CUET UG Accountancy Booster Test 2 Profit Sharing & Gaining Ratio -

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CUET UG Accountancy Booster Test 1 Profit Sharing & Gaining Ratio

⏱️ 30 Minutes

❓ 20 Questions

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

CUET UG Accountancy Booster Test 1 Profit Sharing & Gaining Ratio

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QUESTION 1 OF 20

The new share of each remaining partner conceptually consists of which two components?

Answer Review

1 The new share of each remaining partner conceptually consists of which two components?

A Gaining share and sacrificing share

B Own old share plus the share acquired from the outgoing partner

C Fixed capital ratio and current account balances

D Equal proportions of the new firm's total capital

💡 Short Explanation

Continuing partner keeps old share. Additional share acquired added. Together forms new share.

✅ Correct Answer Explanation

The new share is calculated by adding acquired share to old share. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Sacrifice not always included.
Option C → Capital balances unrelated.
Option D → Equal sharing not necessary.

🎯 Strategy

Used

Conceptual Understanding

Application:

�� Understand composition of new share.

Final Logic:

�� New share = Old share + Acquired share.

🧠 Memory Trick

"Old Share + Acquired Share = New Share"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: New Profit Sharing Ratio – Page reference may vary by edition.

2 If continuing partner X acquires a portion of retiring partner Y's share, the formula to find the exact fractional share acquired by X is:

A New Share of X - Old Share of Y

B Old Share of X + Old Share of Y

C Total Firm Profit × Gaining Ratio

D Retiring Partner's Share × Agreed Proportion of Acquisition

💡 Short Explanation

Retiring share identified first. Agreed proportion applied. Acquired share calculated.

✅ Correct Answer Explanation

Acquired share depends on retiring partner's share and agreed acquisition ratio. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Incorrect subtraction formula.
Option B → Addition not applicable.
Option C → Profit calculation unrelated.

🎯 Strategy

Used

Formula Recognition

Application:

�� Identify acquired share formula.

Final Logic:

�� Acquisition based on agreed proportion.

🧠 Memory Trick

"Retiring Share × Acquisition Ratio"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Acquisition of Share – Page reference may vary by edition.

3 When a partner retires and no agreement exists regarding how their share is acquired, what happens to the relative profit sharing ratio of the continuing partners?

A It remains the same as their old relative ratio.

B It converts immediately to an equal ratio.

C It adjusts inversely to their capital balances.

D It converts to the gaining ratio minus 1.

💡 Short Explanation

No agreement means no change. Old relative ratio continues. Default rule applied.

✅ Correct Answer Explanation

In absence of agreement, continuing partners maintain old relative proportion. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Equal ratio not automatic.
Option C → Capitals unrelated.
Option D → Incorrect concept.

🎯 Strategy

Used

Default Rule Understanding

Application:

�� Apply rule when no agreement exists.

Final Logic:

�� Old ratio continues proportionately.

🧠 Memory Trick

"No Agreement = Old Ratio Continues"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Old Ratio Continuation – Page reference may vary by edition.

4 Read the statements carefully:
Statement 1: The old ratio among all original partners is always identical to the new ratio of continuing partners.
Statement 2: If A, B, and C share profits equally and C retires, A and B will continue to share profits equally if no other information is provided.

A Both 1 and 2 are correct.

B Only 1 is correct.

C Only 2 is correct.

D Neither 1 nor 2 is correct.

💡 Short Explanation

Statement 1 not always true. Statement 2 follows default rule. Equal ratio may continue.

✅ Correct Answer Explanation

Old ratio among all partners changes after retirement, but continuing partners may maintain relative ratio. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Statement 1 false.
Option B → Statement 2 also true.
Option D → Statement 2 true.

🎯 Strategy

Used

Statement Verification

Application:

�� Check each statement separately.

Final Logic:

�� Only Statement 2 valid.

🧠 Memory Trick

"Relative Ratio Continues"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Same Ratio Assumption – Page reference may vary by edition.

5 Murli, Naveen, and Omprakash share profits in 3/8, 4/8, 1/8. Murli retires and surrenders 2/3rd of his share to Naveen. What is the fractional share acquired by Naveen?

A 3/8

B 1/8

C 1/4

D 2/8

💡 Short Explanation

Murli's share identified first. Two-thirds transferred to Naveen. Acquired share calculated.

✅ Correct Answer Explanation

Calculation: 3/8 × 2/3 = 2/8 Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Entire Murli share.
Option B → One-third only.
Option C → Incorrect simplification.

🎯 Strategy

Used

Share Acquisition Calculation

Application:

�� Retiring Share × Acquired Fraction.

Final Logic:

�� Naveen acquires 2/8.

🧠 Memory Trick

"Retiring Share × Agreed Fraction"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Acquisition of Share – Page reference may vary by edition.

6 Continuing the previous question (Murli's share is 3/8; Naveen acquires 2/8 of the firm's total profit share from Murli). If Naveen's old share was 4/8, what is Naveen's new profit share?

A 5/8

B 6/8

C 7/8

D 8/8

💡 Short Explanation

Old share already exists. Acquired share added. New share determined.

✅ Correct Answer Explanation

Calculation: 4/8 + 2/8 = 6/8 Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → One share omitted.
Option C → Incorrect addition.
Option D → Impossible full share.

🎯 Strategy

Used

New Share Calculation

Application:

�� Old Share + Acquired Share.

Final Logic:

�� Naveen's new share is 6/8.

🧠 Memory Trick

"Old + Acquired = New"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Adjusted New Ratio – Page reference may vary by edition.

7 Order the steps to compute the gaining ratio when a new pre-agreed profit sharing ratio is provided:
1. Identify the old fractional share of the continuing partners.
2. Identify the new pre-agreed fractional share of the continuing partners.
3. Deduct the old share from the new share.
4. Simplify the resulting fractions to express the gaining ratio.

A 2, 1, 4, 3

B 4, 3, 2, 1

C 1, 2, 3, 4

D 3, 1, 2, 4

💡 Short Explanation

Old shares identified first. New shares identified next. Difference calculated afterward.

✅ Correct Answer Explanation

Correct order: Old share New share Difference Simplification Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Incorrect order.
Option B → Reverse process.
Option D → Deduction before identification impossible.

🎯 Strategy

Used

Sequential Ratio Logic

Application:

�� Arrange gaining ratio steps.

Final Logic:

�� Calculation follows identification.

🧠 Memory Trick

"Old → New → Difference → Simplify"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Gaining Ratio Calculation – Page reference may vary by edition.

8 Assertion (A): When contributing partners decide on a specified new ratio (e.g., 5:3), this entirely supersedes the old ratio for future profit distribution.
Reason (R): Future profits are legally required to be distributed according to the newly agreed terms in the reconstituted partnership deed.

A Both (A) and (R) are true and (R) is the correct explanation of (A).

B Both (A) and (R) are true but (R) is not the correct explanation of (A).

C (A) is true but (R) is false.

D Both (A) and (R) are false.

💡 Short Explanation

New ratio governs future profits. Agreement legally binding. Reason explains assertion.

✅ Correct Answer Explanation

The reconstituted partnership deed determines future profit-sharing ratio. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

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

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Connect agreement with future ratio.

Final Logic:

�� New deed supersedes old arrangement.

🧠 Memory Trick

"New Agreement = New Ratio"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Specified Ratio – Page reference may vary by edition.

9 Match the concepts to their outcomes regarding profit shares:

List 1	List 2
1. Gain	a. Positive result when Old Share is subtracted from New Share
2. Sacrifice	b. Negative result when Old Share is subtracted from New Share
3. Retirement	c. Reconstitution event triggering share changes
4. Old Ratio	d. The default base for proportioning unstated acquisitions

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

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

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

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

💡 Short Explanation

Gain means positive increase. Sacrifice means decrease. Old ratio acts as base.

✅ Correct Answer Explanation

Correct matching: Gain → Positive difference Sacrifice → Negative difference Retirement → Reconstitution event Old Ratio → Default acquisition basis Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Gain and sacrifice mismatched.
Option B → Multiple incorrect matches.
Option D → Retirement incorrectly paired.

🎯 Strategy

Used

Matching Logic

Application:

�� Match concepts correctly.

Final Logic:

�� Only Option C fully correct.

🧠 Memory Trick

"Positive = Gain, Negative = Sacrifice"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Gaining Ratio Meaning – Page reference may vary by edition.

10 The gaining ratio is predominantly calculated to ascertain the exact proportion in which continuing partners will:

A Share future business losses.

B Introduce extra fixed capital.

C Write off unrecorded assets.

D Compensate the retiring partner for goodwill.

💡 Short Explanation

Continuing partners gain extra share. Compensation required accordingly. Gaining ratio determines burden.

✅ Correct Answer Explanation

Goodwill compensation is shared among gainers in gaining ratio. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Loss sharing unrelated.
Option B → Capital introduction unrelated.
Option C → Asset write-off unrelated.

🎯 Strategy

Used

Purpose Identification

Application:

�� Identify main use of gaining ratio.

Final Logic:

�� Gaining ratio used for goodwill adjustment.

🧠 Memory Trick

"Gainers Pay Goodwill"

11 If Abhishek, Rajat, and Vivek share profits in 5:3:2 and Vivek retires without any specified acquisition agreement, what is the gaining ratio between Abhishek and Rajat?

A 5:3

B 3:2

C 1:1

D 5:2

💡 Short Explanation

No agreement means old ratio continues. Continuing partners retain proportion. Gaining ratio equals old ratio.

✅ Correct Answer Explanation

Since no acquisition agreement exists, Abhishek and Rajat gain in old ratio 5:3. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Includes retiring partner's share.
Option C → Equal gain not specified.
Option D → Incorrect old ratio.

🎯 Strategy

Used

Default Ratio Rule

Application:

�� Apply old ratio continuation rule.

Final Logic:

�� Gaining ratio follows existing ratio.

🧠 Memory Trick

"No Agreement = Old Ratio Gain"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Same as Old Ratio – Page reference may vary by edition.

12 Kumar, Lakshya, Manoj, and Naresh share 3:2:1:4. Kumar retires. His share is acquired ONLY by Lakshya and Manoj in 3:2. What is Naresh's gaining ratio?

A 4

B 0

C 1

D 3

💡 Short Explanation

Naresh acquires no share. No increase in profit share. Gaining amount equals zero.

✅ Correct Answer Explanation

Only Lakshya and Manoj acquire Kumar's share. Naresh gains nothing. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Naresh's old share only.
Option C → Incorrect assumption.
Option D → No such gain exists.

🎯 Strategy

Used

Gain Identification

Application:

�� Identify partners acquiring share.

Final Logic:

�� Non-acquiring partner has zero gain.

🧠 Memory Trick

"No Acquisition = No Gain"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Specified Gaining Ratio – Page reference may vary by edition.

13 If applying the formula (New Share - Old Share) yields a negative figure for a continuing partner, this mathematically represents a:

A Sacrifice

B Absolute Gain

C Revaluation Profit

D Goodwill Write-off

💡 Short Explanation

New share becomes smaller. Negative difference arises. Indicates sacrifice.

✅ Correct Answer Explanation

A negative result means the partner's new share is less than old share. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Gain gives positive value.
Option C → Revaluation unrelated.
Option D → Goodwill unrelated.

🎯 Strategy

Used

Formula Interpretation

Application:

�� Interpret negative difference.

Final Logic:

�� Negative change means sacrifice.

🧠 Memory Trick

"Negative Difference = Sacrifice"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: New Share Minus Old Share – Page reference may vary by edition.

14 Statement 1: As a result of deciding a new profit sharing ratio, a continuing partner may sometimes end up sacrificing a part of their old share.
Statement 2: A sacrificing continuing partner's capital account is debited along with the gaining partners to compensate the retiring partner.

A Both statements are true.

B Both statements are false.

C Statement 1 is true, but Statement 2 is false.

D Statement 1 is false, but Statement 2 is true.

💡 Short Explanation

Sacrifice can occur sometimes. Only gaining partners compensate. Sacrificing partners not debited.

✅ Correct Answer Explanation

Goodwill compensation is borne only by gaining partners. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Statement 2 false.
Option B → Statement 1 true.
Option D → Statement 1 true.

🎯 Strategy

Used

Statement Verification

Application:

�� Check each statement individually.

Final Logic:

�� Only first statement correct.

🧠 Memory Trick

"Only Gainers Pay"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Individual Gain – Page reference may vary by edition.

15 Hanny, Pammy, and Sunny share profits in 3:2:1. Pammy retires. Hanny and Sunny decide to share future profits in 2:1. Sunny's old share was 1/6. Sunny's new share is 1/3 (or 2/6). What is Sunny's individual gaining share?

A 2/6

B 1/6

C 3/6

D 0

💡 Short Explanation

New share exceeds old share. Difference equals gain. Gain calculated directly.

✅ Correct Answer Explanation

Calculation: 2/6 − 1/6 = 1/6 Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → New share only.
Option C → Incorrect subtraction.
Option D → Sunny gains share.

🎯 Strategy

Used

Gain Calculation

Application:

�� New Share − Old Share.

Final Logic:

�� Sunny gains 1/6.

🧠 Memory Trick

"Gain = New − Old"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Ratio of Gain – Page reference may vary by edition.

16 Match the computational formulas:

List 1	List 2
1. Gaining ratio calculation	a. New profit share − Old profit share
2. Share of goodwill to retiring partner	b. Retiring partner's fractional share × Firm's total goodwill
3. Acquired share computation	c. Retiring partner's share × Specified acquisition proportion
4. New profit share	d. Old Share + Acquired Share

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

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

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

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

💡 Short Explanation

Gain calculated by difference. Goodwill based on retiring share. New share includes acquisition.

✅ Correct Answer Explanation

Correct matching: Gaining Ratio → New − Old Goodwill Share → Retiring Share × Goodwill Acquired Share → Retiring Share × Acquisition Proportion New Share → Old + Acquired Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Multiple mismatches.
Option B → Wrong formula pairing.
Option C → Incorrect new share formula.

🎯 Strategy

Used

Formula Matching

Application:

�� Match concepts with formulas.

Final Logic:

�� Only Option D fully correct.

🧠 Memory Trick

"Gain Difference, New Addition"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Computational Formulas – Page reference may vary by edition.

17 Assertion (A): It is possible for a continuing partner to have neither gained nor sacrificed upon the retirement of another partner.
Reason (R): Their new profit share fraction might mathematically equal their exact old profit share fraction.

A Both (A) and (R) are true and (R) is the correct explanation of (A).

B Both (A) and (R) are true but (R) is not the correct explanation of (A).

C (A) is true but (R) is false.

D Both (A) and (R) are false.

💡 Short Explanation

Some partners may remain unchanged. Old and new shares equal. No gain or sacrifice occurs.

✅ Correct Answer Explanation

If old and new shares are equal, there is neither gain nor sacrifice. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

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

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Compare old and new shares.

Final Logic:

�� Equal shares mean no change.

🧠 Memory Trick

"Equal Shares = No Gain, No Sacrifice"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Illustration Concepts – Page reference may vary by edition.

18 Arrange the steps to adjust goodwill when it does not appear in books:
1. Value the firm's total goodwill.
2. Calculate the retiring partner's fractional share of goodwill.
3. Compute the gaining ratio of the continuing partners.
4. Debit gaining partners and credit the retiring partner in the gaining ratio.

A 1, 3, 2, 4

B 2, 1, 3, 4

C 1, 2, 3, 4

D 4, 3, 2, 1

💡 Short Explanation

Goodwill valued first. Retiring share calculated next. Adjustment entry passed finally.

✅ Correct Answer Explanation

Correct order: Value goodwill Find retiring share Compute gaining ratio Pass adjustment entry Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Gaining ratio needed later.
Option B → Goodwill must be valued first.
Option D → Reverse order incorrect.

🎯 Strategy

Used

Sequential Accounting Logic

Application:

�� Arrange goodwill adjustment steps.

Final Logic:

�� Calculations precede journal entry.

🧠 Memory Trick

"Value → Share → Gain → Adjust"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Goodwill Adjustment – Page reference may vary by edition.

📄 Passage

If the firm has agreed to settle the retiring or deceased partner's account by paying him a lump sum amount, then the amount paid to him in excess of what is due to him, based on the balance in his capital account after making necessary adjustments in respect of accumulated profits and losses and revaluation of assets and liabilities, etc., shall be treated as his share of goodwill (known as hidden goodwill).

According to the passage, what specifically defines "hidden goodwill"?

A The total unrecorded assets of the firm.

B The total value of the firm's brand name in the market.

C The exact balance of the retiring partner's capital account.

D The excess amount paid in a lump sum over the adjusted due capital balance.

💡 Short Explanation

Excess payment identified separately. Implied goodwill recognized. Called hidden goodwill.

✅ Correct Answer Explanation

Hidden goodwill arises when payment exceeds adjusted capital due. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Unrecorded assets different concept.
Option B → Brand value broader concept.
Option C → Capital balance alone insufficient.

🎯 Strategy

Used

Passage Interpretation

Application:

�� Identify hidden goodwill meaning.

Final Logic:

�� Excess settlement implies goodwill.

🧠 Memory Trick

"Extra Payment = Hidden Goodwill"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Hidden Goodwill – Page reference may vary by edition.

📄 Passage

Based on the passage concept, how is this "hidden goodwill" adjusted among the continuing partners?

A Credited to their capital accounts equally.

B Debited to their capital accounts in their gaining ratio.

C Ignored as it is not explicitly recorded in the books.

D Deducted from the firm's total bank balance.

💡 Short Explanation

Continuing partners gain benefit. Goodwill burden shared accordingly. Gaining ratio applied.

✅ Correct Answer Explanation

Hidden goodwill is adjusted among gaining partners in gaining ratio. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Partners are debited, not credited.
Option C → Adjustment necessary.
Option D → Bank balance unrelated.

🎯 Strategy

Used

Goodwill Adjustment Understanding

Application:

�� Apply gaining ratio principle.

Final Logic:

�� Gainers compensate retiring partner.

🧠 Memory Trick

"Gainers Bear Goodwill"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Use in Adjustments – Page reference may vary by edition.

CUET UG Accountancy Booster Test 1 Profit Sharing & Gaining Ratio

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