Activity Sheet 2 - Admission of Partner PDF

Activity Sheet – 2 ( Admission of partner) A. Fill in the Blanks (Choose the correct option) 1. When a new partner is admitted, the old partners’ share of profit and loss is ______________ (a) Increased (b) Reduced (c) Remains the same (d) Doubled 2. The goodwill brought by a new partner...

Activity Sheet – 2 ( Admission of partner) A. Fill in the Blanks (Choose the correct option) 1. When a new partner is admitted, the old partners’ share of profit and loss is ______________ (a) Increased (b) Reduced (c) Remains the same (d) Doubled 2. The goodwill brought by a new partner is credited to the ________ account. (a) Goodwill (b) Partner’s Capital (c) Cash (d) Profit and Loss Adjustment 3. The ratio in which the old partners sacrifice their share in favour of the new partner is called ________ (a) Capital ratio (b) Profit-sharing ratio (c) Sacrificing ratio (d) Gaining ratio 4. When a partner is admitted, the ________ account is prepared to adjust the assets and liabilities. (a) Realization (b) Revaluation (c) Capital (d) Goodwill 5. A new partner must contribute ________ to gain rights in the partnership firm. (a) Only capital (b) Capital and goodwill (c) Only goodwill (d) Experience B. Give One Word / Term. 1. The amount that the new partner pays to acquire a share in the firm’s profits. Answer: _____________________________ 2. The adjustment made in the value of assets and liabilities on the admission of a partner. Answer: _______________________________ 3. The ratio in which old partners agree to give up their share of profits in favor of the new partner. Answer: _____________________________ 4. A document containing the partnership agreement terms. Answer: _____________________________ 5. The account used for adjustments in the partnership firm’s assets and liabilities upon a new partner’s admission. Answer: ___________________________ C. True or False. 1. Goodwill is always distributed among old partners in their capital ratio. Answer: ___________________________ 2. The new partner’s share in the profits and losses is adjusted based on the gaining ratio. Answer: ___________________________ 3. Revaluation of assets is done only when a partner retires. Answer: ___________________________ 4. A new partner cannot be admitted unless he contributes capital. Answer: ___________________________ 5. The partnership deed needs to be registered with the registrar on the admission of a new partner. Answer: ___________________________ D. Odd One Out. 1. Sacrificing Ratio, Revaluation Account, Goodwill, Gaining Ratio 2. Assets, Liabilities, Capital, Goodwill 3. Profit-sharing Ratio, Sacrificing Ratio, Partnership Deed, Drawings 4. Partner’s Capital, Revaluation Account, Realization Account, Bank Loan 5. Cash Account, Goodwill, Depreciation, Revaluation E. Answer in One Sentence. 1. What is a Sacrificing Ratio? 2. Why is goodwill adjusted when a new partner is admitted? 3. Define a Partnership Deed. 4. What is the purpose of revaluation of assets and liabilities? 5. Explain the term ‘Capital Account’ in the context of partnership firms. F. Calculate the Following 1. X and Y are partners sharing profits in the ratio 3:2. They admit Z for a 1/5 share. Find the new profit-sharing ratio. 2. If the firm’s goodwill is valued at ₹1,00,000 and the new partner’s share is 1/4, how much goodwill should the new partner bring? 3. A, B, and C share profits equally. On admission, the new partner, D, is admitted for a 1/4 share. Calculate the new ratio. 4. A partner’s capital account shows a balance of ₹2,00,000. On admission of a new partner, goodwill is valued at ₹50,000. How should it be adjusted if the goodwill is raised? 5. X, Y, and Z are partners in a firm with capitals of ₹50,000, ₹30,000, and ₹20,000, respectively. A new partner is admitted with a capital of ₹25,000. Calculate the new total capital of the firm.