Capital
Z's Capital
Investment Fluctuation Fund
Workmen's Compensation
Trade Creditors
Employee's Provident Fund
78,000
42,000
31,000
6,000
12,000
31,000
12,000
Goodwill
Patents
Machinery
Investment
(Market value 27,600)
Stock
Debtors 50,000
Less: Provision for
doubtful debts (4,000)
Cash at Bank
12,000
30,000
60,000
25,000
46,000
8,350
2,12,000 2,12,000
Z retired on the above date on the following terms:
(1) Goodwill of the firm was valued at 60,000.
(2) Value of patents was to be reduced by 20% and that of machinery to 90%.
(3) Provision for doubtful debts was to be raised to 10%.
(4) Liability on account of Provident fund was only 6,000.
(5) Liability for workmen compensation to the extent of 6,000 is to be created.
(6) Z took over the investment at market value.
(7) Amount due to Z is to be settled on the following basis-
50% on retirement, 50% of the balance within one year and the balance by a bill of
exchange (without interest) at 3 months.
You are required the following:
(i) Show entries for the treatment of goodwill,
(ii) Prepare Revaluation Account,
(iii) Partner Capital Account, &
(iv) Balance Sheet. [Sept. 2024, 10 Marks]
Subjective5202
Akbar and Bali are partners in a firm sharing profits and losses equally. On 1st April, 2023 the
balance of their Capital Accounts were: Akbar 50,000 and Bali 40,000. On that date the
balances of their Current Accounts were: Akbar 10,000 (credit) and Bali 3,000 (debit). Interest
@ 5% p.a. is to be allowed on the balance of Capital Accounts as on 1.4.2023. Ball is to get
annual salary of 3,000 which had not been withdrawn. Drawings of Akbar and Ball during the
year were 1,000 and 2,000 respectively. The profit for the year ended 31st March, 2024 before
charging interest on capital but after charging Bali salary was ₹ 70,000. It is decided to
transfer 10% of divisible profit to a Reserve Account. Prepare Profit & Loss Appropriation
Account for the year ended 31st March, 2024 and show Capital and Current Accounts of the
Partners for the year. [RTP Jan. 2025]
Subjective5203
Neptune, Jupiter, Venus and Pluto had been carrying on business in partnership sharing
profits and losses in the ratio of 3:2:1: 1. They decide to dissolve the partnership on the basis
of the following Balance Sheet as on 30th April, 2024:
Liabilities Amount Assets Amount
Capital Account:
Neptune
Jupiter
General Reserve
Capital Reserve
Sundry Creditors
Mortgage Loan
1,00,000
60,000
56,000
14,000
20,000
80,000
Premises
Furniture
Stock
Debtors
Bank
Capital Over drawn:
Venus
Pluto
1,20,000
40,000
1,00,000
40,000
8,000
10,000
12,000
3,30,000 3,30,000
(i) The assets were realised as under:
Debtors 24,000
Stock 16,000
Furniture 60,000
Premises 90,000
(ii) Expenses of dissolution amounted to 34,000.
(iii) Further creditors of 12,000 had to be met.
(iv) General Reserve unlike Capital Reserve was built up by appropriation of profits.
You are required to draw up the Realisation Account; Partners' Capital Accounts and the Bank
Account assuming that Venus became insolvent and nothing was realised from his private
estate. Apply the principles laid down in Garner vs Murray. [RTP Jan. 2025]
Subjective5204
The following information given below:
(i) Total Assets 10,00,000
(ii) External Liabilities 1,80,000
(iii) Normal Rate of Return 10%
(iv) Average Net Profit of last five years 1,00,000
You are required to calculate goodwill by applying:
(i) Capitalization Method and
(ii) 3 year's purchase of super profits. [RTP Jan. 2025]
Subjective5205
The following is the Balance Sheet of M/s. Krishna Bros as at 31st March, 2024, they share
profit and losses equally:
Balance Sheet as at 31st March, 2024
Liabilities Amount Assets Amount
Capital
Amit
Lalit
Sumit
General Reserve
Trade payables
24,000
24,000
27,000
9,000
14,100
Machinery
Furniture
Fixture
Cash
Inventories
Trade receivables
Less: Provision for
Doubtful debts
30,000
16,800
12,600
9,000
5,700
27,000
(1,800)
99,300 99,300
Sumit died on 1st April, 2024 and the following agreement was to be put into effect.
(a) Assets were to be revalued:
Machinery to 35,100; Furniture to 13,800; Inventory to 4,500.
(b) Goodwill was valued at 18,000 and was to be credited with his share, without using a
Goodwill Account.
(c) 6,000 is to be paid to the executors of the dead partner on 5th April, 2024.
(d) After death of Sumit, Amit and Lalit shares the profit equally.
You are required to prepare:
(i) Journal Entry for Goodwill adjustment.
(ii) Revaluation Account, Capital Accounts of the partners and Balance Sheet after the death
of Sumit. [MTP Jan. 2025]
Subjective5206
The Balance Sheet of a Partnership Firm M/s Dutch and Associates consisted of two partners
P and Q who were sharing Profits and Losses in the ratio of 5:3 respectively. The position as
on 31st March, 2024 was as follows:
Liabilities Amount Assets Amount
P's Capital
Q's Capital
Profit & Loss A/c
Trade Creditors
4,10,000
3,30,000
1,12,000
54,800
Land & Building
Plant & Machinery
Furniture
Stock
Sundry debtors
Cash at Bank
3,80,000
1,70,000
1,09,480
1,45,260
60,000
42,060
9,06,800 9,06,800
On the above date, R was admitted as a partner on the following terms:
(a) R should get 1/5th of share of profits.
(b) R brought 2,40,000 as his capital and 32,000 for his share of Good- will.
(c) Plant and Machinery would be depreciated by 15% and Land & Buildings would be
appreciated by 40%.
(d) A provision for doubtful debts to be created at 5% on sundry debtors.
(e) An unrecorded liability of ₹ 6,000 for repairs to Buildings would be recorded in the
books of account.
(f) Immediately after R's admission, Goodwill brought by him would be adjusted among
old partners. Thereafter, the capital accounts of old partners would be adjusted
through the current accounts of partners in such a manner that the capital accounts of
all the partners would be in their profit sharing ratio.
Prepare revaluation A/c, capital Accounts of the partners, new profit sharing ratio and
Balance Sheet of the firm after the admission of R. [MTP Jan. 2025]
Subjective5207
X and Y are partners sharing profits and losses in the ratio of their effective capital. As on 1st
April, 2023, they had ₹ 2,80,000 and ₹ 1,60,000 respectively in their Capital Accounts.
X introduced a further capital of 20,000 on 1 June, 2023 and another 15,000 on 1st October,
2023. On 31 January, 2024, X withdrew 25,000. On 1 August, 2023 Y Introduced further capital
of ₹ 30,000.
During the Financial year 2023-24, the partners drew the following amounts in anticipation
of profit:
X drew 5,000 at the beginning of each quarter and Y drew 1,500 per month at the end of each
month beginning from April, 2023
As per partnership agreement, the profits were to be shared in capital ratio. The interest on
Capital @ 12% p.a. is allowable and interest on drawings @ 10% p.a. is chargeable.
You are required to calculate (i) Profit-sharing ratio; (ii) Interest on capital; and (iii) interest
on drawings. [Jan. 2025, 5 Marks]
Subjective5208
A, B and C are partners sharing profits & losses in the ratio of 3:2:1. The following is the
Balance Sheet of their firm M/s. ABC Trading Corpo- ration as on 31 March, 2024:
Balance Sheet as on 31st March 2024
Liabilities Amount Assets Amount
Capital Accounts:
A
B
C
General Reserve
Trade Payables
2,80,000
1,90,000
1,50,000
1,35,000
97,400
Land & Building
Machinery
Furniture & Fixtures
Trade Receivables 1,55,200
Less: Provision for
Doubtful debts 5,700
Stock
Joint Life Policy
Cash & Bank
2,40,000
1,50,000
1,05,000
1,49,500
85,600
90,000
32,300
8,52,400 8,52,400
C died on 30th June, 2024. As per Partnership deed the following arrangement was to be put
into effect:
i. Goodwill of firm was to be valued at 2 years' purchase of average profit of four years
to 31st March preceding the death of partner. The profits were as under:
31st March, 2021 1,14,000
31st March, 2022 1,22,000
31st March. 2023 1,19,000
31st March, 2024 1,25,000
Goodwill Account will not be opened in the books of account and C was to be credited
with his share. The new profit-sharing ratio of A and B will be 5:3.
ii. Profit till the date of death to be ascertained on the basis of average profit of
previous four years and share of C was to be credited to his capital account.
iii. Assets were to be revalued: Land & Building was appreciated by 15%, Machinery to
be depreciated by 5%, Furniture & Fixtures to be revalued at ₹ 1,00,000 and the
value of Stock to be taken at ₹ 90,000.
iv. Provision for doubtful debts to be increased by ₹ 1,800.
v. A sum of 2,40,000 was received from insurance company against Joint Life Policy.
vi. Amount due to C was paid to the executors.
You are required to prepare Revaluation Account, Partners Capital Accounts and Balance
Sheet as on 30th June, 2024, along with necessary workings. [Jan. 2025, 15 Marks]
Subjective5209
How may a Company utilize its Securities Premium Reserve as per Companies Act, 2013?
Subjective5210
Nominal and Registered Capital
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