This MCQ Test on the adjustment of capital on admission of partner has 15 practice questions. It covers questions on adjustment of capital of old partners based on new partners capital and the calculation of new partners capital based on capital of old partners. It covers questions on journal entries for capital adjustment and disclosure in balance sheet. The test covers conceptual questions for capital adjustment on admission. This MCQ test suits well for conceptual clarity for your board exams
CBSE class 12 accountancy MCQ questions
The below MCQ test is designed as per the latest syllabus prescribed by CBSE board. With the rise in weightage of MCQ questions, the practice of MCQ questions becomes very important. The quiz is equally useful for students of CUET exams.
How to attempt the quiz
One by one go through the below questions and select the right option. Do all the questions and in the end press submit. Instantly you will get your score and the explanation against each question. Go through your mistakes and reattempt the quiz any number of times as needed.
MCQ Quiz - Practice Questions
MCQ Quiz
Question 1
When current account is opened for capital adjustment, partner with surplus shows:
D
Correct Answer: Credit balance in Current Account
Surplus (excess) means firm owes partner, shown as credit balance in Current Account (liability for firm).
Question 2
At the time of capital adjustment on new partner admission, Entry for transferring deficit to current account is:
A
Correct Answer: Dr. Current A/c, Cr. Capital A/c
For deficit: Dr. Partner's Current Account (debit balance), Cr. Partner's Capital Account to bring capital to agreed level.
Question 3
At the time of capital adjustment on new partner admission, Entry for transferring surplus to current account is:
B
Correct Answer: Dr. Capital A/c, Cr. Current A/c
For surplus: Dr. Partner's Capital Account, Cr. Partner's Current Account (credit balance) to reduce capital to agreed level.
Question 4
Capital adjustment can be based on:
D
Correct Answer: Any of the above
Capital can be adjusted based on: (i) new partner's capital as base, (ii) agreed total capital of the firm, or (iii) Total adjusted capital of the old partners as base.
Question 5
Total capital of new firm is agreed at Rs. 3,00,000. Partners A, B and C share profits as 2:2:1. What is the capital of partner A?
B
Correct Answer: Rs. 1,20,000
A's capital = Total capital × A's share = 3,00,000 × 2/5 = Rs. 1,20,000
Question 6
X and Y admit Z for 1/5 share who brings Rs. 60,000 as capital. X and Y will continue to share remaining profits equally. What is X's new capital?
A
Correct Answer: Rs. 1,20,000
Total capital = 60,000 × 5 = 3,00,000; X and Y share 4/5 equally; X's capital = 3,00,000 × 2/5 = Rs. 1,20,000
Question 7
P's an old partner and his capital based on capital of new partner is Rs. 90,000, but P's existing capital after all adjustments is Rs. 75,000. How much cash should P bring in?
A
Correct Answer: Rs. 15,000
Deficit = Required capital - Existing capital = 90,000 - 75,000 = Rs. 15,000 to bring in
Question 8
Q is an old partner and his capital based in new partner's capital is Rs. 80,000 but Q's existing capital after all adjustments is Rs. 95,000. What action Q has to take?
C
Correct Answer: Withdraw Rs. 15,000
Surplus = Existing capital - Required capital = 95,000 - 80,000 = Rs. 15,000 can be withdrawn
Question 9
M and N admit are partners with profit ratio of 3:2 and capital of Rs one lakh and Rs fifty thousand respectively. They admit O for 1/5 share of profits. O will contribute capital of
C
Correct Answer: Rs. 37,500
Total capital = 100000 + 50000 = Rs 150000; total capital of firm = 150000 * 5/4 = 187500 ; Capital of O = 187500 * 1/5 = 37500
Question 10
Total capital of the firm is Rs. 5,00,000. D, E, F share profits 5:3:2. D's existing capital is Rs. 2,40,000. What should D do?
G and H admit I for 1/4 share who brings Rs. 80,000. G and H continue in ratio 3:2. What is G's required capital?
C
Correct Answer: Rs. 1,44,000
Total = 80,000 × 4 = 3,20,000; G & H share 3/4; G = (3,20,000 × 3/4) × 3/5 = Rs. 1,44,000
Question 12
R and S admit T for 1/5 share bringing Rs. 50,000. New ratio R:S:T = 3:2:1. What is the total capital of reconstituted firm?
B
Correct Answer: Rs. 2,50,000
Total capital = T's capital ÷ T's share = 50,000 ÷ (1/5) = 50,000 × 5 = Rs. 2,50,000
Question 13
Total capital of the firm is Rs. 4,80,000. D, E, F share 3:3:2. D's existing capital is Rs. 1,70,000. If capital adjustment to be doine by opening current account, then what is D's current account balance?
A
Correct Answer: Dr. Rs. 10,000
D's required = 4,80,000 × 3/8 = 1,80,000; Deficit = 10,000; Shown as Dr. (debit) balance in current account
Question 14
Partners L, M, N have capitals of Rs. 1,50,000, Rs. 1,20,000, Rs. 90,000 after adjustments. O is admitted for 1/4 share. How much capital shuold be brought by O?
A
Correct Answer: Rs. 1,20,000
Total capital of old partners after all adjustments (150000+120000+90000) = Rs 360000. Total profit share of Old partners = 1 - 1/4 = 3/4. Total capital of the firm based on old partners capital = 360000 * 4/3 = 480000. The capital to be brought by new partner 'O' = 480000 * 1/4 = Rs 120000
Question 15
A and B are partners. C was admitted to the firm. While doing capital adjustment through current accounts, A current account was debited and B current account was credited. Where will partners current account be shown in new balance sheet
C
Correct Answer: A current account on Assets side and B current account on liabilities side
Any account having debit balance is shown on assets side; any account having credit balance is shown on Liabilities side
