Chapter 4: Reconstruction of Partnership Firm

In this course, we discuss the change in profit and loss sharing ratio or distribution ratio between the existing partners in detail.

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Details

Let's take a look at the reasons for changes in a partnership:

1. Change in profit and loss sharing ratio between continuing partners.
2. Admission of existing partnership firm.
3. Retirement or death of a partner of an existing partnership firm.

Curriculum

Basic Concepts and Ratio Sums

Pg 135 Q4 to Q9

31 m 47 s

Full sum with Journal Entries

Pg 139 Q.10

30 m 41 s

Important Sums

Q.11 and Q.12

23 m 45 s

Full Sums

Q.13 and Q.14

35 m 48 s

Objectives

1. What is reconstruction of a partnership?

1 m
2. What is revaluation account?

1 m
3. What is sacrifice ratio?

1 m
4. What is gain ratio ?

1 m
5. How is the consolidated profit distributed?

1 m
6. To which account revaluation account’s profit-loss is transferred?

1 m
7. At which value assets-liabilities are shown in the balance sheet after revaluation?

1 m
8. Which is the other name of revaluation account?

1 m

Practice Section

Practice Quiz

20 questions
1. Due to which reasons is it possible to make changes in profit and loss with the consent of all partners ?

1 m
2. In which ratio is the goodwill amount brought by new partner distributed among the old partners?

1 m
3. If there is decrease in the value of any debt where should it be recorded in Revaluation Account ?

1 m
4. How is the workers' profit sharing fund distributed among the partners ?

1 m
5. How are accumulated profit and reserves distributed among partners at the time of reconstruction of partnership firm ?

1 m
6. What is the other name of Revaluation Account?

1 m
7. Write the formula for sacrifice ratio.

1 m
8. Write the formula for gain ratio.

1 m
9. State the reasons/causes for reconstruction of partnership.

1 m
10. What is revaluation of assets and liabilities?

1 m
11. What is reconstruction of partnership?

1 m
12. On which side of profit and loss adjustment account, discount reserve on debtors (D.R.D.) is to be shown?

1 m
13. At what price are all assets and liabilities recorded in balance sheet after revaluation?

1 m
14. After revaluation, is it necessary to prepare partners capital accounts?

1 m
15. At the time of finding out sacrifice or gain ratio, if we get a negative answer (-), what does it suggest?

1 m
16. What do the debit balance and credit balance of revaluation account suggest ?

1 m
Chapter 4 Practice Material

830 KB
One Line Answer and Theory

1.1 MB

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