Class 12 Accountancy Important Chapter 2 Reconstitution of a Partnership Firm- Admission of a Partner

Class 12 Accountancy Important Chapter 2 Reconstitution of a Partnership Firm- Admission of a Partner Solutions English Medium As Per The New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 12 Accountancy Important Solutions in English Medium and select need one. AHSEC Class 12 Accountancy Additional Notes English Medium Download PDF. HS 2nd Year Accountancy Additional Solutions English Medium.

Class 12 Accountancy Important Chapter 2 Reconstitution of a Partnership Firm- Admission of a Partner

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Reconstitution of a Partnership Firm- Admission of a Partner

Chapter: 2

Part A: Accounting for Partnership Firms

IMPORTANT QUESTION AND ANSWER

Answer The Following Question:

1. What is reconstitution of a partnership firm?

Ans: Reconstitution refers to any change in the existing partnership agreement. This could include the admission of a new partner, a change in profit-sharing ratio, the retirement of a partner, or the death of a partner.

2. What are the main modes of reconstitution?

Ans: The main modes include:

(i) Admission of a new partner.

(ii) Change in profit-sharing ratio.

(iii) Retirement or death of a partner.

3. What is the purpose of admitting a new partner?

Ans: A new partner is admitted to bring in additional capital, provide managerial help, or to share profits, enabling the firm to grow and expand its business operations.

4. How is goodwill treated when a new partner is admitted?

Ans: Goodwill is either paid by the new partner as a premium or calculated based on the firm’s earning capacity. It is shared between the old partners in the sacrificing ratio.

5. What does the term ‘sacrificing ratio’ mean?

Ans: The sacrificing ratio refers to the ratio in which the existing partners forgo a portion of their profit share to accommodate the new partner.

6. What are the adjustments made when a partner retires?

Ans: The retiring partner’s capital account is settled, and accumulated profits or reserves are distributed among the remaining partners. The profit-sharing ratio may also be adjusted.

7. What is the significance of revaluation of assets during reconstitution?

Ans: Revaluation ensures that the firm’s assets are recorded at their current market value. Any gain or loss on revaluation is transferred to the capital accounts of the existing partners.

8. What happens to the accumulated profits when a new partner is admitted?

Ans: Accumulated profits, such as reserves, are distributed among the old partners in their old profit-sharing ratio. The new partner does not have a share in these profits.

9. What is the new profit-sharing ratio after admitting a new partner?

Ans: The new profit-sharing ratio is decided based on the agreed share between the new partner and the old partners. The old partners’ profit shares are adjusted accordingly.

10. How is capital adjusted when a new partner joins?

Ans: The new partner brings capital, and the existing partners may need to adjust their capital accounts to reflect the new profit-sharing ratio. The capital contribution of the new partner is considered for this adjustment.

Fill in the Blanks: 

1. The reconstitution of a partnership firm refers to a change in the ________ between partners.

Ans: Agreement.

2. A new partner is admitted into the firm with the consent of ________ partners.

Ans: All.

3. Goodwill is an ________ asset, representing the firm’s reputation and ability to earn profits.

Ans: Intangible.

4. The ratio in which existing partners sacrifice their share of profits in favour of the new partner is called the ________ ratio.

Ans: Sacrificing.

5. When a new partner brings in cash for capital, it is credited to the ________ account.

Ans: New partner’s capital.