X, Y and Z are partners sharing profits and losses in the ratio of 5 : 3 : 2. From 1st April, 2018, they decided to share profits and losses equally. The profit and loss account showed a debit balance of ₹10,000. The Partnership Deed provides that in the event of any change in the profit-sharing ratio, the goodwill should be valued at two years' purchase of the average profit of the preceding five yea₹ The profits and losses of the preceding years ended 31st March, are:
Year |
2013-14 |
2014-15 |
2015-16 |
2016-17 |
2017-18 |
Profits (₹) |
70,000 |
85,000 |
45,000 |
35,000 |
10,000 (Loss) |
Answer the following questions:
i. Change in the existing agreement of profit sharing ratio is considered as
(a) Reconstitution of a partnership firm
(b) Revaluation of a partnership firm
(c) Dissolution of a partnership firm
(d) None of the above
ii. State the ratio in which the partners share the accumulated profits when there is a change in the profit sharing ratio amongst existing partne₹
(a) Old ratio
(b) New ratio
(c) Equal ratio
(d) Sacrificing ratio
iii. How is the sacrificing ratio determined?
(a) Old ratio – New ratio
(b) New ratio – old ratio
(c) Old ratio + New ratio
(d) None of the above
iv. What is the amount of Goodwill credited to X Capital A/c?
(a) ₹ 15,000
(b) ₹ 90,000
(c) ₹ 12,000
(d) ₹ 3,000