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. 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
Capital adjustment on admission means:
A
Correct Answer: Adjusting capitals of partners after all admission related adjustments
Capital adjustment means adjusting capitals of all partners (old and new) in agreed ratio after completing all admission adjustments.
Question 2
When capital of new partner is determined on the basis of old partners capital then it is calculated based on :
B
Correct Answer: Total capital of firm and his profit share
New partner's capital = Total agreed capital of reconstituted firm × His profit share.
Question 3
When old partners' capitals are adjusted on basis of new partner's capital, the base is:
A
Correct Answer: New partner's capital and his share
Total firm capital is calculated from new partner's capital divided by his share, then old partners' capitals calculated proportionately.
Question 4
While doing capital adjustment, Adjusted capital of old partner is more than their existing capital. It means old partner should:
C
Correct Answer: Bring additional capital
When adjusted/required capital exceeds existing capital, partner must bring additional capital to match required capital.
Question 5
While doing capital adjustment, Adjusted capital of old partner is less than his existing capital then it means partner can:
D
Correct Answer: Withdraw excess capital
When existing capital exceeds adjusted/required capital, partner can withdraw excess to equalize to required capital.
Question 6
Total capital of reconstituted firm is agreed at Rs. 10,00,000. New partner's share 1/4. His capital will be:
D
Correct Answer: Rs. 2,50,000
New partner's capital = Total capital × His share = Rs. 10,00,000 × 1/4 = Rs. 2,50,000.
Question 7
When capitals are adjusted by cash payment/receipt, it is done through:
A
Correct Answer: Cash/Bank Account
Capital adjustment requiring cash is done by bringing cash in (Dr. Bank, Cr. Capital) or withdrawing (Dr. Capital, Cr. Bank).
Question 8
When capitals are adjusted without cash payment, adjustment is through:
C
Correct Answer: Current Accounts of partners
When cash adjustment not desired, excess/deficit is transferred to Partners' Current Accounts to maintain agreed capitals.
Question 9
A and B are partners with capitals of Rs. 80,000 and Rs. 60,000. They admit C for 1/4 share who brings Rs. 50,000 as capital. What is the total capital of the new firm?
C
Correct Answer: Rs. 2,00,000
Total capital = C's capital ÷ C's share = 50,000 ÷ (1/4) = 50,000 × 4 = Rs. 2,00,000
Question 10
New partner brings Rs. 50,000 as capital for 1/5 share. Total capital of firm will be:
D
Correct Answer: Rs. 2,50,000
Total capital = New partner's capital ÷ His share = Rs. 50,000 ÷ (1/5) = Rs. 50,000 × 5 = Rs. 2,50,000.
Question 11
At the time of admission of a new partner, Capital adjustment takes place:
C
Correct Answer: After all adjustments (revaluation, reserves, goodwill)
Capital adjustment is the last step after completing revaluation, reserves/losses distribution, and goodwill adjustment.
Question 12
Capitals are adjusted in proportion to:
C
Correct Answer: New profit-sharing ratio
Capitals of all partners in reconstituted firm are adjusted in their new profit-sharing ratio after admission.
Question 13
When partner brings additional capital, the entry is:
B
Correct Answer: Dr. Bank A/c, Cr. Capital A/c
When partner brings additional capital: Dr. Cash/Bank Account, Cr. Partner's Capital Account for amount brought in.
Question 14
When partner withdraws excess capital, the entry is:
B
Correct Answer: Dr. Capital A/c, Cr. Bank A/c
When partner withdraws excess capital: Dr. Partner's Capital Account, Cr. Cash/Bank Account for amount withdrawn.
Question 15
When current account is opened for capital adjustment, partner with deficit shows:
C
Correct Answer: Debit balance in Current Account
Deficit (shortage) means partner owes firm, shown as debit balance in Current Account (asset for firm).
