Class 12 – Accountancy
Chapter: Retirement of a Partner
Maximum Marks: 30 | Time Allowed: 1 Hour
Section A: Objective Type Questions (1 mark × 6 = 6 marks)
1. A, B and C are partners sharing profits in the ratio 4:3:2. B retires. A and C decide to
share profits equally. The gaining ratio is:
a) 5:3 b) 1:1 c) 4:2 d) 3:1
2. At the time of retirement of a partner, balance in General Reserve is transferred to:
a) Retiring Partner’s Capital Account only b) All Partners' Capital Accounts in old
ratio c) Remaining Partners in new ratio d) Retiring partner’s Loan Account
3. Partner’s Loan Account is shown in the __________ of the Balance Sheet.
a) Asset side b) Capital side c) Liability side d) Revaluation Account
4. Revaluation Account is prepared to record:
a) Profit or loss on realization b) Distribution of cash c) Change in value of assets
and liabilities d) Goodwill adjustment
5. On retirement of a partner, the retiring partner’s capital account is settled through:
a) Cash/Bank b) Loan Account c) Both (a) and (b) d) None of these
6. If new profit sharing ratio is equal to old ratio, gaining ratio will be:
a) Zero b) Same as old ratio c) Equal to new ratio d) Not determinable
Section B: Short Answer Questions (3 Marks Each × 2 = 6 Marks)
7. (Gaining & New Ratio)
X, Y and Z were partners sharing profits in the ratio of 5:3:2. Z retired. X and Y decided to
share future profits in the ratio of 3:2. Calculate:
a) Gaining Ratio
b) New Profit Sharing Ratio
8. Angad retired from a firm. His capital as on 1st April 24 was ₹6,00,000. It was agreed to
pay him in 3 equal yearly instalments with interest @10% p.a. Prepare A’s Loan Account.
Section C: Short Answer Questions (4 Marks Each × 2 = 8 Marks)
9. Binu retired from a partnership firm. The amount due to him as on 1st April 24 was ₹
4,00,000. It was agreed that this amount would be paid in 4 equal half-yearly instalments
along with interest at 10% per annum.
Prepare Binu’s Loan Account.
10. X, Y and Z were partners sharing profits in the ratio 2:2:1. Y retired. Goodwill is valued
at ₹1,20,000. X and Z decided to share future profits in 3:2 ratio.Goodwil appeared in the
books at 75,000.Pass the journal entry.
Section D: Long Answer Questions (6 Marks Each × 2 = 12 Marks)
11. P, Q and R are partners in the ratio of 2:2:1. Their Balance Sheet on 31st March 2024
was:
Liabilities ₹ Assets ₹
Capital: Building 50,000
P 40,000 Furniture 20,000
Q 30,000 Debtors 15,000
R 20,000 Stock 10,000
Creditors 15,000 Cash 10,000
Total 1,05,000 Total 1,05,000
Q retired on 1st April 2024. Terms:
- Building increased by ₹10,000
- Provision for doubtful debts to be created @ 10% on Debtors
- Goodwill valued at ₹15,000 (adjusted through capital accounts)
- Amount due to Q is transferred to Loan Account
Prepare:
a) Revaluation Account
b) Partner’s Capital Accounts
c) Balance Sheet of new firm
12. A, B and C were partners sharing profits in the ratio of 4:3:3. Their Balance Sheet as on
31st March, 2025 is as follows:
Liabilities ₹ Assets ₹
Creditors 30,000 Cash 50,000
Capital: Debtors 40,000
A 80,000 Stock 30,000
B 60,000 Furniture 20,000
C 60,000
Total 2,30,000 Total 2,30,000
C retires from the firm on 31st March 2025. The following adjustments were agreed upon:
Revaluation Adjustments:
1. Debtors to be reduced by ₹4,000
2. Stock to be appreciated by ₹5,000
3. Furniture to be depreciated by ₹2,000
4. Goodwill of the firm is valued at ₹24,000. It is not to be shown in the books. Adjust
goodwill through capital accounts using the gaining ratio.
5. C is to be paid full amount in cash.
6. The total capital of the new firm (A and B) is to be ₹1,20,000, adjusted in their new profit-
sharing ratio of 5:3.
Prepare:
a) Revaluation Account
b) Partners’ Capital Accounts
c) Balance Sheet of the reconstituted firm.
