Partnership

Admission

Medium

Arrange the following regarding admission procedure in the correct sequence.

(A) Giving share to the new partner.

(B) Treatment of Goodwill

(C) Calculating new profit sharing ratio & sacrificing ratio

(D) Preparation of Revaluation A/c

(E) Preparing Partner's Capital A/c and Balance Sheet

Choose the correct answer from the options given below:

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

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

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

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

✅ Correct Option: 2

When a new partner is admitted, the procedure follows a logical sequence:

First, the existing partners decide on the share to be given to the new partner (A). This is the starting point as the share determines all subsequent calculations.

Second, once the share is determined, the new profit sharing ratio needs to be calculated. This helps determine how profits will be shared after admission. The sacrificing ratio is also calculated to identify what proportion each old partner is giving up from their share (C).

Third, goodwill treatment is done (B). The new partner needs to compensate the old partners for sacrificing their share of profits. This compensation is distributed among old partners in their sacrificing ratio, which was calculated in the previous step.

Fourth, Revaluation Account is prepared (D). Assets and liabilities are revalued, and any profit or loss from revaluation is distributed among old partners in their old profit sharing ratio (before admission).

Fifth and finally, Partner's Capital Accounts are prepared showing all adjustments, and the new Balance Sheet is drawn up reflecting the admission of the new partner (E).

The correct sequence is: (A), (C), (B), (D), (E)

The logic is straightforward - you cannot calculate ratios without knowing the share, you cannot treat goodwill without knowing sacrificing ratio, and you cannot prepare final accounts without completing all adjustments.

Correct Answer: Option 2

2025: 16 May Shift 1

Under which method No. of Year's Purchase are not considered

2022: 30 Aug Shift 2

At the time of admission of a new partner general reserve appearing in the old balance sheet is transferred to _______

2026: 21 May Shift 1

Arrange the sequence of following important adjustments which require attention at the time of admission of a new partner.

(A) Valuation and adjustment of goodwill

(B) Balance sheet of Reconstituted firm

(D) New profit sharing ratio and Sacrificing ratio

Choose the correct answer from the options given below:

2026: 13 May Shift 1

Extract of Balance Sheet of a Partnership firm is given below :-

Liabilities	Amount (Rs.)	Assets	Amount (Rs.)
		Debtors	8,00,000
		Less (-) Provision For Bad Debts	(20,000)
			7,80,000

Provision for bad debts is to be made equal to 5% of debtors, for this adjustment what journal entry will be recorded related to Revaluation A/c?

2026: 23 May Shift 2

Aman and Vimal are partners in a firm sharing profits and losses in the ratio of 3:2. They admitted Kamal into partnership for 1/4 share in profits. Kamal brings in Rs. 50,000 for capital and the requisite amount of premium in cash. The goodwill of the firm is valued at Rs. 30,000. The new profit sharing ratio is 2:1:1. The premium brought in by Kamal will be shared between Aman and Vimal in following.

2025: 3 June Shift 2

Vijay and Manohar share profits and losses in the ratio of 2:1. They admit Prakash as a partner with 1/4 share in profits with a guarantee that his share of profit will be at least Rs. 50,000. The net profit of the firm for the year ending March 31, 2015, was Rs. 1,60,000. Calculate the amount of profit Vijay will get.

Solution

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