Q.Ram, Balram and Subham are partners in a firm, sharing profits and losses in the ratio of 3:2:1. Their balance sheet on 31st March 2021 was as follows: Balance Sheet as on 31st March 2021
Equity and liabilities:
Creditors Rs 12600
Reserve fund 6000
Ram's capital Rs 10000
Balram's capital 10000
Suman's capital 10000
Total 48600
Assets:
Cash in hand 11600
Cash in hand 1000
Stock 7000
Debtor 9000
Plant & Machinery 6000
Building 14000
Total 48600 On that date Suman retires from the firm and amount due to him is paid in cash. It is agreed to adjust the values of assets as follows:

1. to provide a reserve of 5% on debtors for doubtful;
2. to depreciate stock 5% and machinery by 10%;
3. building to be revalued Rs. 15100.
   Show the revaluation account and the partners capital accounts and prepare the balance sheet of the firm.

Showing the 12 most recent of 95 on this concept.

1. CBSE 2026Set MARCH1 markMCQ
   Q.When only old profit-loss sharing ratio is given, gaining ratio of remaining partners will be _____.

   (a) 1 : 1

   (b) Old ratio

   (c) Capital ratio

   (d) Can not be calculated

   ›Reveal solutionSolution

   With only the old ratio available, the gaining ratio of the remaining partners is the old ratio, so the answer is (b).

   Gaining ratio = new ratio minus old ratio. If the new ratio is not specified, the assumption is that the continuing partners take over the retiring/deceased partner's share in the s …

   🔒 Start your 14-day free trial to see the full solution →
2. CBSE 2026Set MARCH1 mark
   Q.What is gain ratio?

   ›Reveal solutionSolution

   Gain ratio = New ratio minus Old ratio; it is the proportion in which continuing partners take over the outgoing partner's share.

   When a partner retires or dies, the share of profit released by that partner is taken up by the remaining partners. The proportion in which they acquire this share is called the gain (or gaining) ratio.

   Gain ratio = New profit-sharing ratio - Old profit-sharing ratio

   …

   🔒 Start your 14-day free trial to see the full solution →
3. CBSE 2026Set MARCH1 mark
   Q.In the case of death of a partner, the amount due to the deceased partner is transferred to his ______ account.

   ›Reveal solutionSolution

   On the death of a partner, the amount due is transferred to the Deceased Partner's Executor's Account.

   When a partner dies, his Capital Account is credited with his capital, his share of accumulated profits/reserves, revaluation profit, share of goodwill, interest on capital and his share of profit up to the date of death, and debited with drawings and any losses. The resulting balance (the amount due) is then transferred out of his Capital Account:

   Journal Entry
   Deceased Partner's Capital A/c Dr.

   🔒 Start your 14-day free trial to see the full solution →
4. CBSE 2026Set MARCH1 markMCQ
   Q.A, B and C are partners sharing profits in the ratio of 5 : 3 : 2. If C retires, the New Profit Sharing Ratio between A and B will be :

   (a) a) 3 : 2

   (b) b) 5 : 3

   (c) c) 5 : 2

   (d) d) 1 : 1

   ›Reveal solutionSolution

   Without any fresh agreement, the remaining partners keep their old mutual ratio, so the new ratio of A and B is 5 : 3 - option (b).

   A, B and C shared profits 5 : 3 : 2. On C's retirement, C's share (2/10) is taken over by A and B. When nothing else is stated, the remaining partners share future profits in their existing relative proportion, i.e. 5 : 3.

   …

   🔒 Start your 14-day free trial to see the full solution →
5. CBSE 2026Set MARCH1 mark
   Q.Profit or loss on revaluation is transferred to all partners' capital accounts in case of retirement of a partner. [State True/False]

   ›Reveal solutionSolution

   The statement is True - revaluation profit/loss goes to all partners in the old ratio on retirement.

   When a partner retires, assets and liabilities are revalued so that the retiring partner gets the benefit or bears the burden of changes that occurred while he was a partner. The profit or loss shown by the Revaluation Account therefore relates to the period during which the retiring partner was present, and it is distributed among all partners (old + retiring) in their …

   🔒 Start your 14-day free trial to see the full solution →
6. CBSE 2026Set ANNUAL1 markMCQ
   Q.Seema, Madhu and Shweta are partners in the ratio of 2 1/3 : 3 1/3 : 4 1/3 in a firm. Shweta retired from the firm. Gaining ratio will be A) 7 : 13 B) 7 : 10 C) 10 : 13 D) 13 : 7

   ›Reveal solutionSolution

   After converting the mixed numbers, the old ratio is 7 : 10 : 13; on Shweta's retirement the gaining ratio of Seema and Madhu is their old ratio 7 : 10 — option (B).

   First convert the profit-sharing ratio:

   2 1/3 : 3 1/3 : 4 1/3 = 7/3 : 10/3 : 13/3

   Multiplying each by 3 = 7 : 10 : 13 (Seema : Madhu : Shweta).

   …

   🔒 Start your 14-day free trial to see the full solution →
7. CBSE 2026Set ANNUAL1 mark
   Q.Which account is credited, when lump-sum payment is made to retiring partner?

   ›Reveal solutionSolution

   On a lump-sum settlement, the Cash/Bank Account is credited.

   The amount finally due to a retiring partner is paid out of the firm's cash. The entry is:

   Retiring Partner's Capital A/c ... Dr

   To Cash/Bank A/c

   …

   🔒 Start your 14-day free trial to see the full solution →
8. CBSE 2026Set ANNUAL1 mark
   Q.Fill in the blank: The amount due to deceased partner is paid to ________.

   ›Reveal solutionSolution

   Answer: To the legal representatives of the deceased partner.

   On a partner's death, the amount standing to his credit is transferred to his Executors'/Legal Representatives' Account and paid to his legal heirs or executors. So the amount due to a deceased partner is p …

   🔒 Start your 14-day free trial to see the full solution →
9. CBSE 2026Set ANNUAL1 mark
   Q.Fill in the blank: Retirement or death of a partner also leads to ________ of a partnership firm.

   ›Reveal solutionSolution

   Answer: Reconstitution.

   When a partner retires or dies, the existing partnership agreement ends and the remaining partners continue under a new agreement. The firm is not dissolved but reconstituted. So retirement or d …

   🔒 Start your 14-day free trial to see the full solution →
10. CBSE 2026Set ANNUAL1 markMCQ
    Q.Hema, Jaya and Rama are partners in a partnership firm shares profit-loss equally. Hema and Jaya decided to share profit-loss in the ratio of 4:3 after taking retirement of Jaya. What will be the gain of Hema?

    (a) 1/3

    (b) 5/21

    (c) 4/7

    (d) 3/4

    (a) 1/3

    (b) 5/21

    (c) 4/7

    (d) 3/4

    ›Reveal solutionSolution

    Hema's gain on Jaya's retirement = 5/21.

    Hema, Jaya and Rama originally shared profit and loss equally, i.e. each had a share of 1/3. The question states that after Jaya's retirement the firm continues between Hema and Rama in the new ratio 4:3 (the stem's wording names "Jaya" a second time, but since Jaya is the partner retiring, the two CONTINUING partners can only be Hema and Rama — this is read as the intended meaning).

    Gain (or loss) on reconstitution = New Share − Old Share.

    Hema's old share = 1/3

    Hema's new share = 4/7 (her part of the new 4:3 ratio)

    Gain of Hema = New Share − Old Share

    = 4/7 − 1/3

    = (4×3 − 1×7) / 21

    = (12 − 7) / 21

    = 5/21

    …

    🔒 Start your 14-day free trial to see the full solution →
11. CBSE 2026Set ANNUAL1 mark
    Q.In case of death of partner, to whom is the balance amount of his capital account transferred?

    ›Reveal solutionSolution

    The deceased partner's capital account balance is transferred to his Executor's Account.

    When a partner dies, the partnership between him and the surviving partners automatically comes to an end (though the firm may continue with the surviving partners). The deceased partner's capital account is settled as follows:

    1. His capital account is credited with: his share of General Reserve/accumulated profits, his share of Revaluation profit (or debited for loss), his share of goodwill of the firm, and his share of profit from the last balance sheet date up to the date of death (calculated on time basis, usually using last year's or average profit).
    2. His capital account is debited with any drawings made and interest on drawings, if applicable.
    3. The final (net) balance standing to his credit no longer belongs to the firm — it is a debt payable to his legal representative. …

    🔒 Start your 14-day free trial to see the full solution →
12. CBSE 2026Set ANNUAL1 markMCQ
    Q.On the death of a partner, Ram, his share in the Profits of the firm ₹45,000 till the date of his death is transferred to the _______.

    (a) Credit of Profit and Loss Suspense Account

    (b) Debit of Profit and Loss Suspense Account

    (c) Credit of Profit and Loss Account

    (d) Debit of Profit and Loss Account

    (a) Credit of Profit and Loss Suspense Account

    (b) Debit of Profit and Loss Suspense Account

    (c) Credit of Profit and Loss Account

    (d) Debit of Profit and Loss Account

    ›Reveal solutionSolution

    Ram's share of profit till death is transferred to the debit of the Profit and Loss Suspense Account (Option B).

    When a partner dies during the course of an accounting year, it is not practical to close the firm's books on the date of death just to work out the exact profit for that broken period. Instead, the firm estimates the deceased partner's share of profit from the start of the year to the date of death (here ₹45,000) and passes the entry:

    Profit and Loss Suspense Account Dr. ₹45,000

    To Ram's Capital Account ₹45,000

    …

    🔒 Start your 14-day free trial to see the full solution →