Change in Profit Sharing Ratio MCQs

Change in Profit Sharing Ratio MCQs

1. Any change in the relationship of existing partners which results in an end of the existing
agreement and enforces making of new agreement is called:
(a) Revaluation of partnership
(b) Reconstitution of partnership
(c) Realisation of partnership
(d) None of the above

2. The ratio in which a partner surrenders his share in favour of a partner is known as:
(a) New profit-sharing ratio
(b) Sacrificing Ratio
(c) Gaining Ratio
(d) Capital Ratio

3. The ratio in which a partner receives a rise in his share of profits is known as:
(a) New Ratio
(b) Sacrificing Ratio
(c) Capital Ratio
(d) Gaining Ratio

4. Reserves and accumulated profits are transferred to partners ‘ capital accounts at the time of
reconstitution in:
(a) Old profit-sharing ratio
(b) Sacrificing Ratio
(c) Gaining ratio
(d) New profit-sharing ratio

5. Increase and decrease in the value of assets and liabilities are recorded through:
(a) Partners’ Capital Account
(b) Revaluation Account
(c) Profit and Loss Appropriation Ne
(d) Balance Sheet

Change in Profit Sharing Ratio MCQs for Term 1

6. In which of the following case, revaluation account is debited?
(a) Increase in value of an asset
(b) Decrease in value of an asset
(c) Decrease in value of liability
(d) No change in the value of assets

7. In which of the following cases, revaluation account is credited?
(a) Decrease in value of liability
(b) Increase in value of liability
(c) Decrease in value of asset
(d) No change in value of liability

8. Partner’s capital account is credited when there is
(a) Profit on revaluation
(b) transfer of general reserve
(c) transfer of accumulated profits
(d) All of the above

9. Sacrificing ratio is the difference between :
(a) New ratio and old ratio
(b) Old ratio and new ratio
(c) New ratio and gaining ratio
(d) Old ratio and gaining ratio

10. A and B are partners in a firm sharing profits in the ratio of 3 : 2. They decided to share future
profits equally. Calculate A’s gain or sacrifice
(a) 2/10 (sacrifice)
(b) 5/10 (gain)
(c) 1/10 (Gain)
(d) 1/10 (sacrifice)

MCQ on Change in PSR

11. In case of change in profit-sharing ratio, the gaining partner must compensate the sacrificing
partners by paying the proportional amount of
(a) capital
( b) cash
(c) goodwill
(d) none of the above

12. In case of change in profit-sharing ratio, the accumulated profits are distributed to the partners in
(a) new ratio
(b) old ratio
(c) sacrificing ratio
(d) equal ratio

13. R, S and T sharing profits and losses in the ratio of 1:2:3, decided to share future profit and losses
equally. They also decided to adjust the following accumulated profits, losses, and reserves
without affecting their book figures, by passing a single adjustment entry:
General Reserve – ₹ 40000
Profit and Loss A/c – ₹ 30000
Share Issue expenses – ₹ 10000
The necessary .adjustment entry will be:
(a) Dr. R and Cr. T by ₹ I 0,000
(b) Dr. T and Cr. R by ₹ 10,000
(c) Dr. S and Cr. R by ₹ 10,000
(d) Dr.R and Cr. S by ₹ 10,000

Change in PSR MCQs

14. U V and W are partners sharing profits in the ratio of 2:3:5. They also decide to record the effect
of the following revaluations and reassessments without affecting the book values of assets and
liabilities by passing a single adjustment entry:

Particulars	Book Value ₹	Revised Value ₹
Land and Building	3,00,000	3,50,000
Furniture	1,50,000	1,00,000
Sundry Creditors	60,000	20,000
Outstanding Salaries	10,000	15,000

The single adjustment entry will be:
(a) Dr. W and Cr. U by ₹ 10,500
(b) Dr. U and Cr. W by ₹ 10,500
(c) Dr. V and Cr. U by ₹ 10,500
(d) Dr. W and Cr. V by ₹ 10,500

Change in psr class 12

15. X,Y and Z are partners sharing profits and losses in the ratio of 5:3:2.They decide to share the future
profits in the ratio of 3:2:1. Workmen compensation reserve appearing in the balance sheet on the date if
no information is available for the same will be:
a) Distributed among the partners in old profit sharing ratio
b) Distributed among the partners in new profit sharing ratio
c) Distributed among the partners in capital ratio
d) Carried forward to new balance sheet without any adjustment

16. A,B, and C were are partners in a firm sharing profits in the ratio of 3:4:1 . They decided to share profits
equally w.e.f from 1 .4.2020. On that date, the profit and loss account showed the credit balance of
₹ 48,000.instead of closing the profit and loss account, it was decided to record an adjustment entry
reflecting the change in profit sharing ratio . In the journal entry:
(a) Dr. A by ₹ 2,000; Dr. B by ₹ 8,000; Cr C by ₹ 10,000
(b) Cr. A by ₹ 2,000; Cr. B by ₹ 8,000; Dr. C by ₹ 10,000
(c) Cr. A by ₹ 8,000; Cr. B by ₹ 2,000; Dr. C by ₹ 10,000
(d) Cr. A by ₹ 18,000; Cr. B by ₹ 24,000; Cr C by ₹ 6,000

17. _____(i)_____ should compensate _________(ii)________in the case of reconstitution of the firm.
(a) (i) Old Partner, (ii) New Partner
(b) (i) Sacrificing Partner, (ii) Gaining Partner
(c) (i) Gaining Partner, (ii) Sacrificing Partner
(d) (i) New Partner, (ii) Old Partner

Change in profit sharing ratio notes

18. Increase in the value of assets and decrease in the value of liabilities result in ______(i)______ for the existing partners and should be ______(ii)______ to P/L Adjustment a/c.
(a) (i) Loss, (ii) Debited
(b) (i) Loss, (ii) Credited
(c) (i) Gain, (ii) Credited
(d) (i) Gain, (ii) Debited

19. A partnership is reconstituted due to:
(a) Change in Profit Sharing Ratio
(b) Admission of a Partner
(c) Retirement of a Partner
(d) All of the above

20. A, B, and C are sharing profits in the ratio of 3:2:1. They decided to share equally in future. B’s sacrifice or gain is.
(a) Gain 1/6
(b) Sacrifice 1/6
(c) Neither Gain nor Sacrifice
(d) Gain 2/6

Change in Profit Sharing Ratio MCQs

Accountancy MCQs, Notes.

Accountancy Case Studies