Partnership

Admission

Medium

common

In the case of guarantee of profit ,the sequence of Steps to be followed are.

(A) divide the profit in the given ratio.

(B) prepare profit and loss appropriation account as usual.

(C) deduct the deficiency from guaranteeing partner and add the same to guaranteed partner.

(D) find the deficiency.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(A), (B), (D), (C)

(B), (A), (D), (C)

(C), (B), (D), (A)

✅ Correct Option: 3

When dealing with guarantee of profit, the logical sequence of steps follows the natural flow of profit distribution:

Step 1: Prepare Profit and Loss Appropriation Account as usual (B)

This is the starting point where we calculate the distributable profit after making all necessary adjustments like interest on capital, salary, interest on drawings, etc.

Step 2: Divide the profit in the given ratio (A)

The available profit is distributed among all partners according to their agreed profit-sharing ratio. At this stage, we calculate what each partner actually receives.

Step 3: Find the deficiency (D)

After distributing the profit, we compare the guaranteed partner's actual share with the guaranteed amount. The deficiency is calculated as:

Deficiency = Guaranteed Amount - Actual Share received

If the actual share is less than the guaranteed amount, a deficiency exists.

Step 4: Deduct from guaranteeing partner and add to guaranteed partner (C)

The deficiency amount is transferred from the guaranteeing partner's capital/current account to the guaranteed partner's account to fulfill the guarantee commitment.

This sequence ensures that we first complete the normal profit distribution process before making any adjustments for the guarantee arrangement. The guarantee comes into play only after determining each partner's normal share.

Correct Answer: Option 3 - (B), (A), (D), (C)

2025: 30 May Shift 2

Which Factor does not Affect the Value of Goodwill-

2026: 6 June Shift 1

If, at the time of admission of a partner, any reserve and accumulated profits or losses exist in books of the firm, these should be transferred to:

2026: 11 May Shift 2

"Goodwill is the value of the reputation of a firm in respect of the profits expected in future over and above the normal profits." Which of the following statements are incorrect in the context of goodwill?

A. It is tangible asset.

B. Goodwill exists only when the firm earns super profits.

C. It is intangible asset.

D. Goodwill tends to be low if the business is centrally located or is at a place having heavy customer traffic,

Choose the correct answer from the options given below:

2026: 12 May Shift 1

Hem and Nem are partners in a firm sharing profits in the ratio of 3:2. Their capitals were Rs. 80,000 and Rs. 50,000 respectively. They admitted Sam on Jan. 1, 2025 as a new partner for 1/5 share in the future profits. Sam brought Rs. 60,000 as his capital and does not bring his share of goodwill in cash. Choose the correct journal entry from the following:

Particulars	Dr. Amount	Cr. Amount
Sam's Current A/c Dr.	34,000
To Hem's Capital A/c		20,400
To Nem's Capital A/c		13,600

Particulars	Dr. Amount	Cr. Amount
Sam's Current A/c Dr.	22,000
To Hem's Capital A/c		13,200
To Nem's Capital A/c		8,800

Particulars	Dr. Amount	Cr. Amount
Sam's Capital A/c Dr.	22,000
To Hem's Capital A/c		13,200
To Nem's Capital A/c		8,800

Particulars	Dr. Amount	Cr. Amount
Sam's Current A/c Dr.	22,000
To Hem's Current A/c		13,200
To Nem's Current A/c		8,800

2022: 23 Aug Shift 2

Goodwill brought in by new partners would be _________.

2026: 23 May Shift 2

Arrange the following steps in sequence for calculation of goodwill using Super Profit Method.

A. Calculate the average profit.

B. Calculate the normal profit on the firm's capital on the basis of the normal rate of return.

C. Calculate the super profits by deducting normal profit from the average profits.

D. Calculate goodwill by multiplying the super profits by the given number of years' purchase.

Choose the correct answer from the options given below:

Solution

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