CUET UG Accountancy Booster Test 2 Profit Sharing & Sacrifice -

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CUET UG Accountancy Booster Test 2 Profit Sharing & Sacrifice

⏱️ 30 Minutes

❓ 20 Questions

📌 Answers are locked once submitted — results and explanations appear at the end.

CUET UG Accountancy Booster Test 2 Profit Sharing & Sacrifice

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QUESTION 1 OF 20

In the context of a partnership, the profit sharing ratio dictates how profits and losses are distributed. What is the core consequence if this ratio changes without any partner leaving or joining?

Answer Review

1 In the context of a partnership, the profit sharing ratio dictates how profits and losses are distributed. What is the core consequence if this ratio changes without any partner leaving or joining?

A The firm must be legally dissolved and completely re-registered.

B The old ratio remains valid for all past and future cash transactions.

C It results in a gain of additional share for some partners and a loss for others.

D All partners must bring in equal additional capital.

💡 Short Explanation

Ratio change alters shares. Some partners gain. Others sacrifice profits.

✅ Correct Answer Explanation

A change in profit sharing ratio creates gaining and sacrificing partners. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Dissolution unnecessary.
Option B → Future ratio changes.
Option D → Capital addition not compulsory.

🎯 Strategy

Used

Conceptual Understanding

Application:

�� Analyze effect of ratio change.

Final Logic:

�� Gain and sacrifice arise automatically.

🧠 Memory Trick

"Ratio Change = Gain & Sacrifice"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Meaning of Ratio – Page reference may vary by edition.

2 Why is calculating the exact new profit sharing ratio and sacrificing ratio critical for the accounting treatment of goodwill?

A It dictates the valuation method of goodwill used by the firm.

B It determines the normal rate of return on capital.

C It tells the bank how much loan the firm is legally allowed to take.

D It helps determine the sacrificing ratio, which is used to distribute the goodwill premium.

💡 Short Explanation

Goodwill distributed on sacrifice. Exact ratios required. Compensation depends on sacrifice.

✅ Correct Answer Explanation

The sacrificing ratio determines how goodwill premium is credited to old partners. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Valuation method unrelated.
Option B → NRR separate concept.
Option C → Loan limit unrelated.

🎯 Strategy

Used

Accounting Logic

Application:

�� Connect goodwill with sacrificing ratio.

Final Logic:

�� Correct ratio ensures fair compensation.

🧠 Memory Trick

"Goodwill Follows Sacrifice"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Importance of Ratio – Page reference may vary by edition.

3 Assertion (A): The admission of a partner inherently implies that old partners must sacrifice a portion of their profits.
Reason (R): A newly admitted partner acquires the right to share the future profits of the partnership firm from the existing pool.

A Both A and R are true, and R is the correct explanation.

B Both A and R are true, but R is not the correct explanation.

C A is true, but R is false.

D Both A and R are false.

💡 Short Explanation

New partner gets profit share. Old partners sacrifice part. Reason explains assertion.

✅ Correct Answer Explanation

The incoming partner's share comes from the old partners' existing profit shares. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Reason directly explains.
Option C → Reason true.
Option D → Both statements true.

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Connect admission with sacrifice.

Final Logic:

�� Incoming share reduces old shares.

🧠 Memory Trick

"New Share Comes from Old Shares"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Admission Impact – Page reference may vary by edition.

4 Regarding the complex redistribution of shares on admission:
I. The sum of the new shares of all partners must equal exactly 1.
II. The new partner's share is always deducted equally from all old partners.
III. The remaining share after the new partner's share is divided among old partners in their old ratio, by default.
Which combinations are correct?

A I and II only

B I and III only

C II and III only

D I, II, and III

💡 Short Explanation

Total shares equal one. Equal deduction not compulsory. Old ratio applies by default.

✅ Correct Answer Explanation

Statement I and III are true. Statement II is false because sacrifice need not always be equal. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Statement II false.
Option C → Statement I true.
Option D → Statement II incorrect.

🎯 Strategy

Used

Statement Verification

Application:

�� Evaluate admission rules carefully.

Final Logic:

�� Default assumption uses old ratio.

🧠 Memory Trick

"Remaining Share Follows Old Ratio"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Redistribution of Shares – Page reference may vary by edition.

5 Match the specific cases of share determination with their calculation methodologies:

List 1	List 2
1. Acquired wholly from one partner	a. Only one old partner's share is reduced
2. Acquired equally from two partners	b. Sacrifice = (New Partner's Share) × (1/2)
3. Acquired in a specific new ratio	c. Calculate sacrifice as Old Ratio − New Ratio
4. Acquired in old ratio	d. Remaining share × Old Share

A 1-b, 2-d, 3-a, 4-c

B 1-a, 2-c, 3-b, 4-d

C 1-c, 2-b, 3-d, 4-a

D 1-d, 2-a, 3-c, 4-b

💡 Short Explanation

One partner alone sacrifices fully. Equal acquisition splits sacrifice equally. Old ratio uses remaining share method.

✅ Correct Answer Explanation

Correct matching: Whole acquisition → One partner reduced Equal acquisition → Half share sacrifice Specific ratio → Old minus new Old ratio → Remaining share × old share Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Wrong linkage.
Option B → Equal sacrifice mismatched.
Option D → Multiple mismatches.

🎯 Strategy

Used

Matching Logic

Application:

�� Match methods with acquisition type.

Final Logic:

�� Only Option C fully correct.

🧠 Memory Trick

"Specific Ratio → Old Minus New"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Mutual Agreement – Page reference may vary by edition.

6 Arrange the steps for finding the new ratio under default assumptions (when only incoming share is given):
I. Deduct the new partner's share from 1 to find the remaining share.
II. Multiply the old partners' share by the remaining share.
III. Determine the new partner's incoming share.

A II, I, III

B I, II, III

C II, III, I

D III, I, II

💡 Short Explanation

Incoming share identified first. Remaining share calculated next. Old ratio then adjusted.

✅ Correct Answer Explanation

Correct order: Determine incoming share Find remaining share Multiply old shares accordingly Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Multiplication too early.
Option B → Incoming share missing first.
Option C → Incorrect sequence.

🎯 Strategy

Used

Sequential Logic

Application:

�� Arrange ratio determination process.

Final Logic:

�� Remaining share depends on incoming share.

🧠 Memory Trick

"Incoming → Remaining → Multiply"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Default Assumptions – Page reference may vary by edition.

7 Rohit and Mohit share in 5:3. Bijoy is admitted for a 1/7 share. The new ratio is 4:2:1. What is Mohit's exact fractional sacrifice?

A 5/56

B 3/56

C 4/56

D 2/56

💡 Short Explanation

Sacrifice equals old minus new. Mohit's shares compared. Fraction calculated carefully.

✅ Correct Answer Explanation

Mohit's Old Share: 3/8 New Share: 2/7 Sacrifice: 3/8 − 2/7 = 5/56 Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Rohit's sacrifice.
Option C → Incorrect subtraction.
Option D → Miscalculation.

🎯 Strategy

Used

Sacrifice Formula

Application:

�� Old Share − New Share.

Final Logic:

�� Mohit sacrifices 5/56.

🧠 Memory Trick

"Old Minus New"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Proportion Basis – Page reference may vary by edition.

8 Amar and Bahadur share in 3:2. Mary is admitted for 1/4. The new ratio between Amar and Bahadur will be 2:1. What is Amar's new fractional share in the firm?

A 3/12

B 6/12

C 2/12

D 4/12

💡 Short Explanation

Remaining share distributed. Amar gets larger proportion. Final fraction simplified.

✅ Correct Answer Explanation

Remaining Share: [ 1-\frac{1}{4}=\frac{3}{4} ] Amar's Share: [ \frac{3}{4}\times\frac{2}{3}=\frac{6}{12} ] \frac{3}{4}\times\frac{2}{3}=\frac{6}{12} Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Too small.
Option C → Incorrect multiplication.
Option D → Wrong ratio application.

🎯 Strategy

Used

Remaining Share Method

Application:

�� Apply new ratio on remaining share.

Final Logic:

�� Amar's share equals 6/12.

🧠 Memory Trick

"Remaining Share × Ratio Share"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: From Old Partners – Page reference may vary by edition.

9 Under the old ratio method, if the new partner's share is 1/5, what conceptually happens to the remaining 4/5 of the firm's profits?

A It is given entirely to the most senior partner.

B It is distributed equally among all partners including the new one.

C It is distributed among the old partners in their old profit sharing ratio.

D It is kept as a general reserve in the firm.

💡 Short Explanation

Remaining share belongs to old partners. Distributed in old ratio. Default assumption applies.

✅ Correct Answer Explanation

Under old ratio method, old partners continue sharing remaining profits in old ratio. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → No single partner rule.
Option B → New partner already gets fixed share.
Option D → No reserve creation.

🎯 Strategy

Used

Method Interpretation

Application:

�� Apply old ratio method.

Final Logic:

�� Remaining share follows old ratio.

🧠 Memory Trick

"Remaining Share → Old Ratio"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Old Ratio Method – Page reference may vary by edition.

10 If incoming partner Z takes his 1/4 share equally from X and Y, what is the formula to find the exact fractional amount X surrendered?

A (1/4) × (X's Old Share)

B (1/4) + (1/2)

C (X's Old Share) − (1/4)

D (1/4) × (1/2)

💡 Short Explanation

Share acquired equally. Half of incoming share surrendered. Equal sacrifice formula used.

✅ Correct Answer Explanation

X sacrifices half of Z's incoming share. [ \frac{1}{4}\times\frac{1}{2} ] \frac{1}{4}\times\frac{1}{2} Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Old share irrelevant here.
Option B → Addition incorrect.
Option C → Incomplete formula.

🎯 Strategy

Used

Equal Sacrifice Method

Application:

�� Divide incoming share equally.

Final Logic:

�� Each partner sacrifices half.

🧠 Memory Trick

"Equal Share = Divide by 2"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Equal Sacrifice Method – Page reference may vary by edition.

11 Ram and Shyam share profits 3:2. Ghanshyam is admitted. Ram sacrifices 3/20 and Shyam sacrifices 2/15. What is Ghanshyam's new aggregated share?

A 17/60

B 5/35

C 10/20

D 1/4

💡 Short Explanation

Incoming share equals total sacrifice. Add both sacrifices. Fraction simplified.

✅ Correct Answer Explanation

[ \frac{3}{20}+\frac{2}{15} ] LCM = 60 [ \frac{9}{60}+\frac{8}{60}=\frac{17}{60} ] \frac{3}{20}+\frac{2}{15}=\frac{17}{60} Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Incorrect denominator.
Option C → Excess total.
Option D → Incorrect addition.

🎯 Strategy

Used

Sacrifice Aggregation

Application:

�� Add sacrificed shares.

Final Logic:

�� Total sacrifice equals new share.

🧠 Memory Trick

"Incoming Share = Total Sacrifice"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Fixed Share Sacrifice – Page reference may vary by edition.

12 X and Y share profits 3:2. Z is admitted for a 1/5 share. Z acquires 3/20 from X and 1/20 from Y. What is X's sacrifice represented as a fraction?

A 1/5

B 3/20

C 1/20

D 3/5

💡 Short Explanation

Sacrifice directly specified. X gives larger portion. Fraction identified immediately.

✅ Correct Answer Explanation

X sacrifices exactly 3/20 as stated. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Total incoming share.
Option C → Y's sacrifice.
Option D → Old share only.

🎯 Strategy

Used

Direct Identification

Application:

�� Read specified sacrifice carefully.

Final Logic:

�� X sacrifices 3/20.

🧠 Memory Trick

"Specified Share = Sacrifice"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Fractional Sacrifice – Page reference may vary by edition.

13 Why must the sacrificing ratio be correctly calculated during a partner's admission from an accounting perspective?

A To accurately adjust the capital of the new partner against firm assets.

B To accurately value the unrecorded liabilities of the existing firm.

C To properly distribute the premium for goodwill brought by the new partner among those who lost share.

D To immediately pay off the firm's creditors.

💡 Short Explanation

Sacrificing partners compensated. Goodwill follows sacrifice. Accurate ratio essential.

✅ Correct Answer Explanation

Premium for goodwill is distributed according to sacrificing ratio. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Capital adjustment separate.
Option B → Liabilities unrelated.
Option D → Creditors unaffected.

🎯 Strategy

Used

Accounting Application

Application:

�� Link sacrifice with compensation.

Final Logic:

�� Sacrificing ratio ensures fairness.

🧠 Memory Trick

"Sacrifice Determines Goodwill"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Meaning of Sacrifice – Page reference may vary by edition.

14 If A's old share was 5/8 and new share is 4/7, the application is 5/8 − 4/7. What is the lowest common denominator used to accurately solve this fraction?

A 15

B 35

C 40

D 56

💡 Short Explanation

LCM of 8 and 7 needed. Common denominator required. Fraction subtraction simplified.

✅ Correct Answer Explanation

LCM of 8 and 7: [ 56 ] \text{LCM}(8,7)=56 Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Not divisible by 8.
Option B → Not divisible by 8.
Option C → Not divisible by 7.

🎯 Strategy

Used

Fraction Method

Application:

�� Find LCM for subtraction.

Final Logic:

�� Denominator becomes 56.

🧠 Memory Trick

"8 × 7 = 56"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Formula Application – Page reference may vary by edition.

15 A and B share profits in 3:1. C is admitted for a 1/4 share. The new ratio is calculated as A 9/16, B 3/16, C 4/16. What is A's calculated sacrifice?

A 3/16

B 2/16

C 1/16

D 4/16

💡 Short Explanation

Compare old and new share. Difference equals sacrifice. Fraction carefully calculated.

✅ Correct Answer Explanation

A's Old Share: [ \frac{3}{4}=\frac{12}{16} ] New Share: [ \frac{9}{16} ] Sacrifice: [ \frac{12}{16}-\frac{9}{16}=\frac{3}{16} ] \frac{12}{16}-\frac{9}{16}=\frac{3}{16} Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Incorrect subtraction.
Option C → Too small.
Option D → Equals incoming share.

🎯 Strategy

Used

Sacrifice Formula

Application:

�� Old Share − New Share.

Final Logic:

�� A sacrifices 3/16.

🧠 Memory Trick

"Old Minus New"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Old Minus New Share – Page reference may vary by edition.

16 If A and B share profits in 3:1, and C is admitted for a 1/4 share with no other specific details regarding acquisition, what is the default sacrificing ratio of A and B?

A Equal

B 3:1

C 2:1

D 3:2

💡 Short Explanation

No agreement specified. Default old ratio applies. Sacrifice follows old ratio.

✅ Correct Answer Explanation

By default, old partners sacrifice in their old profit sharing ratio. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Equal sacrifice not assumed.
Option C → No basis given.
Option D → Wrong ratio.

🎯 Strategy

Used

Default Rule Application

Application:

�� Apply old ratio assumption.

Final Logic:

�� Sacrifice ratio equals 3:1.

🧠 Memory Trick

"No Details = Old Ratio"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Ratio Determination – Page reference may vary by edition.

17 In a complex scenario where old partners change ratios or admit a new partner:
I. All old partners always make a sacrifice.
II. An old partner may mathematically gain a share.
III. The sum of all fractional sacrifices must equal the sum of all fractional gains.
Which statements are analytically true?

A I and II only

B I and III only

C II and III only

D All of the above

💡 Short Explanation

Some partners may gain. Total gain equals total sacrifice. Not all sacrifice always.

✅ Correct Answer Explanation

Statement II and III are true. Statement I is false because some old partners may gain. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Statement I false.
Option B → Statement I false.
Option D → All statements not true.

🎯 Strategy

Used

Analytical Verification

Application:

�� Evaluate ratio effects carefully.

Final Logic:

�� Gains balance sacrifices mathematically.

🧠 Memory Trick

"Total Gain = Total Sacrifice"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Identification of Gain – Page reference may vary by edition.

18 Assertion (A): A gaining old partner must also logically compensate the sacrificing partner in a reconstitution.
Reason (R): Goodwill is credited to sacrificing partners to directly compensate for their loss of share in the firm's super profits.

A Both A and R are false.

B A is true, but R is false.

C Both A and R are true, but R is not the correct explanation.

D Both A and R are true, and R is the correct explanation.

💡 Short Explanation

Gaining partner benefits. Sacrificing partner compensated. Reason explains compensation basis.

✅ Correct Answer Explanation

Goodwill compensates partners who sacrifice their future profit share. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Both true.
Option B → Reason true.
Option C → Reason directly explains.

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Connect gain with compensation.

Final Logic:

�� Goodwill balances sacrifice.

🧠 Memory Trick

"Gain Requires Compensation"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Adjustment of Loss – Page reference may vary by edition.

📄 Passage

"When new partner is admitted he acquires his share in profits from the old partners. In other words, on the admission of a new partner, the old partners sacrifice a share of their profit in favour of the new partner. But, what will be the share of new partner and how he will acquire it from the existing partners is decided mutually among the old partners and the new partner. However, if nothing is specified as to how does the new partner acquire his share from the old partners; it may be assumed that he gets it from them in their profit sharing ratio."

According to the passage, who legally decides how the new partner acquires his share if there is an explicit agreement?

A Mutually among the old partners and the new partner

B The old partners only

C The new partner only

D The government regulations

💡 Short Explanation

Mutual agreement controls acquisition. All concerned parties decide. Partnership principle applied.

✅ Correct Answer Explanation

The passage clearly states that acquisition terms are decided mutually. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → New partner also involved.
Option C → Old partners also involved.
Option D → Government not deciding.

🎯 Strategy

Used

Passage Interpretation

Application:

�� Identify decision authority.

Final Logic:

�� Agreement governs acquisition.

🧠 Memory Trick

"Mutual Agreement Decides Share"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Ratio Changes – Page reference may vary by edition.

📄 Passage

What is the direct, inevitable consequence on old partners when a new partner acquires his share, as explicitly stated in the passage?

A They invariably increase their capital.

B They sacrifice a share of their profit.

C They must physically revalue all assets.

D They must dissolve the firm immediately.

💡 Short Explanation

Incoming share comes from old partners. Existing partners sacrifice profits. Reconstitution changes shares.

✅ Correct Answer Explanation

The new partner acquires share by reducing the old partners' profit shares. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Capital increase unnecessary.
Option C → Asset revaluation not inevitable.
Option D → Dissolution unnecessary.

🎯 Strategy

Used

Passage Interpretation

Application:

�� Identify direct consequence.

Final Logic:

�� Old partners sacrifice profit share.

🧠 Memory Trick

"New Partner = Old Partners Sacrifice"

📚 Class XII – Accountancy Part 1 – Chapter: Reconstitution of a Partnership Firm – Admission of a Partner – Topic: Final Distribution – Page reference may vary by edition.

CUET UG Accountancy Booster Test 2 Profit Sharing & Sacrifice

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