Section A : Very Short Answer Questions (1 Marks × 20 = 20 Marks)

1. Which one is not the feature of partnership?

(a) Sharing of profit (b) Limited liability​ (c) Two or more than two persons​ (d) Agreement

2. The current account of the partners will always have _______.

(a) Credit balance (b) Either of the two​ (c) Debit balance​​ ​ (d) None of the above

3.In the absence of any agreement, the profits or losses of the firm are shared _______.

(a) In capital ratio (b) Equally ​ (c) In different proportions​ (d) None of the above

4.In the absence of a partnership deed, partners are not entitled to receive ______.

(a) Commission (b) Interest on Capital​ (c) Salaries​ ​ ​ (d) All of the above

5. Goodwill is defined as

(a) Intangible asset (b) Fictitious asset​ (c) Current asset​​ ​ (d) Liquid asset

6. Break-even indicates

(a) Revenues are more than cost​ (b) Revenues and cost are equal

(c) Costs are more than revenue​ (d) None of the Above

7. The excess amount which the firm can get on selling its assets over and above the saleable value
of its assets is called

(a) Surplus (b) Super Profit​ (c) Reserve​ ​ ​ (d) Goodwill

8. A firm’s goodwill is not affected by

(a) Location of the firm (b) The reputation of the Firm(c) Better Customer Service (d) None of the
Above

9. The excess amount which the firm can get on selling its assets, over and above the saleable value
of its assets, is called _____.

(a) Super profits (b) Reserves​ (c) Goodwill​ ​ ​ (d) Surplus

10. Under the capitalisation method, the formula for calculating the goodwill is _____.
(a) Average profits multiplied by the rate of return ​ (b) Super profits divided by the rate of return
(c) Average profits divided by the rate of return​ ​ (d) Super profits multiplied by the rate of return
11. Weighted average method of calculating goodwill is used when ________?

(a) Profits show a trend (b) Profits are fluctuating (c) None of them are correct(d) Profits are equal

12. The ratio of surrendering of profit sharing ratio is called _____.

(a) Gaining ratio (b)Sacrificing ratio​ (c)Old ratio ​ ​ ​ (d)New ratio

13. Increase in value of assets at the time of admission of a partner is

(a)Credited to revaluation A/c. (b)Debited to revaluation A/c.

(c)Credited to partners cap A/c.(d)Debited to P&L A/c.
14. Decrease in value of liability at the time of admission of a partner is

(a)Credited to partners capital A/c.​ (b)Debited to profit and loss A/c.

(c)Credited to revaluation A/c.​ (d)Debited to revaluation A/c.
15. A and B are sharing profits and losses in the ratio of 3:2. C is admitted with 1/5th share in profits
of the firm which he gets from A. Find out the New profits sharing ratio.

(a)12:8:5 (b)8:12:5​ (c)2:2:1​ ​ ​ ​ (d)2:2:2.

16. X and Y are partners sharing profits and losses in the ratio 3:2. X’s Capital is Rs.60, 000 and Y’s
Capital is Rs.30, 000. They admit Z for 1/5th share of profits. How much Z should bring

(a)Rs.18,000 (b)Rs.24,000​ (c)Rs.29,000​ ​ ​ (d)Rs.22,500

17. At the time of _______ revaluation, an account is prepared.

(a) Retirement of an existing partner​ (b) Death of an existing partner
(c) Admission of a new partner​ (d) All of the above
18. The deceased partner’s due amount is to be paid to the ________.

(a) Friends (b) The Mother​ (c) The executors​ ​ (d) The wife

19. The old profit-sharing ratio among three partners, Ramesh, Sanjana, and Tilak, was 2:2:1. The
new profit-sharing ratio after Sanjana’s retirement is 3:2. What is the gain ratio?

(a) 1:2 (b) 1:1​ (c) 2:3​ ​ ​ ​ (d) 3:2

20. Esha, Yash, and Zack are partners sharing profits in the ratio of 7:5:4. On 30th June 2019, Zack
died, and profits for the year ending 31st March 2020 were Rs. 24,00,000. How many shares in
profits for the period 1st April to 30th June 2019 will be credited to Zack’s account, Determine profit

(a) Rs. 6,00,000 (b) Rs. 1,50,000​ (c) Rs. 2,00,000​ ​ ​ (d) Nill
Section B: Short Answer Questions (3 Marks × 6 = 18 Marks)

21. Define Partnership. Mention any two essential features of a partnership firm.

22. X and Y share profits in the ratio of 3:2. They admit Z for 1/5th share. Calculate the new
profit-sharing ratio.

23. A, B and C are partners sharing profits in the ratio of 5:3:2. B retires. A and C decide to share
equally. Calculate gaining ratio.

24. Distinguish between Sacrificing Ratio and Gaining Ratio (Any three points).

25. R and S are partners sharing profits in the ratio 4:1. T is admitted for 1/5th share. He brings
₹50,000 as capital and ₹10,000 as goodwill. Pass journal entry.

26. A and B are partners sharing profits in the ratio 3:2. They admit C for 1/4th share. C brings
₹80,000 as capital and does not bring goodwill. Goodwill is valued at ₹40,000. Pass journal entries if
the premium is not brought by C.

Section C: Short Answer Questions (4 Marks × 3 = 12 Marks)

27. A, B, and C are partners sharing profits in the ratio of 4:3:2. Their capitals on 1st April 2024 were
₹50,000, ₹40,000, and ₹30,000 respectively. Profits for the year ended 31st March 2025 were
₹36,000. Interest on capital is to be provided at 10% p.a. Show Profit and Loss Appropriation
Account.

28. Explain the factors affecting the value of goodwill of a firm (any four).

29. P, Q and R are partners. R retires and goodwill is valued at ₹36,000. P and Q decide to share
future profits equally. Pass journal entry when goodwill is not shown in books.

Section D: Long Answer Questions (6 Marks × 5 = 30 Marks)

30. M and N are partners sharing profits equally. They admit O for 1/5th share. O brings ₹1,00,000 as
capital and ₹40,000 as goodwill. Pass journal entries assuming:​
a) Goodwill is retained in books.​
b) Goodwill is withdrawn by old partners.

31. Calculate goodwill using average profit method:​

Profits of the firm for 4 years: ₹40,000, ₹45,000, ₹50,000, and ₹55,000.​
Non-recurring income of ₹5,000 was included in the third year. Normal profit expected is ₹50,000.
Calculate goodwill at 3 years’ purchase.

32. A and B are partners sharing profits in the ratio 3:2. They admit C for 1/5th share. The new ratio
is agreed to be 5:3:2. Goodwill is valued at ₹30,000. Pass journal entry for sacrificing ratio and
goodwill adjustment.
33. X, Y, and Z are partners sharing profits in the ratio 4:3:2. Z retires and goodwill is valued at
₹27,000. New ratio of X and Y is 5:3. Pass journal entries for goodwill treatment assuming it is not
shown in books.

34. Following is the Balance Sheet of A and B as on 31st March 2025:

Liabilities Amount Assets Amount

Creditors 20,000 Cash 5,000

General Reserve 10,000 Debtors 15,000

Capital A 40,000 Stock 25,000

Capital B 30,000 Furniture 20,000

Building 35,000

Total 1,00,000 Total 1,00,000

C is admitted for 1/4th share on the following terms:​

a) He brings ₹25,000 as capital.​
b) Goodwill of the firm is valued at ₹20,000.​
c) Furniture is undervalued by ₹5,000 and stock overvalued by ₹3,000.​
d) General reserve is to be transferred to old partners’ capital.

Pass journal entries for revaluation, goodwill, and capital brought in.