Change in Profit Sharing Ratio Test269
Change in Profit Sharing Ratio Test269
Change in Profit Sharing Ratio Test269
General Instruction:
Q.1) Any Changes in the relationship of existing partners which result in an end of the existing agreement
and enforces making of a new agreement is called.
Q.2) If the existing profit-sharing ratio among A, B and C of 3:2:1 is changed to 1:2:3, then the partner(s)
whose share will be unaffected is/are
a) A b) B
c) C d) A and C
Q.3) X and Y shared profits and losses in the ratio of 3:2. With effect from 1st April, 2023 they decided
to share profits equally. Goodwill of the firm was valued at 60,000. The adjustment entry will be:
a) Dr. Y’s capital a/c and Cr. X’s capital a/c by 6,000
b) Dr. X’s capital a/c and Cr. Y’s capital a/c by 6,000
c) Dr. X’s capital a/c and Cr. Y’s capital a/c by 600
d) Dr. Y’s capital a/c and Cr. X’s capital a/c by 600
Q.4) A, B and C are partners sharing profits in the ratio of 5:3:2. They decided to share future profits in
the ratio of 2:3:5. What will be the accounting treatment of workmen compensation reserve appearing in
the balance sheet on that date when no other information is available for the same?
Q.5) Avya, Divya and Kavya were equal partners. They decided to change the profit sharing ratio to 4:3:2.
For this purpose the goodwill of the firm was valued at 90,000.
The journal entry for the treatment of goodwill on change in profit sharing ratio will be:
a) Kavya’s capital a/c dr. 10,000
Q.6) Increase and decrease in the value of assets and liabilities are recorded through
Q.7) Raju and Gaurav were partners in a firm sharing profits and losses in the ratio of 2:1. With effect
from 1st January, 2023 they decided to share profits and losses equally. Individual partner’s gain or
sacrifice due to change in the ratio will be
a) Gain by Raju 1/6 and Sacrifice by Gaurav 1/6 b) Sacrifice by Raju 1/6 and Gain by Gaurav 1/6
c) Gain by Raju 1/2 and Sacrifice by Gaurav ½ d) Sacrifice by Raju 1/2 and Gain by Gaurav ½
Q.8) Meera, Myra and Neera were partners sharing profits in the ratio of 2:2:1. They decided to share
future profits in the ratio of 7:5:3 with effect from 1st April,2019. Their balance sheet as on that date
showed a balance of 45,000 in advertisement suspense account. The amount to be debited respectively to
the capital account of Meera, Myra and Neera for writing off the amount in advertisement suspense
account will be
Q.9) Pawan, Raman and Sharvan are partners before changing their profit-sharing ratio to 5:3:2, They were
sharing profits equally. Workmen compensation reserve existed at 1,00,000 against which a claim existed at
20,000. Amount that will be credited to their capital accounts in their old profit-sharing ratio will be
a) 1,00,000 b) 80,000
c) 1,00,000 credited and 20,000 debited d) 20,000 credited and 1,00,000 debited
Q.10) Om and Shyam are sharing profit and losses equally. With effect from 1st April,2023 they agree
to share profits in the ratio of 4:3. Calculate individual partner’s gain or sacrifice due to the change in
ratio.
Q.11) Pranav, Karan and Rahim are partners sharing profit and losses in agreed ratio. With effect from 1st
April,2023 they agreed to share profit in the ratio of 3:3:4. To arrive at the new ratio, Rahim takes 1/5th
share equally from Pranav and Karan. Calculate the old profit-sharing ratio.
Q.12) Asha, Nisha and Disha shared profits and losses in the ratio of 3:2:1 respectively with effect from 1st
April,2023 they agreed to share profits equally. The goodwill of the firm was valued at 18,000. Pass
necessary journal entries to record the above change.
Q.13) A and B are partners in a firm sharing profits in the ratio of 2:1. They decided that with effect from
1st
April,2022 they would share profits in the ratio of 3:2 but this decision was taken after the profit for the
year ended 31st March, 2023 of 90,000 was distributed in the old profit-sharing ratio.
Firm goodwill was valued on the basis of aggregate of two year’s profit preceding the date decision became
effective.
Profit for the years ended 31st March, 2021 and 2022 were 60,000 and 75,000 respectively. Capital accounts
of the partners as at 31st March, 2023 stood at 1,50,000 for A and 90,000 for B.
Q.14) Naman, Aman and Raman are partners sharing profits and losses in the ratio f 2:2:1. From 1st
April,2023 they decide to change the profits-sharing ratio. They pass the following adjustment entry for
goodwill in the books:
Q.15) A, B and C who are presently sharing profits and losses in the ratio of 5:3:2 decided to share
future profits and losses in the ratio of 2:3:5. Give the journal entry to distribute workmen compensation
reserve of 1,20,000 at the time of change in profit-sharing ratio, when:
Q.16) A, B and C are sharing profits and losses in the ratio of 2:2:1. They decided to share profit. 1st
April,2023 in the ratio of 5:3:2. They also decided not to change the values of assets and liabilities in the
books of account. The book values and revised values of asset and liabilities as on the date of change
were as follows:
Q.17) Balance sheet of X and Y who share profit and losses as 5:3 as at 1st April,2022 is:
a) Goodwill be valued on the basis of two year’s purchase of the average profit of the last three years.
Profits for the year ended 31st March, are: 2020 – 7,500; 2021 – 4,000; 2022 – 6,500
Prepare Revaluation account; Partner’s capital account and the Balance sheet of the new firm.