CUET UG Accountancy Booster Test 3 Amount Due & Basic Adjustments -

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CUET UG Accountancy Booster Test 2 Amount Due & Basic Adjustments

⏱️ 30 Minutes

❓ 20 Questions

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

CUET UG Accountancy Booster Test 2 Amount Due & Basic Adjustments

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QUESTION 1 OF 20

In the event of a partner's death, the final consolidated balance of the deceased partner's capital account is transferred to which specific account for settlement?

Answer Review

1 In the event of a partner's death, the final consolidated balance of the deceased partner's capital account is transferred to which specific account for settlement?

A Gaining Partners' Capital Accounts

B Deceased Partner's Executor's Account

C Profit & Loss Suspense Account

D Revaluation Account

💡 Short Explanation

Deceased partner cannot operate account. Executor handles settlement amount. Final balance transferred accordingly.

✅ Correct Answer Explanation

After death, the deceased partner's dues become payable to the executor/legal representative. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Gainers not settlement holders.
Option C → Suspense used for interim profit.
Option D → Revaluation unrelated.

🎯 Strategy

Used

Settlement Account Identification

Application:

�� Determine legal settlement recipient.

Final Logic:

�� Executor receives final claim.

🧠 Memory Trick

"Death → Executor Account"

📚 Class XII – Accountancy Part 1 – Chapter: Retirement/Death of a Partner – Topic: Executor's Account – Page reference may vary by edition.

2 If a retiring partner's Current Account has a debit balance and their Capital Account has a credit balance, how is the base amount due mathematically established?

A Both balances are added together.

B The debit balance is written off entirely to the Revaluation Account.

C The Current Account debit balance is subtracted from the Capital Account credit balance.

D The Capital Account is transferred to the Current Account to leave a net debit.

💡 Short Explanation

Debit balance reduces claim. Capital balance increases claim. Net amount calculated after subtraction.

✅ Correct Answer Explanation

The current account debit represents amount owed by the partner to the firm. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Debit cannot be added.
Option B → Revaluation unrelated.
Option D → Incorrect treatment.

🎯 Strategy

Used

Net Claim Analysis

Application:

�� Credit minus debit balance.

Final Logic:

�� Debit balances reduce final amount due.

🧠 Memory Trick

"Debit Balance Deducted"

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

3 P, Q, and R share profits 3:2:1. R retires. R's capital balance after all adjustments is Rs. 60,000. P and Q agree to pay him Rs. 75,000 in full settlement. What is R's share of hidden goodwill?

A Rs. 75,000

B Rs. 60,000

C Rs. 30,000

D Rs. 15,000

💡 Short Explanation

Payment exceeds adjusted capital. Excess treated as goodwill. Hidden goodwill calculated.

✅ Correct Answer Explanation

Hidden Goodwill: [75000-60000=15000] 75000-60000=15000 Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Total settlement only.
Option B → Adjusted capital only.
Option C → Incorrect difference.

🎯 Strategy

Used

Hidden Goodwill Calculation

Application:

�� Amount Paid − Adjusted Capital.

Final Logic:

�� Excess payment represents hidden goodwill.

🧠 Memory Trick

"Extra Payment = Goodwill"

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

4 Identify the accurate statements regarding accumulated reserves and losses:
I. Employees' Provident Fund is an external liability and is not distributed to partners.
II. General Reserve is distributed to all partners in their old profit-sharing ratio.
III. Profit & Loss Account debit balance belongs exclusively to the retiring partner.

A I and II only

B II and III only

C I and III only

D I, II, and III

💡 Short Explanation

EPF is external liability. Reserve distributed among partners. Loss not exclusive to retiring partner.

✅ Correct Answer Explanation

General Reserve belongs to all partners, while accumulated losses are shared in old ratio. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Statement III false.
Option C → Statement II true also.
Option D → Statement III incorrect.

🎯 Strategy

Used

Statement Verification

Application:

�� Check each statement independently.

Final Logic:

�� Only Statements I and II correct.

🧠 Memory Trick

"Reserve Shared, Loss Shared"

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

5 The journal entry for the distribution of a net gain on revaluation requires:

A Debiting All Partners' Capital A/cs and Crediting Revaluation A/c.

B Debiting Revaluation A/c and Crediting All Partners' Capital A/cs individually.

C Debiting Revaluation A/c and Crediting only the Retiring Partner's Capital A/c.

D Crediting Revaluation A/c and Debiting Gaining Partners' Capital A/cs.

💡 Short Explanation

Revaluation gain belongs to old partners. Revaluation account closed by debit. Capitals credited accordingly.

✅ Correct Answer Explanation

Profit on revaluation is distributed among all old partners in old ratio. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Reverse entry.
Option C → Only one partner not credited.
Option D → Incorrect treatment.

🎯 Strategy

Used

Journal Entry Recall

Application:

�� Apply revaluation profit transfer.

Final Logic:

�� Profit increases partners' capitals.

🧠 Memory Trick

"Profit Credits Capitals"

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

6 Upon retirement, assets decreased by Rs. 20,000, liabilities increased by Rs. 10,000, and an unrecorded asset of Rs. 5,000 was discovered. What is the net revaluation effect?

A Gain of Rs. 5,000

B Loss of Rs. 35,000

C Loss of Rs. 25,000

D Gain of Rs. 15,000

💡 Short Explanation

Asset decrease creates loss. Liability increase creates loss. Unrecorded asset creates gain.

✅ Correct Answer Explanation

Calculation: [20000+10000-5000=25000] 20000+10000-5000=25000 Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Net effect not gain.
Option B → Gain omitted.
Option D → Incorrect direction.

🎯 Strategy

Used

Net Revaluation Analysis

Application:

�� Total Losses − Total Gains.

Final Logic:

�� Net revaluation loss = Rs. 25,000.

🧠 Memory Trick

"Losses Minus Gains"

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

7 Arrange the steps to calculate a deceased partner's intervening profit based on sales:
1. Identify previous year's sales and previous year's profit.
2. Calculate the firm's profit percentage based on those figures.
3. Apply the profit percentage to the sales from the start of the year to the date of death.
4. Multiply this intervening firm profit by the deceased partner's share.

A 1, 3, 2, 4

B 2, 1, 4, 3

C 4, 3, 2, 1

D 1, 2, 3, 4

💡 Short Explanation

Previous data identified first. Profit percentage calculated next. Intervening profit computed afterward.

✅ Correct Answer Explanation

Correct order: Find past figures Calculate percentage Apply to current sales Allocate partner share Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Percentage must precede application.
Option B → Identification comes first.
Option C → Reverse order incorrect.

🎯 Strategy

Used

Sequential Calculation Logic

Application:

�� Arrange profit estimation steps.

Final Logic:

�� Proper order ensures correct calculation.

🧠 Memory Trick

"Past → Percentage → Current → Share"

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

8 Assertion (A): Interest on a deceased partner's capital is calculated exactly up to the date of death and credited to their executor's account.
Reason (R): Because after the date of death, the accumulated capital balance transfers to the Executor's account and ceases to earn partner's interest on capital.

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

B Both A and R are false.

C A is true, but R is false.

D A is false, but R is true.

💡 Short Explanation

Interest allowed till death date. Executor account used afterward. Reason correctly explains assertion.

✅ Correct Answer Explanation

After death, the deceased partner is no longer part of partnership and capital shifts to executor settlement. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Both statements true.
Option C → Reason also true.
Option D → Assertion true.

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Link death date with interest entitlement.

Final Logic:

�� Interest ends when partnership relationship ends.

🧠 Memory Trick

"Interest Till Death Only"

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

9 Match the settlement scenarios with their correct corresponding journal entries:

List 1	List 2
1. Payment in full immediately	a. Dr. Retiring Capital A/c, Cr. Cash/Bank A/c
2. Whole amount treated as loan	b. Dr. Retiring Capital A/c, Cr. Retiring Partner's Loan A/c
3. Part payment and part loan	c. Dr. Retiring Capital A/c, Cr. Cash A/c & Loan A/c
4. Interest on loan	d. Dr. Interest A/c, Cr. Retiring Partner's Loan A/c

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

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

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

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

💡 Short Explanation

Full payment credits bank/cash. Unpaid balance becomes loan. Interest increases loan balance.

✅ Correct Answer Explanation

Correct matching: Full payment → Cash/Bank Loan treatment → Loan A/c Partial settlement → Cash & Loan Interest → Loan credit Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Entries mismatched.
Option C → Interest incorrectly paired.
Option D → Multiple mismatches.

🎯 Strategy

Used

Matching Logic

Application:

�� Match scenario with journal entry.

Final Logic:

�� Option B fully correct.

🧠 Memory Trick

"Cash, Loan, Interest"

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

10 What is the correct journal entry for transferring a deceased partner's share of profit for the intervening period before closing books?

A Dr. Gaining Partners' Capital A/cs, Cr. Deceased Partner's Capital A/c

B Dr. Deceased Partner's Capital A/c, Cr. Profit & Loss Suspense A/c

C Dr. Profit & Loss Suspense A/c, Cr. Deceased Partner's Capital A/c

D Dr. Revaluation A/c, Cr. Deceased Partner's Capital A/c

💡 Short Explanation

Interim profit estimated first. Suspense account temporarily used. Deceased partner credited.

✅ Correct Answer Explanation

The deceased partner's share of profit is credited before actual books are finalized. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Gainers not directly adjusted.
Option B → Reverse entry.
Option D → Revaluation unrelated.

🎯 Strategy

Used

Journal Entry Recall

Application:

�� Apply intervening profit entry.

Final Logic:

�� Suspense account temporarily absorbs profit estimate.

🧠 Memory Trick

"Suspense Debit, Deceased Credit"

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

11 Regarding personal drawings up to the date of retirement:
I. They reduce the final total claim payable to the partner.
II. Interest charged on those drawings increases the final claim.
III. Both drawings and interest on drawings are debited to the partner's capital account.
Which statements are accurate?

A I and II only

B II and III only

C I, II, and III

D I and III only

💡 Short Explanation

Drawings reduce final claim. Interest on drawings also deducted. Both debited to capital account.

✅ Correct Answer Explanation

Interest on drawings decreases the partner's final amount, not increases it. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Statement II false.
Option B → Statement II incorrect.
Option C → All statements not correct.

🎯 Strategy

Used

Statement Verification

Application:

�� Check each statement carefully.

Final Logic:

�� Only Statements I and III true.

🧠 Memory Trick

"Drawings Reduce Claim"

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

12 How is a retiring partner's Current Account containing a debit balance properly closed out during settlement?

A By transferring it to the debit side of their Capital Account.

B By transferring it to the credit side of the Revaluation Account.

C By leaving it on the asset side of the new Balance Sheet.

D By writing it off against the General Reserve.

💡 Short Explanation

Debit balance means amount owed. Capital account adjusted accordingly. Final claim reduced.

✅ Correct Answer Explanation

The debit balance is transferred to the retiring partner's capital account to determine net amount due. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Revaluation unrelated.
Option C → Cannot remain in books.
Option D → General Reserve unrelated.

🎯 Strategy

Used

Account Closure Understanding

Application:

�� Adjust debit balance against capital.

Final Logic:

�� Net payable amount calculated properly.

🧠 Memory Trick

"Debit Current → Debit Capital"

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

13 In partnership accounting, a debit balance in the Profit and Loss Account inherently signifies:

A A secret reserve.

B An accumulated loss.

C An unrecorded asset.

D A gain on revaluation.

💡 Short Explanation

Debit balance means losses accumulated. Loss reduces partners' capitals. Not reserve or gain.

✅ Correct Answer Explanation

A debit balance in P&L Account represents accumulated losses carried forward. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Reserve usually credit balance.
Option C → Asset unrelated.
Option D → Gain opposite effect.

🎯 Strategy

Used

Account Interpretation

Application:

�� Identify nature of debit balance.

Final Logic:

�� Debit balance represents loss.

🧠 Memory Trick

"Debit P&L = Loss"

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

14 X, Y, and Z share profits 3:2:1. Z retires exactly 4 months into the year. The previous year's loss was Rs. 36,000. Assuming the loss accrues evenly, what is Z's share of the loss for the intervening period?

A Rs. 6,000

B Rs. 4,000

C Rs. 2,000

D Rs. 1,000

💡 Short Explanation

Four months' loss considered. Z's share applied proportionately. Final loss calculated.

✅ Correct Answer Explanation

Calculation: 36000 × 4/12 × 1/6 = 2000 Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Excess amount.
Option B → Ratio ignored.
Option D → Incorrect calculation.

🎯 Strategy

Used

Intervening Loss Calculation

Application:

�� Annual Loss × Time × Share.

Final Logic:

�� Retiring partner bears proportional loss.

🧠 Memory Trick

"Loss × Time × Share"

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

15 Assertion (A): If goodwill exists in the Balance Sheet, it must be written off completely before making the adjustment for the new valuation of goodwill.
Reason (R): This practice prevents double-counting the value of goodwill and adheres to accounting standards.

A Both A and R are false.

B A is true, but R is false.

C A is false, but R is true.

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

💡 Short Explanation

Existing goodwill removed first. Prevents duplicate valuation. Reason explains assertion.

✅ Correct Answer Explanation

Old goodwill must be written off before recording fresh valuation adjustments. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Both statements true.
Option B → Reason also true.
Option C → Assertion true.

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Connect goodwill write-off purpose.

Final Logic:

�� Double-counting avoided through write-off.

🧠 Memory Trick

"Old Goodwill Removed First"

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

16 Order the steps for adjusting goodwill when a continuing partner also sacrifices a portion of their share during a retirement:
1. Credit the Retiring Partner for their share of goodwill.
2. Credit the Sacrificing Continuing Partner for their sacrificed share.
3. Debit the Gaining Partners' Capital Accounts for the total compensation.

A 1, 2, 3

B 2, 1, 3

C 3, 2, 1

D 1, 3, 2

💡 Short Explanation

Retiring partner compensated first. Sacrificing partner credited next. Gainers debited finally.

✅ Correct Answer Explanation

Correct order: Credit retiring partner Credit sacrificing partner Debit gaining partners Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Retiring partner adjusted first.
Option C → Debit cannot precede credits.
Option D → Sacrifice adjustment omitted initially.

🎯 Strategy

Used

Sequential Adjustment Logic

Application:

�� Arrange goodwill adjustment properly.

Final Logic:

�� Credits determined before debits.

🧠 Memory Trick

"Credit Receivers First"

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

17 The total capital of a firm is fixed at Rs. 1,20,000. After all adjustments, Mohit's capital is Rs. 82,000 and Sohan's is Rs. 41,000. Their new profit-sharing ratio is 2:1. To reach their required capital balances, what cash movements must occur?

A Mohit brings Rs. 2,000; Sohan brings Rs. 1,000.

B Mohit brings Rs. 1,000; Sohan withdraws Rs. 2,000.

C Mohit withdraws Rs. 1,000; Sohan withdraws Rs. 2,000.

D Mohit withdraws Rs. 2,000; Sohan withdraws Rs. 1,000.

💡 Short Explanation

Total capital distributed in ratio. Required capitals determined. Excess withdrawn accordingly.

✅ Correct Answer Explanation

Required Capitals: 120000 × 2/3 = 80000 120000 × 1/3 = 40000 Mohit Excess: 82000 − 80000 = 2000 Sohan Excess: 41000 − 40000 = 1000 Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Capitals already excessive.
Option B → Mohit not deficient.
Option C → Mohit excess incorrect.

🎯 Strategy

Used

Capital Adjustment Calculation

Application:

�� Existing Capital − Required Capital.

Final Logic:

�� Excess amounts withdrawn.

🧠 Memory Trick

"Excess Capital Withdrawn"

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

18 Match the capital adjustment scenario with its resultant outcome for a continuing partner:

List 1	List 2
1. Existing Adjusted Capital > New Required Capital	a. Partner withdraws excess cash
2. Existing Adjusted Capital < New Required Capital	b. Partner brings in additional cash
3. Claim unpaid to retiring partner	c. Amount is transferred to a Loan Account
4. Final adjusted claim paid in full immediately	d. Cash goes out of the firm entirely

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

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

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

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

💡 Short Explanation

Excess capital withdrawn. Deficient capital introduced. Unpaid claims become loan.

✅ Correct Answer Explanation

Correct matching: Excess Capital → Withdrawal Deficient Capital → Additional Cash Unpaid Claim → Loan Immediate Payment → Cash Outflow Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Reverse treatments.
Option C → Incorrect matching.
Option D → Multiple mismatches.

🎯 Strategy

Used

Matching Logic

Application:

�� Match scenario with outcome.

Final Logic:

�� Option A fully correct.

🧠 Memory Trick

"Excess Withdraw, Deficit Bring"

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

📄 Passage

Category: Final Settlement Base (Passage for Q19) "When Loan account is settled by paying in instalment includes principal and interest. a) For interest on loan: Interest A/c Dr. To Retiring Partner's Loan A/c b) For payment of instalment: Retiring Partner's Loan A/c Dr. To Cash/Bank A/c"

According to the passage, the journal entry for applying interest to a retiring partner's loan requires debiting which account?

A Revaluation Account

B Retiring Partner's Capital Account

C Interest Account

D Cash/Bank Account

💡 Short Explanation

Interest treated as expense. Loan liability increases. Interest account debited.

✅ Correct Answer Explanation

Entry: Interest A/c Dr. To Retiring Partner's Loan A/c Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Revaluation unrelated.
Option B → Capital already settled.
Option D → Cash payment not immediate.

🎯 Strategy

Used

Passage-Based Entry Analysis

Application:

�� Identify debited account.

Final Logic:

�� Interest expense debited.

🧠 Memory Trick

"Interest Expense Debit"

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

📄 Passage

Based on the text, the balance of the retiring partner's loan account is shown on the liabilities side of the Balance Sheet until:

A The end of the financial year.

B The last instalment is paid off.

C The loan is converted into equity.

D The interest rate changes.

💡 Short Explanation

Outstanding balance remains liability. Liability removed after full repayment. Instalment completion closes account.

✅ Correct Answer Explanation

The loan remains payable until the final instalment settles the outstanding balance. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Liability may continue longer.
Option C → Conversion not compulsory.
Option D → Interest change irrelevant.

🎯 Strategy

Used

Liability Interpretation

Application:

�� Determine closure condition.

Final Logic:

�� Full repayment removes liability.

🧠 Memory Trick

"Loan Ends with Final Payment"

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

CUET UG Accountancy Booster Test 2 Amount Due & Basic Adjustments

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