CUET UG Accountancy Booster Test 1 Profit Sharing & Sacrifice -

🚀

CUET UG Accountancy Booster Test 1 Profit Sharing & Sacrifice

⏱️ 30 Minutes

❓ 20 Questions

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

CUET UG Accountancy Booster Test 1 Profit Sharing & Sacrifice

1 / 20

QUESTION 1 OF 20

The ratio in which the profits of a business carried on by all or any of them acting for all are shared is essentially determined by what?

Answer Review

1 The ratio in which the profits of a business carried on by all or any of them acting for all are shared is essentially determined by what?

A The Companies Act

B The partnership agreement

C The new partner alone

D The creditors of the firm

💡 Short Explanation

Profit sharing depends on agreement. Partners mutually decide ratio. Legal basis is partnership agreement.

✅ Correct Answer Explanation

The profit-sharing ratio is determined by the partnership agreement among partners. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Companies Act not applicable.
Option C → New partner alone cannot decide.
Option D → Creditors have no role.

🎯 Strategy

Used

Legal Concept Recall

Application:

�� Identify basis of profit sharing.

Final Logic:

�� Agreement governs partnership relations.

🧠 Memory Trick

"Agreement Decides Ratio"

📚 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 must the old profit sharing ratio fundamentally change upon the admission of a new partner?

A To ensure the firm incurs no losses in the future.

B To reduce the overall capital base of the firm.

C To accommodate the new partner's share out of the existing profit pool.

D To pay off the liabilities of the retiring partners.

💡 Short Explanation

New partner requires share. Existing partners sacrifice profits. Old ratio must change.

✅ Correct Answer Explanation

Admission of a new partner reduces the old partners' share to provide a share to the incoming partner. Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Ratio change unrelated to losses.
Option B → Capital base not necessarily reduced.
Option D → No retiring partner involved.

🎯 Strategy

Used

Concept Application

Application:

�� Connect admission with ratio adjustment.

Final Logic:

�� Existing profit pool redistributed.

🧠 Memory Trick

"New Partner Needs Share"

📚 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): A new partner can be admitted only when existing partners unanimously agree.
Reason (R): This is specified under the provisions of the Partnership Act 1932 unless otherwise provided in the partnership deed.

A A is false, but R is true.

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

Unanimous consent generally required. Partnership Act provides rule. Reason explains assertion.

✅ Correct Answer Explanation

The Partnership Act 1932 requires unanimous consent for admission unless the deed states otherwise. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Assertion true.
Option B → Reason also true.
Option C → Reason directly explains.

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Link legal rule with admission.

Final Logic:

�� Admission requires partner approval.

🧠 Memory Trick

"All Partners Must Agree"

📚 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 A and B share profits in 3:1. They admit C for a 1/4 share in the future profits. What will be the new profit sharing ratio?

A A 9/16, B 3/16, C 4/16

B A 8/16, B 4/16, C 4/16

C A 10/16, B 2/16, C 4/16

D A 8/16, B 9/16, C 10/16

💡 Short Explanation

Remaining share distributed in old ratio. C receives 1/4 share. Old partners share 3/4 proportionately.

✅ Correct Answer Explanation

Remaining Share: 1 - (1/4) = 3/4 A's Share: (3/4) × (3/4) = 9/16 B's Share: (1/4) × (3/4) = 3/16 C's Share: 1/4 = 4/16 (3/4) × (3/4) = 9/16 Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Assumes equal sacrifice.
Option C → Incorrect allocation.
Option D → Ratio total invalid.

🎯 Strategy

Used

Remaining Share Method

Application:

�� Multiply remaining share with old ratio.

Final Logic:

�� New ratio becomes 9:3:4.

🧠 Memory Trick

"Remaining Share × 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 Regarding mutual agreement during a partner's admission, consider the following:
I. The share of the new partner is decided mutually.
II. The new partner can demand any share irrespective of agreement.
III. How the new partner acquires the share is decided mutually.
Which statements are correct?

A I and II

B I and III

C II and III

D All of the above

💡 Short Explanation

Share decided mutually. Acquisition method also mutual. No unilateral demand allowed.

✅ Correct Answer Explanation

Statements I and III are correct. Statement II is incorrect because admission requires mutual agreement. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Statement II false.
Option C → Statement II incorrect.
Option D → All statements not true.

🎯 Strategy

Used

Statement Verification

Application:

�� Identify valid partnership principles.

Final Logic:

�� Mutual agreement controls admission.

🧠 Memory Trick

"Admission Depends on Agreement"

📚 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 Match the acquisition scenarios with their calculation outcomes:

List 1	List 2
1. No specific agreement on acquisition	a. Deduct fixed fraction directly from old share
2. Fixed fraction given from old partner	b. Deduct half of incoming share from each old partner
3. New ratio explicitly given	c. Assumed acquired in old profit ratio
4. Equal sacrifice mentioned	d. Calculate sacrifice as Old Share - New Share

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

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

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

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

💡 Short Explanation

Default acquisition uses old ratio. Fixed share deducted directly. Equal sacrifice splits incoming share equally.

✅ Correct Answer Explanation

Correct matching: No agreement → Old ratio assumed Fixed fraction → Deduct directly New ratio given → Old minus new Equal sacrifice → Half from each Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Pairings incorrect.
Option B → New ratio mismatch.
Option D → Equal sacrifice wrongly linked.

🎯 Strategy

Used

Matching Logic

Application:

�� Connect acquisition methods properly.

Final Logic:

�� Only Option C fully correct.

🧠 Memory Trick

"No Agreement → Old Ratio"

📚 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 X and Y share profits 3:2. Z is admitted, getting a 1/5 share. Z acquires 3/20 from X and 1/20 from Y. What is the new profit sharing ratio?

A 6:10:4

B 10:6:4

C 8:8:4

D 9:7:4

💡 Short Explanation

Old shares adjusted individually. Sacrifice deducted separately. New ratio calculated.

✅ Correct Answer Explanation

X's New Share: (3/5) - (3/20) = 9/20 Y's New Share: (2/5) - (1/20) = 7/20 Z's Share: 1/5 = 4/20 New Ratio: 9 : 7 : 4 (3/5) - (3/20) = 9/20 Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Reversed shares.
Option B → Incorrect adjustments.
Option C → Assumes equal shares.

🎯 Strategy

Used

Share Deduction Method

Application:

�� Subtract sacrificed fractions individually.

Final Logic:

�� Ratio becomes 9:7:4.

🧠 Memory Trick

"Old Share Minus Sacrifice"

📚 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.

8 Arrange the steps to find the new ratio when a partner acquires their share in a specific proportion from old partners:
I. Subtract the sacrificed share from the old partner's share.
II. Determine the specific proportion of the new partner's share each old partner gives.
III. Calculate the new partner's total share.

A II, I, III

B I, II, III

C III, I, II

D II, III, I

💡 Short Explanation

Determine sacrifice first. Deduct from old shares. Then finalize new share.

✅ Correct Answer Explanation

Correct order: Determine sacrifice proportion Subtract from old shares Calculate new share Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Deduction before calculation incorrect.
Option C → New share not first.
Option D → Final calculation misplaced.

🎯 Strategy

Used

Sequential Logic

Application:

�� Arrange ratio calculation process.

Final Logic:

�� Sacrifice must be identified first.

🧠 Memory Trick

"Find Sacrifice → Deduct → Finalize"

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

9 When the new partner's share is given as a fraction 'X', and old partners share the remaining in their old ratio, what is the formula for calculating the remaining share?

A X - 1

B 1 - X

C 1 + X

D X / 1

💡 Short Explanation

Total share equals one. New partner gets X. Remaining share equals 1 − X.

✅ Correct Answer Explanation

Remaining share available to old partners: 1 - X Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Reverse subtraction.
Option C → Total exceeds one.
Option D → No relevance.

🎯 Strategy

Used

Formula Recall

Application:

�� Compute remaining share.

Final Logic:

�� Total profit always equals one.

🧠 Memory Trick

"Total 1 Minus New Share"

📚 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 A and B share profits equally. C is admitted for a 1/4 share, taking equally from A and B. What is A's exact sacrifice?

A 1/4

B 1/6

C 1/8

D 1/2

💡 Short Explanation

C receives 1/4 share. Sacrifice equally shared. Each sacrifices half of 1/4.

✅ Correct Answer Explanation

A's Sacrifice: (1/4) × (1/2) = 1/8 (1/4) × (1/2) = 1/8 Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Entire incoming share.
Option B → Incorrect division.
Option D → Excessive sacrifice.

🎯 Strategy

Used

Equal Sacrifice Method

Application:

�� Divide incoming share equally.

Final Logic:

�� Each sacrifices 1/8.

🧠 Memory Trick

"Equal Sacrifice Means Equal Division"

📚 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 Das and Sinha share in 4:1. Pal is admitted for 1/4 share, acquired wholly from Das. What is Sinha's new share?

A 4/5

B 1/4

C 11/20

D 1/5

💡 Short Explanation

Pal's share taken fully from Das. Sinha sacrifices nothing. Sinha's share unchanged.

✅ Correct Answer Explanation

Sinha's old share: 1/5 = 0.2 Since Pal acquires share wholly from Das, Sinha's share remains unchanged. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Das's old share.
Option B → Pal's share.
Option C → Das's adjusted share.

🎯 Strategy

Used

Direct Share Analysis

Application:

�� Identify unaffected partner.

Final Logic:

�� Sinha retains original share.

🧠 Memory Trick

"No Sacrifice, No Change"

📚 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 If Ram sacrifices 1/4 "of his share" to a new partner, how do you correctly calculate his actual fractional sacrifice?

A By multiplying 1/4 with Ram's old share.

B By adding 1/4 to Ram's old share.

C By dividing Ram's old share by 1/4.

D By subtracting 1/4 from Ram's old share.

💡 Short Explanation

Fraction applies to existing share. Multiplication required. Sacrifice proportion calculated.

✅ Correct Answer Explanation

Fractional sacrifice means a proportion of the old share: Sacrifice = (1/4) × Old Share Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Addition incorrect.
Option C → Division unnecessary.
Option D → Direct subtraction invalid.

🎯 Strategy

Used

Formula Application

Application:

�� Apply fractional sacrifice rule.

Final Logic:

�� "Of" means multiplication.

🧠 Memory Trick

"'Of' Means Multiply"

📚 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 The primary purpose of the new partner bringing in a premium for goodwill is to compensate for what?

A The sudden increase in the firm's liabilities.

B The sacrificing partners for the loss of their share in super profits.

C The depreciation of old manufacturing assets.

D The creation of necessary general reserves.

💡 Short Explanation

Old partners sacrifice profits. Compensation provided through goodwill. Super profits specifically affected.

✅ Correct Answer Explanation

Premium for goodwill compensates sacrificing partners for losing future super profits. Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → Liabilities unrelated.
Option C → Depreciation irrelevant.
Option D → Reserves not purpose.

🎯 Strategy

Used

Conceptual Understanding

Application:

�� Identify purpose of goodwill premium.

Final Logic:

�� Compensation protects old partners.

🧠 Memory Trick

"Goodwill Rewards Sacrifice"

📚 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 an Old Share = 3/5 and the New Share = 2/4, what is the correct formula application for calculating the sacrifice?

A 2/4 - 3/5

B (3/5) * (2/4)

C 3/5 - 2/4

D (3/5) / (2/4)

💡 Short Explanation

Sacrifice equals old minus new. Compare partner shares. Reduction gives sacrifice.

✅ Correct Answer Explanation

Formula: Sacrifice = Old Share - New Share Thus: (3/5) - (2/4) = 1/10 Hence, Option C is correct.

❓ Why Other Options Are Incorrect

Option A → Reverse formula.
Option B → Multiplication incorrect.
Option D → Division irrelevant.

🎯 Strategy

Used

Formula Recall

Application:

�� Apply sacrifice formula.

Final Logic:

�� Old share reduced to new share.

🧠 Memory Trick

"Old Minus New"

📚 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 Amar's old share was 3/5, and his new share is 2/4. What is his calculated fractional sacrifice?

A 4/20

B 1/20

C 3/20

D 2/20

💡 Short Explanation

Convert fractions to common denominator. Subtract new from old. Difference equals sacrifice.

✅ Correct Answer Explanation

3/5 = 12/20 2/4 = 10/20 Sacrifice: (12/20) - (10/20) = 2/20 (12/20) - (10/20) = 2/20 Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Incorrect subtraction.
Option B → Wrong denominator logic.
Option C → Miscalculation.

🎯 Strategy

Used

Fraction Conversion Method

Application:

�� Convert and subtract accurately.

Final Logic:

�� Sacrifice equals (2/20).

🧠 Memory Trick

"Convert First, Then Subtract"

📚 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 Consider the following statements regarding the calculation of sacrifice:
I. Sacrificing ratio is primarily used to distribute the premium for goodwill.
II. If the new ratio is not given, the old ratio is often assumed as the sacrificing ratio.
III. Sacrificing ratio is calculated as New Share minus Old Share.
Which statements are fundamentally true?

A I and II only

B II and III only

C I and III only

D I, II, and III

💡 Short Explanation

Goodwill distributed in sacrificing ratio. Old ratio assumed if new ratio absent. Formula in III reversed.

✅ Correct Answer Explanation

Statements I and II are correct. Statement III is incorrect because: Sacrifice = Old Share - New Share Hence, Option A is correct.

❓ Why Other Options Are Incorrect

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

🎯 Strategy

Used

Statement Verification

Application:

�� Evaluate sacrifice principles.

Final Logic:

�� Sacrifice means reduction in share.

🧠 Memory Trick

"Sacrifice = Old Minus New"

📚 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 Suresh's old share is 3/7, and his new share is calculated as 3/6. What is his resultant gain or sacrifice?

A Sacrifice of 3/42

B Gain of 3/42

C Sacrifice of 1/42

D Gain of 1/42

💡 Short Explanation

New share exceeds old share. Increase represents gain. Difference calculated fractionally.

✅ Correct Answer Explanation

(3/6) - (3/7) (21 - 18) / 42 3/42 Since new share is higher, it is a gain. (3/6) - (3/7) = 3/42 Hence, Option B is correct.

❓ Why Other Options Are Incorrect

Option A → It is gain, not sacrifice.
Option C → Incorrect value.
Option D → Wrong calculation.

🎯 Strategy

Used

Share Comparison

Application:

�� Compare old and new shares.

Final Logic:

�� Increase indicates gain.

🧠 Memory Trick

"Higher New Share = Gain"

📚 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): Sometimes an old partner's share actually increases upon the admission of a new partner.
Reason (R): This happens when the old partner's new ratio mathematically exceeds their old ratio, resulting in a gain rather than a sacrifice.

A A is false, but R is true.

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

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

D A is true, but R is false.

💡 Short Explanation

Some partners may gain share. New share can exceed old share. Reason correctly explains gain.

✅ Correct Answer Explanation

An old partner gains when the new share becomes greater than the old share. Hence, both Assertion and Reason are true.

❓ Why Other Options Are Incorrect

Option A → Assertion true.
Option B → Reason directly explains.
Option D → Reason true.

🎯 Strategy

Used

Assertion–Reason Analysis

Application:

�� Compare old and new ratios.

Final Logic:

�� Gain occurs if new share increases.

🧠 Memory Trick

"New Share Bigger = Gain"

📚 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

"Any change in the existing agreement amounts to reconstitution of the partnership firm. This results in an end of the existing agreement and a new agreement comes into being with a changed relationship among the members of the partnership firm and/or their composition. However, the firm continues. The partners often resort to reconstitution of the firm in various ways such as admission of a new partner, change in profit sharing ratio, retirement..."

According to the passage, what happens to the firm itself when a new agreement comes into being?

A The firm is completely liquidated.

B The firm suspends all operations.

C The firm merges with another entity.

D The firm continues.

💡 Short Explanation

Agreement changes only. Business continuity maintained. Firm still operates.

✅ Correct Answer Explanation

The passage clearly states that the firm continues even after reconstitution. Hence, Option D is correct.

❓ Why Other Options Are Incorrect

Option A → Liquidation unnecessary.
Option B → Operations continue.
Option C → Merger not mentioned.

🎯 Strategy

Used

Passage Interpretation

Application:

�� Identify effect of reconstitution.

Final Logic:

�� Reconstitution does not end firm.

🧠 Memory Trick

"Agreement Changes, Firm Continues"

📚 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

Which of the following is NOT explicitly listed in the passage as a standard reason for the reconstitution of a firm?

A Payment of heavy tax liabilities

B Retirement of a partner

C Admission of a new partner

D Change in profit sharing ratio

💡 Short Explanation

Reconstitution linked to partner changes. Tax liabilities unrelated. Passage lists partner-related events.

✅ Correct Answer Explanation

The passage mentions admission, retirement, and change in ratio, but not tax liabilities. Hence, Option A is correct.

❓ Why Other Options Are Incorrect

Option B → Explicitly mentioned.
Option C → Explicitly mentioned.
Option D → Explicitly mentioned.

🎯 Strategy

Used

Passage-Based Elimination

Application:

�� Identify option absent from passage.

Final Logic:

�� Tax liability not a reconstitution reason.

🧠 Memory Trick

"Partner Changes Cause Reconstitution"

📚 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 1 Profit Sharing & Sacrifice

Test Complete!

Answer Review