Home › mcqs › Class 12 accountancy reconstitution of a partnership firm retirement and death o

Reconstitution of a Partnership Firm - Retirement and Death of a Partner (12 Accountancy)

Practise chapter-wise MCQs for Class 12 Accountancy — Reconstitution of a Partnership Firm - Retirement and Death of a Partner. Every question comes with t

✓ 100% Free ✓ No Login Needed ✓ NCERT / CBSE Aligned ✓ Download as PDF

TL;DR: Practise chapter-wise MCQs for Class 12 Accountancy — Reconstitution of a Partnership Firm - Retirement and Death of a Partner. Every question comes w…

Written & reviewed by the Syllab.in Academic Team (CBSE/NCERT subject experts) · Updated Aug 7, 2026

🤖 Stuck on any question? Ask Syllab's free AI Tutor for a step-by-step explanation — instant, unlimited, no login.

Practise chapter-wise MCQs for Class 12 Accountancy — Reconstitution of a Partnership Firm - Retirement and Death of a Partner. Every question comes with t

Reconstitution of a Partnership Firm - Retirement and Death of a Partner MCQs with Answers & Explanations

Q1. In case of death of a partner, profit or loss on revaluation of assets and liabilities is transferred to:

  1. Remaining partners' capital accounts in their new profit-sharing ratio
  2. Deceased partner's executor's account
  3. All partners' capital accounts in their old profit-sharing ratio ✓ (correct)
  4. All partners' capital accounts in their new profit-sharing ratio

Explanation: Similar to retirement, the profit or loss on revaluation relates to the firm's operations up to the point of the partner's death, and thus, it should be shared by all partners (including the deceased partner) in their old profit-sharing ratio.

Q2. The gain or loss on revaluation of assets and liabilities at the time of retirement of a partner is shared by:

  1. All partners in their new profit-sharing ratio
  2. The retiring partner only
  3. The remaining partners in their new profit-sharing ratio
  4. All partners in their old profit-sharing ratio ✓ (correct)

Explanation: The revaluation of assets and liabilities represents profits or losses arising from the change in value of assets and liabilities up to the point of retirement. These should be shared by all partners who were part of the firm during that period, i.e., in their old profit-sharing ratio.

Q3. If a retiring partner's share of profit is guaranteed at a minimum amount of Rs. 20,000, and the firm's profit for the year is Rs. 60,000, with the retiring partner's share being 1/4, what is the amount the retiring partner will receive?

  1. Rs. 20,000 ✓ (correct)
  2. Rs. 15,000
  3. Rs. 5,000
  4. Rs. 60,000

Explanation: The retiring partner's share of profit is Rs. 60,000 * (1/4) = Rs. 15,000. However, since a minimum of Rs. 20,000 is guaranteed, the retiring partner will receive Rs. 20,000. The shortfall of Rs. 5,000 will be borne by the remaining partners.

Q4. If the retiring partner's share of profit is guaranteed by the remaining partners, and the firm incurs a loss after retirement, this loss will be borne by:

  1. The firm
  2. The remaining partners in the ratio of their guarantees ✓ (correct)
  3. The retiring partner
  4. The remaining partners in their profit-sharing ratio

Explanation: When a profit is guaranteed by remaining partners, any shortfall in the guaranteed amount (or loss in this case) is to be borne by the guaranteeing partners in the ratio of their guarantees, which is usually their new profit-sharing ratio unless stated otherwise.

Q5. Goodwill appearing in the old balance sheet at the time of a partner's retirement:

  1. Is transferred to the debit of the retiring partner's capital account
  2. Is ignored
  3. Is written off by debiting all partners' capital accounts in their old profit-sharing ratio ✓ (correct)
  4. Is transferred to the credit of all partners' capital accounts

Explanation: Existing goodwill is an unrecorded profit that has not yet been distributed. It is treated as an asset that needs to be written off before distributing profits or transferring balances. It is written off by debiting all partners' capital accounts in their old profit-sharing ratio.

Q6. On the death of a partner, the executor is paid:

  1. Only the share of profit till the date of death
  2. Only the capital balance of the deceased partner
  3. The entire profit of the firm for the current year
  4. Capital balance, share of profit/loss till death, and share of any accumulated reserves ✓ (correct)

Explanation: The executor is entitled to the deceased partner's capital balance, their share of profits or losses up to the date of death, their share of revaluation gain/loss, and their share of accumulated profits and reserves.

Q7. On the death of a partner, the balance of the deceased partner's current account is transferred to:

  1. His executor's account ✓ (correct)
  2. The remaining partners' capital accounts
  3. The revaluation account
  4. The profit and loss appropriation account

Explanation: Any balance in the deceased partner's current account (whether debit or credit) represents amounts due to or from the partner. This balance, along with other entitlements, is transferred to the executor's account to settle the deceased partner's final dues.

Q8. If the profit till the date of death is to be calculated on the basis of the previous year's profit, and the deceased partner's share is 1/4, with the previous year's profit being Rs. 80,000, and the death occurring on June 30th in a financial year starting April 1st, what is the deceased partner's share of profit for the period?

  1. Rs. 20,000
  2. Rs. 10,000 ✓ (correct)
  3. Rs. 5,000
  4. Rs. 80,000

Explanation: Previous year's profit = Rs. 80,000. Deceased partner's share = 1/4. Period from April 1st to June 30th = 3 months (1/4th of the year). Share of profit = Rs. 80,000 * (1/4) * (3/12) = Rs. 5,000.

Q9. When a partner retires, the remaining partners can decide to adjust goodwill in their capital accounts. This adjustment is done in the ratio of:

  1. Their old profit-sharing ratio
  2. Their new profit-sharing ratio
  3. The gaining ratio ✓ (correct)
  4. The sacrificing ratio

Explanation: Goodwill adjustment on retirement (or death) when not fully written off is done by debiting the gaining partners and crediting the sacrificing partner. The gaining ratio is crucial for this adjustment.

Q10. When a partner retires, any accumulated unrecorded profit or loss is transferred to:

  1. All partners' capital accounts in their new profit-sharing ratio
  2. Revaluation account
  3. Retiring partner's capital account
  4. All partners' capital accounts in their old profit-sharing ratio ✓ (correct)

Explanation: Unrecorded profits or losses are adjustments that pertain to the period when all partners were active and therefore should be shared among all partners according to their existing profit-sharing ratio.

More 12 Accountancy MCQs

  • Accounting for Partnership: Basic Concepts
  • Goodwill: Nature and Valuation
  • Reconstitution of a Partnership Firm - Change in Profit Sharing Ratio
  • Reconstitution of a Partnership Firm - Admission of a Partner
  • Dissolution of Partnership Firm
  • Accounting for Share Capital

🤖 Stuck on any of these? Ask Syllab's free AI Tutor to explain step by step →

Explore:

  • Syllabus
  • Practice
  • Mock Tests
  • NCERT Solutions
  • Coding
  • GK Quiz
  • Career Predictor
  • AI Tutor
  • Live Quiz
  • Doubt Solver
  • Microlearning
  • Free Alternatives
  • Kids Zone
  • Study Room
  • Calculators
  • Worksheets

Syllab.in — Free learning for Indian students, Class 1–12