In This Post we are providing Chapter-6 The Browning Version NCERT MCQ for Class 11 English Hornbill which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON THE BROWNING VERSION
Q1. What was Millie carrying when she entered the classroom?
(i) basket (ii) books (iii) knits (iv) flowers
Answer (i) basket
Q2. Why was Taplow worried that Mrs. Crocker – Harris might have heard what they were saying?
(i) as she had been standing for a few minutes when they were busy talking (ii) as she interrupted them talking about his husband (iii) as she heard them talking about Principal (iv) Don’t know
Answer (i) as she had been standing for a few minutes when they were busy talking
Q3. Who is Mr. Crocker-Harris ?
(i) Principal (ii) School Teacher (iii) middle-aged schoolmaster (iv) Don’t know
Answer (iii) middle-aged schoolmaster
Q4. What did Millie suggest to Taplow in her husband’s absence?
(i) to go to chemist to get her prescription filled (ii) to go to his home (iii) to play golf (iv) to wait
Answer (i) to go to chemist to get her prescription filled
Q5. Where was Mr. Crocker – Harris?
(i) At the Bursar’s (ii) At home (iii) At market (iv) At library
Answer (i) At the Bursar’s
Q6. What does Frank do?
(i) Student (ii) Teacher (iii) Principal (iv) Parent
Answer (ii) Teacher
Q7. How is Mr. Crocker – Harris different from other teachers?
(i) as he is not biased (ii) as he is strict (iii) as he is old (iv) as he is rude
Answer (i) as he is not biased
Q8. Does Taplow think that Mr. Crocker – Harris is baised?
(i) Yes (ii) no (iii) May be (iv) Can’t Say
Answer (ii) no
Q9. What is the age of Taplow?
(i) Fourteen (ii) Sixteen (iii) Twenty (iv) Five
Answer (ii) Sixteen
Q10. Who was Agamemnon?
(i) he was American astrologer (ii) he was an Egyptian king (iii) he was the king of Mycenae in Greek mythology (iv) Don’t know
Answer (iii) he was the king of Mycenae in Greek mythology
Q11. How did Frank react upon the arrival of Mrs. Crocker – Harris?
(i) he was happy (ii) he was nervous (iii) he was relieved (iv) nothing as suchShow Answer
Answer (iii) he was relieved
Q12. Who are the three characters of the play ‘The Browning Version’?
(i) Taplow, Alice and Mr. Harrow (ii) Taplow, Frank and Mrs. Harris (iii) Taplow, Frank, and Mr. Crocker – Harris (iv) Alice, Frank and Mr. Crocker – Harris
Answer (iii) Taplow, Frank, and Mr. Crocker – Harris
Q13. Who said the lines, ‘Come along, Taplow. Do not be so selfish as to keep a good joke to yourself.’?
(i) Mr. Crocker – Harris (ii) Millie (iii) Frank (iv) Principal
Answer (iii) Frank
Q14. How would you describe Millie Crocker – Harris?
(i) Thin Woman, late thirties, smartly dressed (ii) fat woman, forties (iii) thin woman, in her twenties (iv) thin women, smartly dressed
Answer (i) Thin Woman, late thirties, smartly dressed
Q15. Where is the starting scene of the play set ?
(i) School Classroom (ii) School Playground (iii) Home (iv) Road
In This Post we are providing Chapter-5 The Ailing : The Green Movement’s Role NCERT MCQ for Class 11 English Hornbill which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON THE AILING: THE GREEN MOVEMENT’S ROLE
Question 1. Who wrote the book ‘The Global Economic Prospect” ? A. l k Jha B. Lester R Brown C. James Speth D. Edgar S Woolard
Answer : B
Question 2. What forms the foundation of the global economic system according to Lester Brown? A. ” fisheries, forests, grasslands, and croplands “ B. land and water C. forests, fisheries, grasslands D. fisheries and forests
Answer : A
Question 3. When did the Green Movement help environmentalists to raise awareness about the harmful condition of the earth? A. 1992 B. 1972 C. 1987 D. 1970
Answer : B
Question 4. ” Every four days the world population increases by ……………..” A. 1.5 million B. 1 million C. 1.7 million D. half a million
Answer : B
Question 5……………. has a most crucial role to play in this new Era of Responsibility A. Agriculture B. Fishery C. Industry D. Aforestation
Answer : C
Question 6. When was the Sustainable Development used by the World Commission on Environment and Development? A. 1987 B. 1992 C. 1990 D. 1986
Answer : A
Question 7. Who said that tropical forests are “the powerhouse of evolution” ? A. Edgar S Woolard B. L K Jha C. Dr Myres D. James Speth
Answer : C
Question 8. Where was the first nationwide Green party founded? A. USA B. Australia C. New Zealand D. Canada
Answer : C
Question 9. Where was the message ‘The World’s most dangerous animal’ written in the zoo? A. board B. Mirror C. wood D. bark of the tree
Answer : B
Question 10. Who said, “We have not inherited this earth from our forefathers; we have borrowed it from our children.”? A. Margaret Thatcher B. Mr Edgar S. Woolard C. Mr. Lester Brown D. Brandt Commission
Answer : C
Question 11. When did the Green Movement start? A. 35 years ago B. 15 years ago C. nearly 25 years ago D. 20 years ago
Answer : C
Question 12. “Who raised the question “Are we to leave our successors a scorched planet of advancing deserts, impoverished landscapes and ailing environment?” A. Brandt Commission B. Brundtland Commission C. UN World Commission D. None of the above
Answer : A
Question 13. What are the four principal biological systems that form the foundation of the global economic system? A. water, air, sand, forests B. ocean, forests, deserts, land C. fisheries, grasslands, forests, and croplands D. fisheries, grasslands, oceans, land
Answer : C
Question 14. At what rate is the world’s ancient patrimony of tropical forests eroding? A. at the rate of forty to fifty million acres a year B. at the rate of one million per year C. at the rate of 90 million per year D. none of the above
Answer : A
Question 15. What is the concept of Sustainable Development? A. Development of the future B. Development for the present C. “Development that meets the needs of the present, without compromising the ability of future generations” D. Environmental development
In This Post we are providing Chapter-4 Landscape of the Soul NCERT MCQ for Class 11 English Hornbill which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON LANDSCAPE OF THE SOUL
Q1. What is the essential third element ?
(i) Left Void (ii) Middle Void (iii) Yang (iv) YinShow Answer
Answer (ii) Middle Void
Q2. What does the European Figurative painting mean to the viewer?
(i) Illusion (ii) Imagination (iii) exactly as he sees it from a specific angle (iv) view of the painter
Answer (iii) exactly as he sees it from a specific angle
Q3. Where did the painter draw the attention in the painting?
(i) Sun (ii) Palace (iii) Birds (iv) a cave at the foot of the mountain
Answer (i) Sun
Q4. Antwerp, a master blacksmith called Quinten Metsys fell in love with a …daughter”
(i) emperor’s (ii) painter’s (iii) minister’s (iv) master’s
Answer (ii) painter’s
Q5. What is the third element compared with?
(i) prayer (ii) travel (iii) yogic practice of pranayama (iv) nirvanaShow Answer
Answer (iii) yogic practice of pranayama
Q6. Who did the Tang emperor Xuanzong commission to decorate a wall in the palace?
(i) painter said a prayer (ii) with a magic spell (iii) “painter clapped his hands” (iv) with a commandShow Answer
Answer (iii) “painter clapped his hands”
Q8. What according to the painter dwells in the cave?
(i) a spirit (ii) magic (iii) mystery (iv) dragon
Answer (i) a spirit
Q9. What two forms of art did the author contrast in this chapter?
(i) Indian Ancient Art and Chinese Art (ii) Chinese art and European art (iii) American Art ad European Art (iv) European Art and Greek ArtShow Answer
Answer (ii) Chinese art and European art
Q10. Where had the Master hidden the masterpiece for the Emperor to see?
(i) In a room (ii) behind a screen (iii) underground place behind (iv) a cupboard
Answer (ii) behind a screen
Q11. What was Francois Cheng’s expression?
(i) the center of the landscape (ii) the eye of the landscape (iii) the center of the universe (iv) the left side of the yang
Answer (ii) the eye of the landscape
Q12. What happened when the painter clapped his hands?
(i) the painting on the wall was gone and so was the painter (ii) the emperor entered the cave (iii) painter falls (iv) the wall collapsed
Answer (i) the painting on the wall was gone and so was the painter
Q13. What is the role of man in between Heaven and Earth?
(i) He is in a path (ii) He is a sinner (iii) He is meant to do actions (iv) he becomes the conduit of communicationShow Answer
Answer (iv) he becomes the conduit of communication
Q14. What does the concept of ‘Shanshui’ represent?
(i) Imaginery place (ii) worship (iii) ‘mountain water’ which when used together represents the word ‘landscape’ (iv) None of the above
Answer (iii) ‘mountain water’ which when used together represents the word ‘landscape’
Q15. Why didn’t the painter want to draw an eye of a dragon?
(i) he feared that the painting would not look good (ii) he feared that the dragon would fly out of the painting (iii) he feared that dragon will seem real (iv) because he didn’t wanted to work
Answer (ii) he feared that the dragon would fly out of the painting
In This Post we are providing Chapter-3 Discovering Tut: The Saga Continues NCERT MCQ for Class 11 English Hornbill which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON DISCOVERING TUT: THE SAGA CONTINUES
Q1. How did Tut die?
(i) It is a mystery (ii) Due to heart attack (iii) Due to Cancer (iv) During a warShow Answer
Answer (i) It is a mystery
Q2. What is the Cemetery of Tut called?
(i) Valley of the Kings (ii) Tut’s Resting Place (iii) Resting Peace (iv) Valley of Flowers
Answer (i) Valley of the Kings
Q3. When was Tut’s body taken for CT scan after being found?
(i) After 1 year (ii) After 80 years (iii) After 50 years (iv) After 30 yearsShow Answer
Answer (ii) After 80 years
Q4. Tut was laid to rest, laden with ………
(i) platinum (ii) aluminum (iii) gold (iv) silver
Answer (iii) gold
Q5. Who said “The mummy is in very bad condition because of what Carter did in the 1920s”?
(i) Carter (ii) Zahi Hawass (iii) an anatomy professor (iv) A Egypt Historian
Answer (ii) Zahi Hawass
Q6. Who discovered Tut’s tomb and when?
(i) Adam Cooper in 1901 (ii) Howard Carter in 1922 (iii) Howard Carter in 1930 (iv) Sam Shaw in 1890
Answer (ii) Howard Carter in 1922
Q7. Who is Osiris?
(i) god of nature (ii) god of afterlife (iii) god of seasons (iv) god of universe
Answer (ii) god of afterlife
Q8. When did Tut die?
(i) 22000 years ago (ii) more than 33000 years ago (iii) 10000 years ago (iv) 16000 years ago
Answer (ii) more than 33000 years ago
Q9. Who was Tutankhamun?
(i) A Geologist (ii) A Scientist (iii) An Egyptian king (iv) A historian
Answer (iii) An Egyptian king
Q10. When was Tut’s body taken back in his tomb after CT scan?
(i) After a day (ii) After 3 hours (iii) After 12 hours (iv) After 5 hours
Answer (ii) After 3 hours
Q11. How has archeology changed through the decades ?
(i) focusses more on treasure (ii) focusses more on physical findings (iii) focusses on time factors more (iv) focusing less on treasure and more on the fascinating details of life and mysteries of death
Answer (iv) focusing less on treasure and more on the fascinating details of life and mysterious
Q12. How did the workmen lift the body for the scan?
(i) through the stairs (ii) on a hydraulic trailer (iii) through sliding (iv) through lift
Answer (ii) on a hydraulic trailer
Q13. Why did the procedure stop in between?
(i) As spare fan stopped working (ii) as the light went off (iii) As the lift broken (iv) none of the above
Answer (i) As spare fan stopped working
Q14. For how many years did Amenhotep III rule Egypt?
(i) 5 years (ii) 20 years (iii) 10 years (iv) 40 years
Answer (iv) 40 years
Q15. When was the mummy examined in X-Ray by the anatomy professor?
In This Post we are providing Chapter-2 We’re not Afraid to die.. if we can all be Together NCERT MCQ for Class 11 English Hornbill which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter.
NCERT MCQ ON WE’RE NOT AFRAID TO DIE… IF WE CAN ALL BE TOGETHER
Question 1. What happened after the hand pumps started to block up with the debris floating around the cabins? (a) the author connected an electric-pump to an out-pipe (b) by taking out water with the help of bucket (c) by repairing hand pump (d) the author found another hand pump
Answer : A
Question 2. Where did they decide to reach to save themselves and the ship? (a) Australia (b) Ile Amsterdam (c) Mumbai, India (d) Japan
Answer : B
Question 3. What happened after the hand pumps started to block up with the debris floating around the cabins? (a) the author connected an electric-pump to an out-pipe (b) by taking out water with the help of bucket (c) by repairing hand pump (d) the author found another hand pump
Answer : A
Question 4. When did they reach lle Amsterdam? (a) around 6 pm in the evening (b) never reached there (c) at 11 in the next morning (d) they decided to take different route
Answer : A
Question 5. When did they reach lle Amsterdam? (a) around 6 pm in the evening (b) never reached there (c) at 11 in the next morning (d) they decided to take different route
Answer : A
Question 6. Why did the author hire the two crewmen? (a) to take rest from long the voyage (b) to help tackle one of the world’s roughest seas, the southern Indian Ocean (c) because he could no longer sail the ship (d) he wanted to spend some time with his family
Answer : B
Question 7. What happened when the author’s head smashed into the wheel? (a) he was hurt but steady (b) he flew overboard sinking below the waves (c) he was not hurt (d) he gained control immediately
Answer : B
Question 8. What happened after the first indication of the disaster? (a) a wave appeared vertical and almost twice the height of other waves (b) it broke the ship from inside (c) the ship turned upside down (d) it didn’t affect the ship
Answer : A
Question 9. Why did the author accept his approaching death? (a) Pirates had attacked the ship (b) because he was injured by the explosion (c) he was thrown in the sea (d) he was stabbed
Answer : A
Question 10: Find out the synonym of ‘Honing’ from the following? (a) Perfect (b) Sharpen (c) Taper (d) All of these
Answer : D
Question 11: what was the occupation of the author? (a) Businessman (b) Sailor (c) Teacher (d) None of the above
Answer : A
Question 12: why did the author hire the two Crewmen? (a) to take rest from the long the voyage (b) to help tackle one of the world’s roughest seas, the Southern Indian Ocean (c) Because he could no longer sail the ship (d) He wanted to spend some time with his family
Answer : B
Question13. Who said, “we aren’t afraid of dying if we can all be together — you and Mummy, Sue and I.”? (a) Jon (b) Crewmen to each other (c) Suz (d) Mom
Answer : A
Question 14: what happened after the first indication of disaster? (a) A wave appeared Vertical, almost twice the height of other waves (b) Thunder and lightning (c) The ship turned upside down due to Tsunami (d) It didn’t affect the ship
Answer : A
Question 15: what happened to the author’s body when he managed to reach the deck? (a) his head smashed against the deck and his eye was injured (b) his left ribs cracked mouth was filled with blood and broken teeth (c) he broken his right leg and hip bone (d) his broken his left hand and shoulder
ANSWER: Management refers to the process of managing people and tasks efficiently and effectively using the right techniques and methods. It is an integrated process which involves a series of functions like Planning, Organising, Staffing, Directing and Controlling.
Q.2 Name any two important characteristics of management.
ANSWER: The two characteristics of management are as follows:
Management is a goal-oriented process: Each and every organisation has a set of goals to be achieved in a certain period of time. Different organisations have different types of goals depending upon the reason for its existence.
Management is a dynamic function: The world is changing at a very fast pace and has become very dynamic. Management has to adapt itself as per the changing environment. Various external factors like social, political, economic factors have to be taken into consideration in order to survive.
Q.3 Identify and state the force that binds all the other functions of management.
ANSWER: Coordination binds all the other functions of management. It is also considered as the essence of management. Coordination as a process begins from the first step of management i.e planning. This is the process through which all the activities are lined up and put to action.
Q.4 List any two indicators of growth of an organisation.
ANSWER: The two indicators are:
Increase in the sales volume of an organisation.
Increase in number of employees over a period of time.
Q.5 Indian Railways has launched a new broad gauge solar power train which is going to be a path breaking leap towards making trains greener and more environment friendly. The solar power DEMU (Diesel Electric Multiple Unit) has 6 trailer coaches and is expected to save about 21,000 liters of diesel and ensure a cost saving of Rs 12, 00,000 per year. Name the objectives of management achieved by Indian Railways in the above case.
ANSWER: Social objectives of the management of Indian Railways have been achieved in the above case, as the organisation succeeded in saving diesel and costs, by making the trains environment friendly.
Q.6 Ritu is the manager of the northern division of a large corporate house. At what level does she work in the organisation? What are her basic functions?
ANSWER: Ritu works in the middle-level management, being the manager of the northern division of a large corporate house.
The basic functions of the middle level managers are:
They interpretes and explain the organisational plans and policies to line managers.
They recruit and select the appropriate personnel.
They are responsible for organising required resources for effective implementation of plans.
They assign duties and responsibilities to first line managers.
They motivate lower level management to achieve the best of their potential.
They represent the complaints and problems of lower level management to top level management.
Q.7 State the basic features of management as a profession.
ANSWER: The basic features of management as a profession are:
Well defined body of knowledge: Manager is a professional who can acquire specialised knowledge through books for joining specific courses.
Restricted entry: Professional degree is a must to become a professional but an individual with managerial skills can become a manager despite having no professional degree.
Professional association: Professionals need to be associated with respective professional bodies. They are professional bodies for management as well but it is not compulsory for managers to join.
Ethical code of conduct: Professionals are bound by the code of conduct laid bi associations they are associated with. Managers are expected to be ethical but there is no specifically laid down code of conduct for them.
Service motive: Aprofessional and a manager both aim to provide dedicated and committed services towards the increase of their clients.
Q.8 Why is management considered a multi-dimensional concept?
ANSWER: Management is considered to be a multi-dimensional concept because it involves:
Management of work: Each and every organisation has some work to perform. The management translates the work into goals to achieve and also the means used to achieve it.
Management of people: Human Resource is an organisation’s greatest asset. The task of management involves making people work, dealing and communicating with them, strengthening their positive aspects, and working upon their weaknesses
Management of operations: Each and every organisation has some basic products to serve and some services to provide for survival. This requires a process through which the input materials are transformed into desired output.
Long Answer Questions:
Q.1 Management is considered to be both an art and science. Explain. ANSWER: Art is the skillful and personal applications of existing knowledge to achieve desired goal. Management is considered an art due to the following reasons (i)Existence of Theoretical Knowledge :All art subjects are based on theoretical knowledge e.g., written material is available on dancing, time arts, music etc same way there is lot of literature available on management and its branches – finance, marketing, human resource etc. (ii)Personalised Application :The use of this basic knowledge differs from one individual to the other. Two painters, two dancers or two singers all use their knowledge in their own way. Same way two managers who have acquired the same knowledge may use it in their own different ways to get the work done. (iii) Based on Practice and Creativity : All art is practical. It involves creative practice. The more we practice it better we become at it. It also requires creativity. Same way a manager applies his acquired knowledge in a unique manner. More practice makes him a better manager and he also develops his own style of management. Management is an In-exact Science (i)Systematised Body of Knowledge :Science is a systematised body of knowledge. Its principles are based on cause and effect relationship, e.g., water evaporates on being heated. Same way management is a body stigmatised Knowledge. All managerial principles have cause and effect relationship. (ii) Principles Based on Experimentation :Scientific principles are first developed through observation and then tested through repeated experimentation. Same way management principles are also propounded after observation and repeated experimentation. (iii) Universal Validity :All scientific principles have universal validity. They give same result wherever applied. Principles of management do not have Universal validity. They have to be adjusted and applied according to the need of the situation. Thus, management is an in-exact science.
Q.2 Do you think management has the characteristics of a full fledged profession? ANSWER: No, management does not possess all the characteristics of a full fledged profession. The reasons go as follows (i) Well-defined Body of Knowledge All professions are based on a well-defined body of knowledge that can be acquired teaching – learning process. This feature of a profession is possessed by management as well. There is vast knowledge available on management in the form of definitions, concepts, theories, principles etc. (ii) Restricted Entry All professions have a restriction or the entry of its practitioners. They have to acquire a specific degree to be professional e.g., LLB for a lawyer MBBS for a doctor etc. But a manager can be an MBA qualified or not. (iii) Professional Association All professions are affiliated to a professional association which regulates entry, grants certificate of practice and formulates a code of conduct e.g., ail lawyers have to be a member of Bar Council to practice law. It is not compulsory for all managers to be a member of AIMA.’ (iv) Ethical Code of Conduct All professions are bound by a ethical code of conduct which guides the behaviour of its members. But as it is not compulsory for all managers to be members of AIMA, they all may not be aware of the prescribed code of conduct of AIMA. (v) Service Motive All basic motive to serve their client’s interest, e.g., -lawyers to get justice for their clients, doctors to treat the patients etc. All managers also work in a manner where by they show their effectiveness and efficiency in the form of good quality goods provided to the customer at a reasonable price. Thus, management possesses some characteristics of a profession but not all.
Q.3 Co-ordination is the essence of management. Do you agree? Give reasons. ANSWER:Co-ordination plays a vital role as it binds all the other functions of management. It is the common thread of all activities such as purchase, production, sales etc that runs through. Some of the basic features are as follows (i) Integrates Group Efforts Co-ordination brings unity to all. It gives a common focus to group efforts. (ii) Ensures Unity of Actions It acts as a binding force between departments and ensures that all action is aimed at achieving the goals of the organisation. (iii) It is a Continuous Process Co-ordination is not a one time function but a continuous process. It begins at the planning stage and continues till controlling. (iv) It is an All Pervasive Function Co-ordination is required at all levels of management due to the interdependent nature of activities of various departments. It integrates the efforts of different departments and different levels. (v) It is the Responsibility of All Managers All managers need to co-ordinate something or the other. A manager of production department needs to co-ordinate the work within his department and also with the other departments at the same time. (vi) It is a Deliberate Function Whatever the managers are doing in an organisation they are doing it knowingly. Co-ordination is one of the most important functions of all managers. Thus co-ordination is also done deliberately. Whatever the managers do, they do it deliberately to achieved the predetermined goals and objectives. Thus, we can say co-ordination is the essence of managment after analysing these points.
Q.4 “A successful enterprise has to achieve its goals effectively and efficiently” Explain. ANSWER:“A successful enterprise has to achieve its goals effectively and efficiently”. Thus, management has to see that task are completed and goals are achieved with the minimum resources. Management is thus getting things done with the aim of achieving goals effectively and efficiently. Being effective or doing work effectively basically means finishing the given task. It is concerned with end result, it is achieved or not. Efficiency means doing the work correctly and with minimum cost. If by using less resources more benefits are derived then efficiency has increased. It is thus essential for any organisation to focus on efficiency as well as effectiveness. It is not only important to complete the work correctly but equally important to complete it with minimum cost. In the same manner, it is not only important to reduce cost but equally important to complete the work correctly.
Q.5 Management is a series of continuous inter-related functions. Comment. ANSWER:Management is a series of continuous inter-related functions. Each one of them performed to guide and direct the efforts of others. (i) Planning Planning is the primary function which runs through all other functions. It is the process of thinking before doing. It bridges the gap between where we are and where we want to go. (ii) Organising It is the process of defining the formal relationship among people and resources to accomplish the desired goals. It involves (a) Identification and division of work (b) Departmentalisation (c) Assigning of duties (d) Establishing reporting relationships (iii) Staffing Organisational goals can be achieved only through human efforts. It is the duty of management to make the best possible use of this resource. Thus, placing the right person on the right job is very important. Staffing helps management to motivate, select and place the right person on the right job. (iv) Directing Directing involves leading, influencing and motivating employees to perform the tasks assigned to them. This requires establishing an atmosphere that encourages employees to do their best. Directing comprises of four elements; supervision, motivation, leadership and communication. (v) Controlling Controlling is the management function of monitoring organisational performance towards the attainment of organisational goals. The task of controlling involves (a) Establishing standards of performance (b) Measuring current performance’ (c) Comparing this with established standards (d) Taking corrective action
Q.1State the difference between dissolution of partnership and dissolution of partnership firm.
ANSWER:
Basis of Difference
Dissolution of Partnership
Dissolution of Partnership firm
Meaning
It means change in the partnership deed (or the agreement) among the partners.
It means that the business is wound up and the firm is dissolved.
Discontinuation
Business is not discontinued.
Business is discontinued, as the firm is dissolved.
Closure of Books of Accounts
Books of accounts are not closed, as there is only change in the existing agreement between the partners.
Books of accounts are closed, as the business is discontinued.
Assets and Liabilities
In this case, the assets and liabilities are revalued.
In this case, all the assets are sold off in order to pay the liabilities of the business.
Role of Court
There is no intervention by the court.
Dissolution of a partnership firm may be done with the consent of the court.
Nature
It is voluntary in nature.
It may be voluntary (as per the discretion of the partners) or compulsory (as per the order of the court).
Effect
It may or may not involve dissolution of the firm.
It necessarily involves dissolution of both the partnership as well as of the partnership firm.
Q.2 State the accounting treatment for:
i. Unrecorded assets
ii. Unrecorded liabilities
ANSWER:
i) Accounting Treatment for Unrecorded Assets
Unrecorded asset is an asset, the value of which has been written off in the books of accounts but the asset is still in usable position. The accounting treatment for unrecorded asset is:
a) When the unrecorded asset is sold for cash
Cash A/c
Dr.
To Realisation A/c
(Unrecorded assets sold for cash)
b) When the unrecorded asset is taken over by any partner
Partner’s Capital A/c
Dr.
To Realisation A/c
(Unrecorded asset taken over by the partner)
ii)Accounting Treatment for Unrecorded Liabilities
Unrecorded liabilities are those liabilities which are not recorded in the books of account. The accounting treatment for unrecorded liability is:
a) When the unrecorded liability is paid off
Realisation A/c
Dr.
To Cash A/c
(Unrecorded liability paid in cash)
b) When the unrecorded liability is taken over by a partner
Realisation A/c
Dr.
To Partner’s Capital A/c
(Unrecorded liability taken over by the partner)
Q.3 On dissolution, how you deal with partner’s loan if it appears on the
(a) Assets side of the Balance Sheet
(b) Liabilities side of the Balance Sheet
ANSWER:
a) If partner’s loan appears on the assets side of the Balance Sheet then it implies that the partner has taken loan from the business and is liable to pay back to the business. In such case, the loan amount is transferred to his capital account. Thus the accounting entry will be:
Partner’s Capital A/c
Dr.
To Partner’s Loan A/c
(Partner’s loan transferred to Partner’s Capital Account)
b) If partner’s loan appears on the liabilities side of the Balance Sheet then it implies that the partner has forwarded loan to the firm and the firm is liable to pay back the amount to the partner. In such case, partner’s loan is paid off after paying all the external liabilities. The partner’s loan is not transferred to the Realisation Account, in fact, it is paid in cash. The following accounting entry is passed.-
Partner’s Loan A/c
Dr.
To Cash/Bank A/c
(Partner’s loan paid in cash)
Q.4Distinguish between firm’s debts and partner’s private debts.
ANSWER:
Basis of Difference
Firm’s Debts
Partner’s Private Debts
Meaning
It refers to those debts that are borrowed against the name of the firm.
It refers to those debts that are borrowed personally by the partner.
Liability
All the partners of the firm are jointly and separately liable for the firm’s debt.
The concerned partner is personally liable for his private debts.
Settlement of debts by private assets
If the firm’s debt exceeds the firm’s assets, then private assets of the partners may be utilised to pay back the firm’s debt, if only the partner’s private assets exceeds his/her own private debts.
Private debts are settled against the partner’s private assets. Subsequently, if any surplus exists then this may be utilised to settle the firm’s debts.
Settlement of debts by firm’s assets
Firm’s debts are settled against the firm’s assets. Subsequently, if any surplus exists, then this is distributed among the partners.
After paying off firm’s debts, the surplus of firm’s assets, if any is distributed among the partners. The personal share of the partner in this surplus can be utilised to settle his/her own private debts.
Q.5 State the order of settlement of accounts on dissolution.
ANSWER:
The following are the rules of settlement of accounts on dissolution as per the Section 48 of Partnership Act 1932.
1. Application of Assets: Amount received by the realisation (sale) of the assets shall be used in the following order:
a) First of all the external liabilities and expenses are to be paid.
b) Then, all loans and advances forwarded by the partners should be paid.
c) Then, the capital of each partner should be paid off. If there remains any surplus after the payment of (a), (b) and (c), then it should be distributed among the partners in their profit sharing ratio.
2. Treatment of Loss: In case of loss and any deficiency of capital this should be paid in the following order:
a) First these should be adjusted against firm’s profits.
b) Then, against the total capital of the firm.
c)Even if there exists any loss and deficiencies then it should be borne by all the partners individually in their profit sharing ratio.
Q.6 On what account realisation account differs from revaluation account.
ANSWER:
Basis of Difference
Realisation Account
Revaluation Account
Meaning
It records the sale of various assets and payment of various liabilities.
It records the effect of revaluation of assets and liabilities on the eve of admission, retirement, death and change in the profit sharing ratio.
Time
It is prepared at the time of dissolution of firm.
It is prepared when admission/retirement/death or change in profit sharing ratio takes place.
Objective
To find profit or loss on realisation of assets and payment of liabilities.
To find out profit or loss on revaluation of assets and liabilities.
Amount
Assets and liabilities are shown at the book value.
Increase or decrease in the value of assets and liabilities are shown in this account.
Records
All assets and liabilities are recorded here.
Only those assets and liabilities are recorded here whose values have changed over a period of time.
Effect
All accounts of assets and liabilities are closed.
No account is closed on revaluation of assets and liabilities.
LONG ANSWER TYPE QUESTIONS:
Q.1 Explain the process of dissolution of partnership firm. ANSWER: Dissolution means breaking of relationship among the partners. As per Section 39 of the Indian Partnership Act 1932, the dissolution of firm implies that not only partnership is dissolved but the firm losses its existence, i.e., after dissolution the firm does not remain in business. Dissolution of partnership firm implies discontinuation of the business of the partnership firm. Dissolution involves winding up of business, disposal of assets and paying off the liabilities and distribution of any surplus or borne of loss by the partners of the firm. As per the Partnership Act 1932, a partnership firm may be dissolved in the following manners.
(i)Dissolution by Agreement As a firm is formed with the consent of all partners with a mutual agreement. Dissolution can also be there with the help of agreement. It happens in following two ways. A firm may be dissolved (a) When all the partners agree to dissolve the firm. (b) When there is any term related to dissolution of firm in the partnership agreement. (ii) Compulsory Dissolution A firm may be dissolved compulsorily in the following condition (a) In case, all the partners or all except one partner become insolvent or insane. (b) If the business becomes illegal. (c) Where all the partners except one decide to retire from the firm. (d) Where all the partners except one die. (iii) Dissolution by Notice When partnership is at will then the partnership firm may be dissolved, if any partner give notice in writing to all the other partners expressing his/her intention to dissolve the firm. (iv) Dissolution by Court A court may order for dissolution if a suit is filed by a partner, as per Section 44 of Indian Partnership Act, 1932. The court may order to dissolve a partnership in following conditions (a) A partner becomes insane. (b) A partner commits breach of agreement wilfully. (c) When a partner’s conduct affects the business. (d) When a partner transfers his interest to a third party. (e) If business cannot be continued. (f) If a partner becomes incapable of doing business. (g) If court thinks dissolution to be just and equitable on any ground. Besides these, above mentioned circumstances, a partnership firm may be dissolved if the court at any stage finds dissolution of the firm to be justified and inevitable.
Q.2 What is a Realisation Account? ANSWER: On dissolution of a firm, all the books of account are closed, all assets are sold and all liabilities are paid off. In order to record the sale of assets and discharge of liabilities, a nominal account is opened named realisation account. The main purpose to open realisation account is to ascertain the profit or loss due to the realisation of assets and liabilities. Realisation profit (if credit side > debit side) or realisation loss (if debit side > credit side) are transferred to the partner’s capital account in their profit sharing ratio. Concisely, following are the important objectives of preparing realisation account (i) To close all the books of account. (ii) To record transactions relating to the sale of assets and discharge of liabilities. (iii) To determine profit or loss due to the realisation of assets and liabilities. Features of Realisation Account (i) In realisation account, sale of assets is recorded at their realised value. (ii) Payment to liabilities (creditors) is recorded at their settlement value. (iii) After all the transactions have been recorded, there will be balance, which may be profit or loss. (iv) Profit arises in two situations (a) When assets are realised at more than their book value. (b) When liabilities are settled at less than their book value. (v) If the two conditions are vice versa, the net result will be loss. (vi) The net profit or loss on realisation is to be transferred to the partner’s capital accounts in their profit sharing ratio.
The format for realisation account is as follows
Q.3 Reproduce the format of Realisation Account. ANSWER:
Q.4 How deficiency of creditors is paid off? ANSWER:When a firm gets into the situation of dissolution, first of all the amount received from the sale of firm’s assets are utilised to pay the creditors. After that, if the sale receipts of assets fall short, then partners’ private assets are used for settling the dues of the firm’s creditors. Even if some portion of the amount due to creditors is left unpaid, then there arises deficiency of creditors. This deficiency is handled in the following two ways (i) In first case, deficiency is transferred to the Deficiency Account. (ii) In second case, the deficiency is transferred to the partner’s capital account. In first case, a separate account is prepared for the firm’s creditors. Then in ‘ order to ascertain the firm’s cash balance accruing from the sale of the firm’s assets and partners’ private assets, cash account is prepared. After ascertaining the cash availability with the firm, the creditors and the external liabilities are paid proportionately (partially). The remaining unpaid creditors or the deficiency is transferred to the Deficiency Account. In the second case, the creditors are paid by the cash available with the firm including the partners’ individual contribution. The deficiency or unpaid creditors amount .is transferred to the partner’s capital account. Thus, the deficiency of the creditors is borne by all the partners in their profit sharing ratio. If any partner becomes insolvent and is unable to bear the deficiency, then this will be regarded as a capital loss to the firm. ‘ If the partnership deed is silent, about such capital loss in the fact of insolvency of a partner, the deficiency on the insolvent partner’s capital ’ account must be borne by the other solvent partners, in proportion to their capital. In that case, we should apply Garner vs Murray decision in solving problems in partnership.
Q.1 What are the different ways in which a partner can retire from the firm?
ANSWER: The following are the different ways in which a partner can retire from a firm.
i. With the consent of all other partners: A partner must take the consent of all the co-partners of the firm before his/her retirement. Thereafter, the partner can retire from the firm if and only if all the partners agree on the decision of his/her retirement.
ii) With an express agreement by all the partners: In case of written agreement among the partners a partner may retire from the firm by expressing his/her intention of leaving the firm though a notice to the other partners of the firm.
iii) By giving a written notice: If partnership among the partners is at will then a partner may retire by giving notice in writing to all the other partners informing them about his/her intention to retire.
Q.2 Write the various matters that need adjustments at the time of retirement of partner/partners.
ANSWER: The following are the various matters that need to be adjusted at the time of retirement of partners/partner.
1. Calculation of new gaining ratio of all the remaining partners of the firm.
2. Calculation of new ratio of the remaining partners of the firm.
3. Calculation of goodwill of the new firm and its accounting treatment.
4. Revaluation of assets and liabilities of the new firm.
5. Distribution of accumulated profits and losses and reserves among all the partners (including the retiring partner).
6. Treatment of Joint Life Policy
7. Settlement of the amount due to the retiring partner
8. Adjustment of capital accounts of the remaining partners in their new profit sharing ratio.
Q.3 Distinguish between sacrificing ratio and gaining ratio.
ANSWER:
Basis of Difference
Sacrificing ratio
Gaining Ratio
1. Meaning
It is the ratio in which old partners agree to sacrifice their share of profit in favour of new partners/partner
It is the ratio in which continuing partner acquires the share of profit from outgoing partner/partner
2. Calculation
Sacrificing Ratio = Old Ratio – New Ratio
Gaining Ratio = New Ratio – Old Ratio
3. Time
It is calculated at the time of admission of new partners/partner.
It is calculated at the time of retirement/death of old partners/partner.
4. Objective
It is calculated to ascertain the share of profit and loss given up by the existing partners in favour of new partners/partner.
It is calculated to ascertain the share of profit and loss acquired by the remaining partners (of the new firm in case of retirement) from the retiring or deceased partner.
5. Effect
It reduces the profit share of the existing partners.
It increases the profit share of the remaining partners.
Q.4 Why do firm revaluate assets and reassess their liabilities on retirement or on the event of death of a partner?
ANSWER: At the time of retirement or death of a partner, it becomes inevitable to revalue the assets and liabilities of the firm for ascertaining their true and fair values. The revaluation is necessary as the value of assets and liabilities may increase or decrease with the passage of time. Further, it may be possible that there are certain assets and liabilities that remained unrecorded in the books of accounts. The retiring or the deceased partner may be benefited or may bear loss due to change in the values of assets and liabilities. Therefore, the revaluation of the assets and liabilities is necessary in order to ascertain the true profit or loss that is to be divided among all the partners in their old profit sharing ratio.
Q.5 Why a retiring/deceased partner is entitled to a share of goodwill of the firm?
ANSWER: Goodwill is an intangible asset of a firm that is earned by the efforts of all the partners of the firm. After the retirement or death of a partner, the fruits of the past performance and reputation will be shared only by the remaining partners. Thus the remaining partners should compensate the retiring or the deceased partner by entitling him/her a share of firm’s goodwill.
Long answer Type Question:
Q.1 Explain the modes of payment to a retiring partner. ANSWER: Payment to a retiring partner can be made in the following ways (i) Lump Sum Payment : A lump sum payment can be made to the retiring partner in full settlement. In that case, the following Journal entry will be passed
(ii) Opening the Loan Account Sometimes the amount due to the retiring partner is paid in instalments then the balancing figure of his/her capital account is transferred to his/her loan account, in this case, the retiring partner receives equal instalments along with the interest on the amount outstanding. In that case the following journal entries will be passed for transferring the amount paid to him/her in retiring partner’s loan account.
(iii)Some Payment in Cash and Some in Instalment Sometimes the amount due to the retiring partner is paid partly in cash and partly in equal instalments in that case a certain amount is paid in cash to the retiring partner and the rest amount due to him/her is transferred to his/her loan account. The following necessary journal entry is to be passed.
Q.2 How will you compute the amount payable to a deceased partner? ANSWER: In case of a death, the legal executor of the deceased partner is entitled for a claim which includes his share of profit or loss, interest on capital, interest on drawings In that case for computing the amount payable is calculated by preparing the deceased partner’s capital account as follows
Note: In the above capital account, the legal executor will be entitled for the balancing figure that is the excess of the credit side over the debit side of the deceased partner’s capital account.
Q. 3 Explain the treatment of goodwill at the time of retirement or on the event of death of a partner. ANSWER: At the time of retirement or is the event of death of a partner, the goodwill of the firm is adjusted among the partners in their gaining ratio with the share of goodwill of the retiring or the deceased partner. At the time of retirement or on the event of death of a partner, goodwill account is not opened hence only two situations are left for treating the goodwill first when goodwill account is already there in the book or it appear in the books and second when the amount of goodwill is not appearing in the books. The treatment of goodwill will be as follows in the above two situations First Situation When Goodwill Already Appears in the Books of the Firm Step 1 Write-off the Existing Goodwill When goodwill account already exist in the book of the firm or mentioned in the book first of all, it will be written oft and should be distributed among all the partners of the firm including the retiring or the deceased partner in their old profit sharing ratio. In that case, the journal entry will be as follows
Step 2 Adjusting Goodwill Through Partners’ Capital Account After writing off the old goodwill, the amount of goodwill now needs to be adjusted through the partner’s capital account with the share of the goodwill of the retiring orthe deceased partner. The following journal entry is passed. Second Situation When No Goodwill Appears in the Books of the Firm In second case, when no goodwill appears in the books of the firm, the amount of goodwill will be adjusted through the partner’s capital account with the share of the goodwill of the retiring or the deceased partner. The following journal entry’is passed
Q.4 Discuss the various methods of computing the share in profits in the event of death of a partner. ANSWER: Computation of profit will be different in case of death of a partner as compare to the retirement. The reason is that in case of retirement everything is pre-planned but in case of death nothing is planned. In case of death, the share of profit.can be calculated by one of the two methods. (i) On the Basis of Time In this method, profit upto the date of the death of the partner is calculated on the basis of time passed till the death of the partner from the beginning of the year on the bases of the last year’s/years’ profit or average profit of last few years. The assumption in this method is that the profit will be uniform throughout the current year. The share of the deceased partner profit will be calculated as follows
Example A, B, C and D are equal partners. The profit of the firm for the years 2009, 2010 and 2011 are ? 5,00,000, ? 7,00.000 and <9,00,000 respectively. C dies on June 30, 2012. The share of C in the firm’s profit will be calculated on the basis of average profit of last three years. Firm closes its books every year on December 31. In this case, C’s share in the profits will be calculated for four months. i e., from January 1. 2012
(ii) On the Basis of Sale In this method, profit up to the date of the death of the partner is calculated on the basis of sales affected till the date of the’ death of the partner from the beginning of the year. The assumption in this method is that the net profit margin for current year will be same as the previous year. The share of the deceased partner profit will be calculated as follows
Example A, B and C are equal partners. The last year’s sales and profit were ? 40,00,000 and ? 4,00,000. C died on June, 2012. Sales of the current year till the date of C’s death amounts to ? 15,00,000. Firm closes its books on December 31 every year.
Q.1Identify various matters that need adjustments at the time of admission of a new partner.
ANSWER: The following are the various items that need to be adjusted at the time of admission of a new partner.
1. Profit Sharing Ratio: Calculation of new profit sharing ratio.
2. Goodwill: Valuation and adjustment of goodwill among the sacrificing old partners.
3. Revaluation of Assets and Liabilities: Assets and liabilities are revalued to ascertain the current value of the assets and liabilities of the partnership firm. Moreover, the profit or loss due to the revaluation need to be distributed among the old partners.
4. Accumulated profits, losses and reserves are distributed among the old partners in their old ratio.
5. Adjustment of capital of the partners.
Q.2 Why i is it necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?
ANSWER: When new partner/s is/are admitted, then the old partners in the partnership firm need to sacrifice their share of profit in favour of the new partner/s. This reduces the share of profit of the old partners ,hence, it is necessary to ascertain the new profit sharing ratio even for the old partners in the event of admission of new partner/s.
Q.3 What is sacrificing ratio? Why is it calculated?
ANSWER: Sacrificing ratio refers to the ratio in which the old partners of a partnership firm surrender their share of profit in favour of the new partner/s. It is calculated as a difference between the old ratio and the new ratio of the old partners.
Sacrificing Ratio = Old Ratio − New Ratio
It is very important to calculate this ratio, as the new partner need to compensate the old partners for sacrificing their share of profit. The new partner compensates the old partners by making payment to them in the form of goodwill that is transferred among the old partners in their sacrificing ratio
Q.4 On what occasions sacrificing ratio is used?
ANSWER: The following are the different situations when sacrificing ratio is used.
1. When the existing partners of a partnership firm agree to change the share of profit among themselves.
2. When a new partner is admitted in the partnership firm and the amount of the goodwill brought by him/her is transferred among the old partners in sacrificing ratio of the old partners.
Q.5 If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?
ANSWER: If goodwill already appears in the books of old firm (before the admission of new partner), then this should be written off among the old partners in their old profit sharing ratio. The following Journal entry is passed.
Old Partner’s Capital A/c
Dr.
To Goodwill A/c
(Goodwill written off in old ratio among the old partners)
Q.6 Why is there need for the revaluation of assets and liabilities on the admission of a partner?
ANSWER: At the time of admission of a new partner, it becomes very necessary to revalue the assets and liabilities of a partnership firm for ascertaining its true and fair values. This is done because the value of assets and liabilities may have increased or decreased and consequently their corresponding figures in the old balance sheet may either be understated or overstated. Moreover, it may also be possible that some of the assets and liabilities are left unrecorded. Thus, in order to record the increase and decrease in the market value of the assets and liabilities, Revaluation Account is prepared and any profits or losses associated with this increase or decrease are distributed among the old partners of the firm.
Long Answer Type Question:
Q.1 Do you advise that Liabilities and Assets must be revalued at the time of admission of a partner? If so, why? Also describe how is this treated in the book of account?
ANSWER: It is logical to revalue Liabilities and Assets when a new partner gets admitted in the firm, as it is helpful in determining the true value of them on that day. Revaluation is helpful as the value of Liabilities and Assets may increase or decrease and as such their values in existing balance sheet may be not justified, also some assets or liabilities may not be recorded at all. Hence, for recording the changes in market value for the Liabilities and Assets, a revaluation account is needed to be prepared and the associated profits or losses needs to be distributed between the existing partners of firm.
Following journal entries are added to the account on the date a new partner is admitted in a firm.
i. When asset value increases:
Assets A/c Dr.
To Revaluation A/c
(For increase in asset value)
ii) When asset value decreases:
Revaluation A/c
Dr.
To Asset A/c
(For Decrease in asset value)
iii) When Liabilities increase:
Revaluation A/c
Dr.
To Liabilities A/c
(For increase in liabilities value)
iv) When liabilities decrease:
Liability A/c
Dr.
To Revaluation A/c
(For decrease in liabilities value)
v) To record assets that are unrecorded:
Unrecorded Assets A/c
Dr.
To Revaluation A/c
(Recording unrecorded assets)
vi) To record liabilities that are unrecorded :
Revaluation A/c
Dr.
To Unrecorded Liabilities A/c
(To record unrecorded liabilities)
vii) Transferring credit balance of Revaluation account:
Revaluation
Dr.
To Old Partner’s Capital A/c
(Transfer of profit earned from Revaluation to Old Partners as per existing profit sharing ratio)
vii) Transferring debit balance of Revaluation account:
Old Partner’s Capital A/c
Dr.
To Revaluation A/c
(Transfer of loss on revaluation to Old Partners as per existing profit sharing ratio)
Q.2 What is goodwill? What are the factors that affect goodwill?
ANSWER: Goodwill refers to the intangible asset that represents the firms value and reputation and the brand name that it carries in the market. Goodwill is earned by a firm from the work it does which helps earn people trust by meeting all customer demands both in quality and quantity. Having a positive goodwill is very much helpful for a firm to earn extraordinary profits in comparison to its competitors. It also ensures profits that keep coming in the future and helps in retaining old customers.
Factors affecting firms’ goodwill are:
1. Product Quality: A firm which is constantly delivering the best product for its customers will have a greater goodwill.
2. Location: A central location makes it easy to reach and attracts more footfalls which leads to higher sales and more goodwill.
3. Management: Cost efficiency and higher productivity can be achieved by having an efficient management in place, also it ensures quality products at less price which increases goodwill.
4. Market Structure: A firm will enjoy more benefits of goodwill if the market is monopolistic in nature and there are no substitutes, it will add more goodwill to the firm.
5. Other Advantages: A firm that is getting benefits such as continuous supply of fuel, power and raw materials and uses it to produce quality goods enjoys a higher goodwill.
Q.3 Explain various methods of valuation of goodwill.
ANSWER: There are four different methods of goodwill valuation:
1. Average Profit Method: In this method, the calculation of goodwill is done based on the average profits of the past years. It can be calculated as
Goodwill = Average Profit × No. of Years Purchase
Here, the number of years of purchase signifies the years till which the firm expects profits to generate in the same way as current period
Following steps are involved in this method
1. Determine total profit of past years
2. Add all losses which are abnormal in nature such as theft, fire etc.
3. Add all normal income, if not done previously
4. Deduct all incomes that are not obtained from business, and all such abnormal incomes for e.g winning a lottery
5. Deduct all normal expenses, if not deducted previously
6. Calculate the average profit, by dividing total profit determined in the previous step
7. Multiply the average profit hence obtained to the number of year’s purchases in order to determine goodwill.
Example:
Last 5 years profits are 3,00,000, 9,00,000, (6,00,000), 15,00,000, 24,00,000.
Goodwill calculated as:
Goodwill = 9, 00,000 × 4 = 36, 00,000
2. Weight Average Method:In this method, weights are allocated to each year’s profit with the highest weight given to recent year’s profit and lower weights marked for past years profits. The product of the profits and weights are added and divided by the total weight to determine weighted average profits. It is a modified version of Average Profit Method. The following formulae is used.
The following steps are involved:
1. Assign highest weightage to recent year’s profit and lowest weightage to past years profits.
2. Multiply weights with the profits corresponding to each year
3. Determine product total
4. Divide the product total with total of weightage to find Weighted Average Profit
5. Multiply the weighted average profit with number of years purchase
For example:
Last 5 years profits are ₹ 3,00,000, ₹ 9,00,000, ₹ (6,00,000), ₹ 15,00,000, ₹ 24,00,000.
Goodwill calculated as:
Profit/Loss₹
Weights
Product₹
3,00,000
1
3,00,000 × 1 = 3,00,000
9,00,000
2
9,00,000 × 2 = 18,00,000
(6,00,000)
3
(6,00,000) × 3 = (18,00,000)
15,00,000
4
15,00,000 × 4 = 60,00,000
24,00,000
5
24,00,000× 5 = 1,20,00,000
Total
15
₹ 1,83,00,000
3. Super Profit Method: In this method, goodwill is determined on excess profit earned by a firm as compared to profit earned by rivals in the same industry. The excess profit earned over normal profit is called as Super Normal Profit
Following steps are involved:
1. Calculate the average profit
2. Calculating average capital engaged
3. Calculating normal profit
4. Calculation of Super Normal Profit using the formulae: Super Normal Profit = Average Profit – Normal Profit
5. Multiply super normal profit with number of years purchase to determine goodwill.
4. Capitalisation Method: Goodwill is determined by two ways as follows:
a) By Average Profit capitalisation. b) By Super Profit capitalisation.
a) By Average Profit capitalisation
Following steps are involved:
1. Average profit is calculated
2. Calculating average profits capitalised value using the formulae
3. Determine Actual Capital Employed
4. Deduct Actual Capital Employed from Capitalised Average Profit to calculate goodwill.
Goodwill = Capitalised Average Profit – Actual Capital Employed
b) By Super Profit capitalisation.
Following steps are involved:
1. Capital Employed for calculation
2. Calculation of Normal profit
3. Calculation of average profit
4. Calculating Super Normal Profit:
Super Normal Profit = Average Profit – Normal Profit
Step 5: Goodwill calculation by the following formula:
4. If it is agreed that the capital of all the partners be proportionate to the new profit sharing ratio, how will you work out the new capital of each partner? Give examples and state how necessary adjustments will be made.
When a new partner is admitted to the firm, the capital of all partners must be determined using new profit sharing ratio. In such cases new capital of each partner is determined and is dependent on the following instances:
1. New partner’s capital is given
2. Firm’s total capital is given
1) New partner’s capital is given
It involves the following steps
1. Calculation of total capital of firm based on the new partners’ capital
2. Divide total capital of the firm by individual share of partner’s profits to determine each partner’s new capital
3. After posting adjustments determine each partner’s capital balance
4. The capital determined previously is written in Partners Capital account on the credit side
5. Calculation of surplus or deficit. If new capital is more than the old share, then it needs to be contributed by old partners and is termed deficit and if new capital is less than old capital, it is called surplus and the difference is paid to old partners.
Let us understand the above steps with the help of an example.
A & B are partners in business who share profits and losses equally. They agree to admit C for share in profit. C brings ₹ 1, 00,000 as capital. A and B have old capital of ₹ 80,000 and ₹ 60,000 respectively, at the time admission of C.
Step 3:
A
B
New Capital
100,000
100,000
Less: Existing Capital
(80,000)
(60,000)
Withdrawal (deposit)
(20,000)
(40,000)
So both A and B need to pay 20,000 and 40,000 more as share for their new capital.
2) When new firms’ total capital is known:
When new partner’s capital is not mentioned, then new capital is determined based on the total capital of the firm on a proportionate basis. The amount that is determined has to be brought in by the new partner as capital. Following steps are taken to determine the new partners’ capital:
1. Finding the total old capital of the existing partners after performing all adjustments.
2. Finding total capital of the new firm by multiplying old capital of existing partners with the reciprocal of old partners total share.
Q.4 The new capital of each partner is determined on the basis of total capital calculated which is multiplying new profit ratio with the total capital, individually for all partners. Here is an example to help understand the concept.
ANSWER: Ram and Shyam are partners in a firm sharing profit and loss equally. They agree to admit Anil for 1/3rd share in profit and decided to share future profit and loss equally. X’s capital is ₹ 1, 00,000 and Y’s capital is ₹ 50,000. Z brings sufficient capital for his share in profit.
1. Old Capital= ₹ 1, 00,000 + 50,000 = 1, 50,000
2. Calculation of total capital
3. New Partners Capital
Q.5 Explain how will you deal with goodwill when new partner is not in a position to bring his share of goodwill in cash?
ANSWER: The situation in which a new partner is unable to bring his share of goodwill in cash, the goodwill account gets adjusted through Old Partners account. New partners’ capital account is debited with the share of goodwill and the same gets credited to Old Partner’s account.
New Partner’s Capital A/c
Dr.
To Old Partners’ Capital A/c
(New Partner account debited)
Note: According to Para 16 of Accounting Standard 10, Goodwill is recorded only when it is any transaction equivalent to money or money’s worth. It is a mandatory practice that is followed.
Q.6 Explain various methods for the treatment of goodwill on the admission of a new partner?
ANSWER: Goodwill is treated in the following ways on introduction of a new partner:
1. Premium Method
2. Revaluation Method
When a new partner pays the share of goodwill in the form of cash, it is called as premium method. There can be two scenarios:
1. New partners pays directly to old partners
2. Partner brings goodwill in form of cash and it is retained in the business.
The corresponding entries are:
(i) When goodwill brought in cash by new partner
Cash/Bank A/c Dr.
To Premium for Goodwill A/c
(Amount of goodwill brought in by new partner)
(ii)When goodwill is retained by business:
Premium for Goodwill A/c Dr
To Sacrificing Partners’ Capital A/c
(Goodwill brought by new partner distributed among old partners as per the sharing ratio)
Revaluation Method: Situations when new partner is unable to bring goodwill in form of cash
New Partner’s Capital A/c Dr. (Goodwill amount not brought by new partner)
To Old Partners’ Capital A/c
(Goodwill of new partner distributed to old partners as per their sharing ratio)
Note: According to Para 16 of Accounting Standard 10, Goodwill is recorded only when it is any transaction equivalent to money or money’s worth. It is a mandatory practice that is followed.
Q.7 How will you deal with the accumulated profit and losses and reserves on the admission of a new partner?
ANSWER: A new partner is not entitled to bear the losses or enjoy the profits of a previous business. Hence, when a new partner is added to the firm, the accumulated profits or losses, reserves needs to be distributed to current partners (partners of old firm) in their profit sharing ratio.
Treatment of accumulated losses, profits and reserve
Profit and Loss A/C Dr.
General Reserve A/C Dr.
Contingency Reserve A/C Dr.
When losses accumulate over a period.
For Profits and losses
Deferred Advertising expense Dr.
(Losses accumulated shared to old partners as per sharing ratio)
Q.8 At what figures the value of Liabilities and Assets appear in the books of the firm after revaluation has been done? Show with the help of an imaginary balance sheet.
ANSWER: After revaluation has been done, the Liabilities and Assets appear at their current market values in the Balance Sheet of the reconstituted firm. This can be better explained with the help of the below explained example.
Anil & Bijay shares profit and loss equally.
Balance Sheet of A and B as on April 01, 2019
Liabilities
Amount₹
Assets
Amount₹
Sundry Creditors
1,00,000
Cash in Hand
8,000
Capital Accounts
Cash at Bank
1,78,000
Anil 1,50,000
Debtors
40,000
Bijay 1,50,000
3,00,000
Stock
36,000
Furniture
38,000
Plant and Machinery
1,00,000
4,00,000
4,00,000
1) On that date Chetan is admitted as new partner for 1/3rd share and offers 2, 00,000 as capital.
2) Value of stocks increased by ₹ 7,000.
3) A ₹ 2,000 provision has been created against Debtors.
4) ₹ 35,000 value obtained after revaluating furniture.
5) A machinery costing ₹ 100,000 purchased is not recorded in books.
6) Outstanding rent ₹ 2,000.
Prepare Revaluation Account, Partners’ Capital Account, Cash Account and Balance Sheet.
ANSWER: Partnership Deed is a written agreement among the partners of a partnership firm. It includes agreement on profit sharing ratio, salaries, commission of partners, interest provided on partner’s capital and drawings and interest on loan given or taken by the partners, etc. Generally following details are included in a partnership deed.
1. Objective of business of the firm
2. Name and address of the firm
3. Name and address of all partners
4. Profit and loss sharing ratio
5. Contribution to capital by each partner
6. Rights, types of roles and duties of partners
7. Duration of partnership
8. Rate of interest on capital, drawings and loans
9. Salaries, commission, if payable to partners.
10. Rules regarding admission, retirement, death and dissolution of the firm, etc.
Q.2 Why it is considered desirable to make the partnership agreement in writing.
ANSWER: Partnership agreement may be oral or written. It is not compulsory to form partnership agreement in writing under the Partnership Act, 1932. However, written partnership deed is desirable than oral agreement as it helps in avoiding disputes and misunderstandings among the partners. Also, it helps in settling disputes (as the case may be) among the partners, as written partnership deed can be referred to anytime. If written partnership deed is duly signed and registered under Partnership Act, then it can be used as evidence in the court of law.
Q.3 List the items which may be debited or credited in the capital accounts of the partners when:
(i) Capitals are fixed
(ii) Capitals are fluctuating
ANSWER:
(i)When Capitals are fixed
The following items are credited in the Partner’s Capital Account when capital accounts are fixed.
(a) Opening balance of capital
(b) Additional capital introduced during an accounting year
The following items are debited in the Partner’s Capital Account when capital accounts are fixed.
(a) Part of capital withdrawn
(b) Closing balance of capital
(ii) When Capitals are fluctuating
The following items are credited in the Partner’s Capital Account when capital accounts are fluctuating.
(a) Opening balance of capital.
(b) Additional capital introduced during an accounting year
(c) Salaries to the partners
(d) Interest on capital
(e) Share of profit
(f) Commission and bonus to the partners
The following items are debited in the Partner’s Capital Account when capital accounts are fluctuating.
(a) Drawings made during the accounting period
(b) Interest on drawings.
(c) Share of loss.
(d) Closing balance of capital.
Q.4 Why is Profit and Loss Adjustment Account prepared? Explain.
ANSWER: The Profit and Loss Adjustment Account is prepared because of the following two reasons.
1. To record omitted items and rectify errors if any– After the preparation of Profit and Loss Account and Balance Sheet, if any error or omission is noticed, then these errors or omissions are adjusted by opening Profit and Loss Adjustment Account in the subsequent accounting period without altering old Profit and Loss Account.
2. To distribute profit or loss between the partners– Sometimes, besides adjusting the items and rectifying errors, this account is also used for distribution of profit (or loss) among the partners. In this situation, this account acts as a substitute for Profit and Loss Appropriation Account. The main rationale to prepare the Profit and Loss Adjustment Account is to ascertain true profit or loss.
Q.5 Give two circumstances under which the fixed capitals of partners may change.
ANSWER: The following are the two circumstances under which the fixed capitals of partner may change.
(i) If any additional capital is introduced by the partner during the year.
(ii) If any part of capital is permanently withdrawn by the partner from the firm.
Q.6 If a fixed amount is withdrawn on the first day of every quarter, for what period
the interest on total amount withdrawn will be calculated?
ANSWER: If a fixed amount is withdrawn on the first day of every quarter, then the interest is calculated on the amount withdrawn for a period of seven and half () months.
Example:
If a partner withdraws Rs 5,000 in the beginning of each quarter and the interest is charged @ 10% on the drawings, then interest on drawings is calculated as:
Total drawings made by the partner during the whole year are Rs 20,000, i.e. Rs 5000× 4.
Interest on drawings
Q.7 In the absence of partnership deed, specify the rules relating to the following:
(i) Sharing of profits and losses.
(ii) Interest on partner’s capital.
(iii) Interest on Partner’s drawings.
(iv) Interest on Partner’s loan
(v) Salary to a partner.
ANSWER: (i) Sharing of profits and losses: If the partnership deed is silent on sharing of profit or losses among the partners of a firm, then according to the Partnership Act of 1932, profits and losses are to be shared equally by all the partners of the firm.
(ii) Interest on partner’s capital: If the partnership deed is silent on interest on partner’s capital, then according to the Partnership Act of 1932, no interest on capital should be given to the partners of the firm.
(iii) Interest on partner’s drawings: If the partnership deed is silent on interest on partner’s drawings, then according to the Partnership Act of 1932, no interest on drawing should be charged from the partners of the firm for the amount of capital withdrawn in form of drawings.
(iv) Interest on partner’s loan: If the partnership deed is silent on interest on partner’s loan, then according to the Partnership Act of 1932, the partners are entitled for 6% p.a. interest on the loan forwarded by them to the firm.
(v) Salary to a partner: If the partnership deed is silent on salary to a partner, then according to the Partnership Act of 1932, no salary should be given to any partner.
Long Answer Type Questions:
Q.1 What is partnership? What are its chief characteristics? Explain. ANSWER: According to the Section 4 of the Partnership Act, 1932 Partnership is an agreement between two or more persons who have agreed to share profits or losses of a business that will be carried by all or any one of them acting for all. Person who joined their hands to set up the business are called ‘partners individually and ‘firm’ collectively and the name under which they carry out their business is termed as ‘firm name’. The following are the important characteristics of partnership (i) Two or More Persons In order to form partnership, there should be at least two person coming together for a common goal In other words, the minimum number of partners in a firm can be two. There is however, a limit on their maximum number, if a firm is engaged in the banking business, it can have a maximum of ten partners while in case of any other business, the maximum number of partners can be twenty. (ii) Partnership Deed A partnership deed is an agreement among the partners which contains all the terms of the partnership. It generally contains the details about all the aspects affecting the relationship between the partners including the objective of business, contribution of capital by each partner, ratio in which the profits and the losses will be shared by the partners and entitlement of partners to interest on capital, interest on loan, etc. (iii) Business One of the important characteristics of a partnership is that it is formed to carry out a legal business. Partnership in case of illegal business is not valid. (iv) Sharing of Profit In case of a partnership the partners are suppose to share profit or loss on an agreed ratio or as per the provisions of the Partnership Act, 1932, as per which they will share profit equally. (v) Liability In the case of a partnership liability of partners are unlimited. If there is any obligation against the third party the partner will have to pay it out of his personal property.
Q.2 Discuss the main provisions of the Indian Partnership Act, 1932 that are relevant to partnership accounts if there is no partnership deed. ANSWER:It is always suggested that there must be a partnership deed among the partners before getting into any partnership venture. But sometimes a partnership is started without signing any such document. In this case the rules of partnership will be applicable as per the provisions of the Indian Partnership Act, 1932. The following are the provisions that are relevant to the partnership accounts in absence of partnership deed. (i) Profit Sharing Ratio When a partnership deed is not made or even if it is made and silent on sharing of profit or losses among the partners of a firm, then according to the Partnership Act 1932, profits and losses are to be shared equally among all the partner of the firm. (ii) Interest on Capital When there is absence of partnership deed or the partnership deed is silent on the issue related to interest on partner’s capital, then according to the Partnership Act 1932, no interest on partners’ capital will be provided. However, if they mutually agree on this issue than they are free to give interest on capital out of the profit of the firm. (iii)Interest on Drawings there is no partnership Peed the issue ‘elated h die interest on drawing will be handled according to the provisions Partnership Act. 1932 According sc which no Interest on drawing will be charge loan the orders on withdraw in the form of drawings. (iv) Interest on Partner’s Loan When there is no partnership deed among the partners or the partnership deed is silent on interest on partner’s loan then according to the Partnership Act, 1932. the partners are entitled for 6% pa interest on the loan forwarded by them to the firm (v) Salary to Partner When partnership deed is not there or it is silent on the issue related to salary to a partner, then as per the rules of the partnership Act. 1932. no partner will be entitled to any salary.
Q.3 Explain why it is considered better to make a partnership agreement in writing. ANSWER: As per Partnership Act. 1932, it is not necessary that a partnership agreement must be in writing but still it is always suggested that it should be in written form. Because today there are very good relationship among the partners but in future there may be any dispute regarding any Issue a written partnership agreement will help in avoiding dusputes and misunderstandings among the partners. In this way a written partnership deed is more desirable than the ora agreements. A written partnership agreement ensures the smooth functioning of the business of the partnership firm It aiso helps in settling the disputes among the partners. Moreover a duly signed and registered partnership deed can be used as evidence in the court of law. Therefore, it s desirable to form partnership deed in writing because of the moots associated with written documents over its oral counterparts.
Q.4 Illustrate how interest on drawings will be calculated under various situations. ANSWER:When a partner withdraws any amount, either in cash or in any other form, from the firm for his/her personal use, then it is termed as drawings. The interest charged by the firm on the amount of drawings is termed as interest on drawings. The method of calculating interest on drawings depends on the information available for time and frequency of the drawings made by the partner. The following different situations of drawings made illustrate the calculation of interest charged on drawings. Situation I When ail the information regarding amount, date and rate of interest on drawings is given When a partner withdrew Rs 10,000 on July 01 and interest on drawings is charged at 12% pa and the firm closed its books on December 31 every year then interest on drawings amount to Rs 600.
Situation(II) When information regarding amount, rate of interest on drawings is given Case I Sometimes amount and rate of interest on drawings (per annum) is given but date is not mentioned in this case when the details regarding the amount of drawings and rate of interest on drawings (pa) is given but the date of drawings is not given then interest will be charged on average basis and the period of drawings will be taken as 6 months
Case II Sometimes the amount and rate of is interest on drawings is given but the date and per anum rate of interest is not mentioned. In this case when the date and the rate of interest aim given but per annum is not specified, then annual interest is charged. e.g., If a partner withdrewRs 10 000 and interest rate is 12%, then the interest on drawings amounts to Rs.12,000.
Situation III When a fixed amount is withdrawn at regular interval Case I Sometimes a fixed amount is withdrawn at the beginning of each month and the rate of interest is given then the interest is calculated for 6 5 months. e.g.. If a partner withdraws Rs1,000 in the beginning of every month and the rate of interest is 12% pa, then the interest on drawings amount to RS 780.
Case II Sometimes a fixed amount is withdrawn at the end of each month and the rate of interest is given then the interest is calculated for 5.5 months. e.g.. if a partner withdraws Rs 1.000 at the end of each month arid rate of interest is 12% pa then the interest on drawings amount to Rs 660.
Case III Sometimes a fixed amount is withdrawn at the mid of each month and the rate of interest is given then the interest is calculated for 6 months. e g. if a partner.withdraws Rs.1,000 on 15th of every month and the rate of in’crest is 12% pa then the interest on drawings amount to Rs 720. Case IV If a fixed amount is withdrawn in the beginning of every quarter then the interest is calculated for 7.5 months. e.g.. If a partner withdraws Rs.5,000 in the beginning of every quarter and the rate of interest is 12% pa then the interest on drawings amount to Rs 1,800.
Case V If a fixed amount is withdrawn at the end of every quarter, then the interest is calculated for 4.5 months. e.g., If a partner withdraws Rs. 5,000 at the end of every quarter and the rate of interest is 12% pa then the interest on drawings amounts to Rs. 900
Situation IV When different amount is at different intervals When different amount is withdrawn by a partner at different dates then the interest is calculated by product method. The period of drawings is calculated from the date of withdrawal to the last date of the accounting year, e.g., A partner withdraws?6,000 on March 01, Rs.4,000 on June 01, Rs.5,000 on Aug 30 and Rs.2,000 on Nov 30 and the rate of interest on drawings is 12% pa. The firm closes its book on December 31.
Q.5 How will you deal with a change in profit sharing ratio among existing partners? Take imaginary figures to illustrate your answer. ANSWER: Change in the profit sharing ratio occurs only in case of the admission, retirement or death of a partner or sometimes due to the general agreement among the partners in which they may decide to change the profit sharing ratio. There may be number of issues that should be considered during the change in the profit sharing ratio such as goodwill, reserves and accumulated profits, profit or loss on the revaluation of assets and liabilities and adjustment of capital, etc. As far as the issue related to general reserve is concerned it is basically the accumulated profits (if any) and profit (or loss) on revaluation of assets and liabilities and should be distributed in the partner’s capital account in partners old profit sharing ratio. Sometimes the existing partners may decide to change the profit sharing ratio then some partners gain at the cost of other partners. In other words one partner gain and other one sacrifice equal to the gain. In that case the former should compensate the latter. Therefore, the gaining partner’s capital account’s are debited to the extent of their gain and sacrificing partner’s capital accounts are credited to the extent of their sacrifice .The following journal entry is passed
Example Ram. Mohan and Shyam are partners in a firm sharing profit and loss in 3 2 :1 ratio. They decide to share profit and loss equally in future. On dm: date, the books of the firm showsRs.2.40.000 as general reserve, profit on ^evaluation of Plant and Machinery Rs.60.000. The following adjustment entry is passed through the capital accounts without affecting the books of accounts. Hence, in the above example. Shyam gains at the cost of Ram. so the Ram needs to be compensated by Shyam with the amount of Rs.50.000. The following adjustment entry is passed.
share in profit. C brings ₹ 1, 00,000 as capital. A and B have old capital of ₹ 80,000 and ₹ 60,000 respectively, at the time admission of C.
) months.
