Tag: book keeping and accountancy

Questions Related to book keeping and accountancy

On the death of a partner, the amount of Join Life Policy is credited to the Capital Account of _____________.

book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

  1. Only the deceased partner

  2. All partners including the deceased partner

  3. Remaining partners, in the new profit sharing ratio

  4. Remaining partners, in the old profit sharing ratio

Show answer
Correct Option: B

R, J & D are the partners sharing profits in the ratio $7 : 5 : 5$. D died on $30$th June $2015$. Profit for the accounting year $2014-2015$ was $Rs.24,000$. How much share in profits for the period $1st$ April, $2015$ to $30$th June, $2015$ will be credited to D's A/c?

book keeping and accountancy accounting for retirement and death of partner reconstitution of partnership (retirement of partner) accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

  1. $Rs.6,000$

  2. $Rs.1,500$

  3. $Rs.4,500$

  4. $Rs.2,000$

Show answer
Correct Option: B
Explanation:

Profit of the accounting year 2014 - 2015 = Rs. 24000

Profit till 30th june = Rs.24000 * (3/12) = 6000
Distribution of profit among partners on the date of the death of D
R = 6000 * (7/16) = 2625
J = 6000 * (5/16) = 1875
D = 6000 * (4/16) = 1500

In the absence of proper agreement, representative of the deceased partner is entitled to the dead partner's share in ____________.

book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

  1. Profits till date, good will, joint life policy, share in revalued assets and liabilities.

  2. Capital, good will, joint life policy, interest on capital, share in revalued assets and liabilities.

  3. Capital, profits till date, good will, interest on capital, share in revalued assets and liabilities.

  4. Capital, profits till date, good will, joint life policy, share in revalued assets and liabilities.

Show answer
Correct Option: B

A partner retires but the business is still being carried on 

book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

  1. Profit sharing between the remaining partners will remain same

  2. Share proportion remains same

  3. Share proportion changes

  4. Both a & c

Show answer
Correct Option: D

Choose the correct answers from the alternatives given.
Public notice of retirement must be given ________. 

book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

  1. only by the retiring partner only

  2. only by any partner other than retiring partner

  3. by retiring partner or any of the other partners

  4. none of these

Show answer
Correct Option: C
Explanation:

If a partner retires, without giving public notice, he  continues to be liable as a partner by holding out. If a Dormant partner retires without giving any public notice, he cannot be held liable as a partner by holding out. If no notice of retirement of a partner is given to the third parties and, if they continue to supply goods or funds to the reconstituted firm, they can either hold th old firm or the new firm liable.

Public notice regarding the retirement of the partner may be given by the retired partner or by other partner of the reconstituted firm as per section 32 (4)  of the Indian Partnership Act, 1932.

Choose the correct answers from the alternatives given.
A partner may retire from an existing firm ________. 

book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

  1. with consent of all partners

  2. as per express agreement

  3. by written notice in partnership at will

  4. all of the above

Show answer
Correct Option: D

Choose the correct answers from the alternatives given.
In case of death of a partner ________. 

book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

  1. the firm is dissolved unless otherwise agreed

  2. the estate of deceased partner is liable for any act of the firm after the date of his death if no public notice is given

  3. both (A) & (B)

  4. none of these

Show answer
Correct Option: A
Explanation:
A partnership firm can be dissolved on happening of certain contingencies. Such contingencies are made clear in section 42, which laid down that subject to contract between the partners, a firm is dissolved
1. if constituted for a fixed term, by the expiry of that term;
2. if constituted to carry out one or more adventures or undertakings, by the completion thereof;
3. by the death of a partner; and
4. by the adjudication of a partner as an insolvent.
However, it can be provided in the partnership agreement that the firm will not be dissolved in any of the circumstances mentioned above and if such provision is made in the agreement that is considered valid.

Choose the correct answers from the alternatives given.
A partner can retire on __________. 

book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

  1. reaching the age of superannuation

  2. on the balance in the capital account reaching a certain amount

  3. in accordance with the Partnership Deed

  4. on the condition of his nominee becoming a partner

Show answer
Correct Option: C
Explanation:

In accordance with the Partnership Deed, a partner is said to retire when other partners continue to carry on the partnership business and that partner who retires ceases to be a partner. There are three modes of retirement of a partner, which are as follows:

1. Any partner may retire at any time with the consent of all partners.
2. When the partnership deed expressly provides for the retirement of a partner; a partner may retire according to the terms of agreement between the partners.
3. When the partnership is at will, by giving notice in writing to all the other partners of his intention to retire.

Choose the correct answers from the alternatives given.
In case of a partnership at will, a partner may retire by giving ________. 

book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

  1. an oral notice to that effect to any of the working partners

  2. an oral notice to that effect to all other partners

  3. a written notice to that effect to all other partners

  4. a written notice to that effect to any of the working partners

  5. a written notice to that effect to the registrar of firms

Show answer
Correct Option: C
Explanation:

In a partnership, a partner may retire: With the consent of all the partners, In accordance with an express agreement by the partners, or. The partnership is at will, by giving notice in writing to all the other partners of his intention to retire.

Choose the correct answers from the alternatives given.
The heir of the deceased partner _______. 

book keeping and accountancy reconstitution of partnership (retirement of partner) accounting for retirement and death of partner accounting of sum payable to a partner on retirement or death accounting treatment in case of retirement of a partner

  1. has a right to become a partner in the firm of the deceased partner

  2. does not have a right to become a partner in the firm of the deceased partner

  3. can become a partner in the firm of the deceased partner only if the surviving partners give their consent in this regard

  4. both (b) & (C)

Show answer
Correct Option: D