Q.Nicku, Mala and Ritu were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Nicku died on 30th September, 2023. The deceased partner was entitled to his share of profit up to the date of death which was to be calculated on the basis of previous year's profit. The previous year's profit was ₹80,000. Nicku's share of profit will be : (A) ₹10,000 (B) ₹20,000 (C) ₹30,000 (D) ₹40,000

Showing the 12 most recent of 109 on this concept.

1. CBSE 2026Set 67/4/11 markMCQ
   Q.Ravi, Sunil and Amit were partners in a firm sharing profits and losses in the ratio of 4 : 3 : 5. On 1st April, 2025, Ravi retired. Sunil and Amit decided to share future profits in the ratio of 2 : 3. After all adjustments with respect to general reserve, goodwill and revaluation, etc., the balances in the capital accounts of Ravi, Sunil and Amit stood at ₹ 3,00,000; ₹ 2,40,000 and ₹ 3,60,000 respectively. It was decided that the amount payable to Ravi will be brought by Sunil and Amit in such a way so as to make their capitals proportionate to their new profit sharing ratio. The amount brought in by Sunil and Amit will be : (A) Sunil ₹ 1,00,000, Amit ₹ 2,00,000 (B) Sunil ₹ 1,20,000, Amit ₹ 1,80,000 (C) Sunil ₹ 1,50,000, Amit ₹ 1,50,000 (D) Sunil ₹ 80,000, Amit ₹ 2,20,000

   ›Reveal solutionSolution

   After Ravi’s retirement, Sunil and Amit adjust their capitals to be proportionate to their new profit-sharing ratio (2:3). The required additional contributions are Sunil ₹1,20,000 and Amit ₹1,80,000 — option (B).

   Concept First — Why This Treatment?

   When a partner retires, the continuing partners often decide to adjust their capital accounts so that the capitals are in the new profit-sharing ratio. This ensures that capital contributions align with the risk and reward sharing going forward. The amount payable to the retiring partner is brought in by the continuing partners in the same proportion as their new ratio, unless otherwise agreed.

   The key rule: Total capital of the new firm is determined first (usually based on the retiring partner’s capital or a mutually agreed figure), then each continuing partner’s capital is calculated as their share of that total. The difference between this required capital and their existing balance is the amount they must bring in (or withdraw).

   Watch out

   Common Pitfall

   Students often mistakenly use the old ratio to divide the amount payable to the retiring partner. Remember: after retirement, the continuing partners share future profits in the new ratio, so the capital adjustment must also follow the new ratio.

   Step-by-Step Solution

   Step 1: Determine the Total Capital of the New Firm

   After all adjustments (general reserve, goodwill, revaluation), the balances are:

   • Ravi: ₹3,00,000 (this is the amount payable to him)
   • Sunil: ₹2,40,000
   • Amit: ₹3,60,000

   The continuing partners (Sunil and Amit) decide to bring in cash so that their capitals become proportionate to their new ratio of 2:3.

   The total capital of the new firm is not simply the sum of Sunil and Amit’s existing capitals. Instead, we use the retiring partner’s capital as a base. Since Ravi’s capital is ₹3,00,000 and his old share was 4/12, the total capital of the firm before retirement was:

   Total old capital = Ravi’s capital ÷ his old share = ₹3,00,000 ÷ (4/12) = ₹3,00,000 × 12/4 = ₹9,00,000

   But after retirement, the firm’s capital belongs only to Sunil and Amit. Their combined existing capital is ₹2,40,000 + ₹3,60,000 = ₹6,00,000. The difference of ₹3,00,000 (Ravi’s capital) is what needs to be brought in by Sunil and Amit.

   Tip

   Shortcut

   The amount payable to the retiring partner (₹3,00,000) is exactly the amount that the continuing partners must bring in total. This amount is then divided in the new profit-sharing ratio (2:3) to find each partner’s contribution.

   Step 2: Calculate the Amount to be Brought in by Each Partner

   Total amount to be brought in = ₹3,00,000 (Ravi’s capital)

   New ratio of Sunil : Amit = 2 : 3

   Sunil’s share = 2/5 × ₹3,00,000 = ₹1,20,000

   Amit’s share = 3/5 × ₹3,00,000 = ₹1,80,000

   Step 3: Verify the New Capital Balances

   After bringing in the cash:

   Sunil’s new capital = ₹2,40,000 + ₹1,20,000 = ₹3,60,000

   Amit’s new capital = ₹3,60,000 + ₹1,80,000 = ₹5,40,000

   Check proportionality: Sunil : Amit = ₹3,60,000 : ₹5,40,000 = 2 : 3 ✓ …

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2. CBSE 2026Set 67/4/11 markMCQ
   Q.Dinesh, Siddharth and Naina were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On 31st March, 2025, they decided to dissolve the firm. On this date, the firm had debtors amounting to ₹ 2,10,000 and provision for doubtful debts of ₹ 20,000. On dissolution, debtors of ₹ 10,000 proved bad and the remaining debtors realised 90%. Amount realised from debtors will be : (A) ₹ 1,71,000 (B) ₹ 2,00,000 (C) ₹ 1,80,000 (D) ₹ 1,89,000

   ›Reveal solutionSolution

   Amount realised from debtors on dissolution = ₹1,80,000 (Option C).

   Concept: Realisation of Debtors on Dissolution

   When a partnership firm dissolves, all assets are converted into cash through a Realisation Account. Debtors represent amounts owed to the firm, and their realisation involves two steps:

   1. Identify the book value of debtors (gross debtors minus any provision for doubtful debts already created).
   2. Determine actual cash realised based on what is collected and what proves irrecoverable.

   The provision for doubtful debts is an accounting estimate created before dissolution. On dissolution, we ignore this provision and work with the actual outcome: which debtors pay and which don't. The Realisation Account is debited with the book value of debtors (net of provision) and credited with the actual cash received.

   Watch out

   A common mistake is to deduct the provision for doubtful debts from the amount realised. The provision is merely an accounting adjustment already made in the books; on dissolution, we focus on actual realisations. The ₹20,000 provision is irrelevant to the cash calculation.

   Treatment on Dissolution

   Step 1: Transfer debtors to Realisation Account at their net book value:

   • Gross Debtors = ₹2,10,000
   • Less: Provision for Doubtful Debts = ₹20,000
   • Net Book Value = ₹1,90,000

   The Realisation Account is debited with ₹1,90,000 (the asset taken over for realisation).

   Step 2: Determine actual cash realised:

   • Debtors proving bad = ₹10,000 (these yield zero cash)
   • Remaining debtors = ₹2,10,000 − ₹10,000 = ₹2,00,000
   • These remaining debtors realise 90% of their face value
   • Cash realised = 90% of ₹2,00,000 = ₹1,80,000

   The Realisation Account is credited with ₹1,80,000 (cash received), and Bank/Cash Account is debited.

   ---

   Solution

   Working Note 1: Calculation of Amount Realised from Debtors

   Particulars	Amount (₹)
   Total (Gross) Debtors	2,10,000
   Less: Debtors proving bad	10,000
   Good Debtors	2,00,000
   Realisation percentage	90%
   Cash Realised (90% of ₹2,00,000)	1,80,000

   The provision for doubtful debts (₹20,000) does not enter this calculation. It was an accounting estimate; the actual bad debts are ₹10,000, and the actual collection rate on the remaining ₹2,00,000 is 90%.

   ---

   Journal Entry (Dissolution)

   | Date | Particulars | L.F. | Debit (₹) | Credit (₹) | …

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3. CBSE 2026Set 67/5/11 markMCQ
   Q.(a) John, Honey and Racob were partners in a firm sharing profits and losses equally. On 31st July, 2025 John died. His share in the profits of the firm from the date of last balance sheet till the date of his death will be : (A) Debited to Profit and Loss Account (B) Credited to Profit and Loss Account (C) Debited to Profit and Loss Suspense Account (D) Credited to Profit and Loss Suspense Account

   (OR)

   (b) Shashi, Maya and Komal were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On 31st March, 2025 Komal retired. The new profit sharing ratio between Shashi and Maya was decided as 3 : 5. The gain or sacrifice of Shashi and Maya on Komal’s retirement was : (A) Shashi’s sacrifice 1/8; Maya’s gain 13/40 (B) Shashi’s gain 1/8; Maya’s sacrifice 13/40 (C) Shashi’s sacrifice 1/8; Maya’s sacrifice 13/40 (D) Shashi’s gain 1/8; Maya’s gain 13/40

   ›Reveal solutionSolution

   Part (a): a deceased partner's share of profit up to the date of death is debited to the Profit and Loss Suspense Account → option (C).

   Part (b): Shashi sacrifices 1/8 and Maya gains 13/40 → option (A).

   Part (a)

   When a partner dies during the year, his share of profit from the date of the last Balance Sheet to the date of death is estimated (on time or sales basis) and credited to the deceased partner's capital account. Since the year-end Profit and Loss Account is not yet prepared, the corresponding debit is parked in the Profit and Loss Suspense Account, which is later adjusted. Therefore his share is debited to the Profit and Loss Suspense Account. …

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4. CBSE 2026Set 67/5/11 markMCQ
   Q.Sushil and Sapna were partners in a firm sharing profits and losses in the ratio of 3 : 2. On 31st March, 2025, the firm was dissolved. On the date of dissolution there existed a balance of ₹ 1,20,000 in sundry creditors account. The sundry creditors were payable after three months. They were paid immediately at a discount of 12% p.a. The amount paid to sundry creditors was : (A) ₹ 1,20,000 (B) ₹ 1,23,600 (C) ₹ 1,16,400 (D) ₹ 1,34,400

   ›Reveal solutionSolution

   The sundry creditors, originally ₹1,20,000, were paid immediately at a 12% p.a. discount for three months, resulting in a payment of ₹1,16,400.

   When a partnership firm undergoes dissolution, the primary objective is to close down its operations by realising all assets and settling all liabilities. To achieve this, a special account called the Realisation Account is prepared. This account serves as a temporary ledger to record all transactions related to the sale of assets and payment of liabilities, ultimately determining the profit or loss arising from the dissolution process.

   External liabilities, such as Sundry Creditors, are first transferred to the credit side of the Realisation Account. This closes their individual ledger accounts and brings them into the dissolution process. When these liabilities are subsequently paid, the Realisation Account is debited, and the Bank/Cash Account is credited. Debiting the Realisation Account signifies an expense or loss incurred during the dissolution, as funds are being used to settle the firm's obligations.

   In this specific scenario, the Sundry Creditors were due after three months but were paid immediately. Paying a liability before its due date often results in a discount, as the creditor receives their money earlier than anticipated. This discount reduces the actual cash outflow from the firm. The discount is calculated on the original amount of the liability for the period by which the payment is advanced, at the agreed annual rate. The amount actually paid is the original liability less this discount.

   The accounting treatment for the payment of creditors at a discount involves:

   1. Transfer of Creditors: (Though not explicitly asked for, conceptually, Sundry Creditors Account is debited to close it, and Realisation Account is credited).
   2. Payment of Creditors: Realisation Account is debited with the actual amount paid (original amount minus discount), and the Bank/Cash Account is credited with the same amount, reflecting the reduction in cash.

   Working Notes

   1. Calculation of Discount on Sundry Creditors

      Original amount of Sundry Creditors = ₹1,20,000

      Discount rate = 12% p.a.

      Period for which discount is received = 3 months (since payment was made 3 months before the due date)

      Discount = Original Amount $\times$ Rate $\times$ Period

      Discount = ₹1,20,000 $\times$ $\frac{12}{100}$ $\times$ $\frac{3}{12}$

      Discount = ₹1,20,000 $\times$ 0.12 $\times$ 0.25

      Discount = ₹3,600

   2. Calculation of Amount Paid to Sundry Creditors …

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5. CBSE 2026Set MARCH1 mark
   Q.Old Ratio – New Ratio = __________ Ratio.

   ›Reveal solutionSolution

   Old Ratio - New Ratio = Sacrificing Ratio.

   On admission of a partner, the existing partners surrender a portion of their profit share in favour of the incoming partner. The proportion in which they surrender is the sacrificing ratio, calculated as the difference between each old partner's old share and new shar …

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6. CBSE 2026Set ANNUAL1 markMCQ
   Q.Consider the following statements: Statement (I): Sacrificing Ratio = Old Profit and Loss sharing ratio – New Profit and Loss sharing ratio. Statement (II): Super profit = Average profits – Normal profits. Choose the correct answer from the following options: A) Only statement (I) is wrong B) Only statement (II) is correct C) Statement (I) is wrong and statement (II) is correct D) Both statements (I) and (II) are correct

   ›Reveal solutionSolution

   Both definitions are standard and correct, so option (D) applies.

   Statement (I): Sacrificing Ratio = Old profit-sharing ratio - New profit-sharing ratio. This is the correct formula; it measures the share old partners give up to the incoming/gaining partner.

   …

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7. CBSE 2026Set ANNUAL1 markMCQ
   Q.If Nisha and Komal are sharing profits in the ratio of 4 : 3. They decided to distribute profits equally in future. The sacrifice of Nisha will be A) 1/14 B) 4/14 C) 4/7 D) 3/7

   ›Reveal solutionSolution

   Nisha's sacrifice on moving from a 4:3 ratio to an equal ratio is 1/14 — option (A).

   Old ratio of Nisha and Komal = 4 : 3, so Nisha's old share = 4/7.

   New ratio = equal = 1 : 1, so Nisha's new share = 1/2.

   Sacrifice = Old share - New share

   = 4/7 - 1/2

   = 8/14 - 7/14

   = 1/14

   …

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8. CBSE 2026Set ANNUAL1 mark
   Q.Mahaveer and Jitendra are partners in a firm sharing profits in the ratio of 4 : 3. They admitted Vaibhav for 1/5th share in profit, which he received from Jitendra. Calculate the sacrificing ratio.

   ›Reveal solutionSolution

   Only Jitendra sacrifices his 1/5th share, so the sacrificing ratio is entirely Jitendra's (Mahaveer nil).

   Mahaveer and Jitendra share profits 4 : 3. Vaibhav is admitted for a 1/5th share, which he takes wholly from Jitendra.

   • Mahaveer's sacrifice = 0 (his share is unchanged).
   • Jitendra's sacrifice = 1/5 (he alone gives up the share). …

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9. CBSE 2026Set ANNUAL1 mark
   Q.Fill in the blank: Sacrificing ratio is always ________ to gaining ratio.

   ›Reveal solutionSolution

   Answer: Opposite / reverse.

   Sacrificing ratio = Old ratio - New ratio (share given up), while gaining ratio = New ratio - Old ratio (share acquired). They are computed in opposite directions, so a sacrificing ratio is always the opposite (reverse) of a gaining r …

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10. CBSE 2026Set ANNUAL1 mark
    Q.Answer in one word/sentence: The amount of goodwill brought by new partner is distributed to old partners in which ratio?

    ›Reveal solutionSolution

    Answer: Sacrificing ratio.

    The premium (goodwill) brought in by a new partner compensates the old partners for the share of profit they give up, so it is distributed among the …

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11. CBSE 2026Set ANNUAL1 markMCQ
    Q.Case study: Pawan and Ritesh are partners in Vision Tech Solutions, a partnership business sharing profit-loss in the ratio of 3:2. Capital invested by Pawan was ₹1,00,000 and by Ritesh ₹1,20,000 in the business. Their business involves developing software and providing related services according to market demand. Considering the potential for increased demand in the future, they plan to expand their business. To expand their business, they decide to bring in Sundar, a software investor, as a new partner to provide the necessary additional capital. Sundar contributed ₹80,000 as his capital. Pawan and Ritesh surrender 1/2 of their respective profit shares in favor of Sundar. Upon Sundar's admission, the firm's goodwill is to be valued at 2 years' purchase of the average profits of the last three years. The profits for the last three years were: I year ₹10,000 (loss); II year ₹40,000; III year ₹60,000. Sundar did not bring his share of goodwill in cash, and goodwill of ₹30,000 already existed in the firm's books. Based on the above information, answer the following question: What will be the sacrificing ratio of Pawan and Ritesh?

    (a) 1:1

    (b) 3:2

    (c) 2:1

    (d) 2:3

    (a) 1:1

    (b) 3:2

    (c) 2:1

    (d) 2:3

    ›Reveal solutionSolution

    Sacrificing ratio of Pawan and Ritesh = 3:2.

    Pawan and Ritesh share profit-loss in the ratio 3:2, so Pawan's share = 3/5 and Ritesh's share = 2/5. Each of them surrenders exactly 1/2 of their OWN respective share in favour of Sundar:

    Pawan's sacrifice = 1/2 × 3/5 = 3/10

    Ritesh's sacrifice = 1/2 × 2/5 = 2/10 (= 1/5)

    Sacrificing Ratio = Pawan's sacrifice : Ritesh's sacrifice

    = 3/10 : 2/10

    = 3 : 2

    …

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12. CBSE 2026Set ANNUAL1 markMCQ
    Q.Case study (same as above — Pawan and Ritesh are partners in Vision Tech Solutions sharing profit-loss 3:2; capitals ₹1,00,000 and ₹1,20,000; they admit Sundar as a new partner who contributes ₹80,000 capital, with Pawan and Ritesh each surrendering 1/2 of their respective profit shares in favor of Sundar). Based on the above information, answer the following question: What will be the new profit sharing ratio of Pawan, Ritesh and Sundar?

    (a) 3:2:5

    (b) 3:2:1

    (c) 1:1:1

    (d) 5:2:3

    (a) 3:2:5

    (b) 3:2:1

    (c) 1:1:1

    (d) 5:2:3

    ›Reveal solutionSolution

    New profit-sharing ratio of Pawan, Ritesh and Sundar = 3:2:5.

    Step 1 — Old shares

    Pawan = 3/5, Ritesh = 2/5

    Step 2 — Sacrifice by each (from Q29)

    Pawan sacrifices 3/10, Ritesh sacrifices 2/10

    Step 3 — New shares of Pawan and Ritesh

    Pawan's new share = 3/5 − 3/10 = 6/10 − 3/10 = 3/10

    Ritesh's new share = 2/5 − 2/10 = 4/10 − 2/10 = 2/10

    Step 4 — Sundar's share

    Sundar receives exactly what both partners sacrificed:

    Sundar's share = 3/10 + 2/10 = 5/10

    Step 5 — New Ratio

    …

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