Accountancy
Reconstitution of partnership firm
Class12th
And:- partnership is result the agreement and any change in existing agreement bearing to its and the existing agreement and a new agreement comes into force. it the amount to reconstitution of partnership firm.
Q2) mention three modes of a reconstitution of partnership form.
Ans:- i) admission of a new partner.
ii) death of an existing partner.
iii)retirement of an existing partner.
Q3) what is sacrificing ratiwrite formulae.
Ans:- the ratio in which one or more existing partners surrender some of their old share in favour of one or more other partner is called sacrificing ratio. sacrificing ratio is computed by deducting the new ratio from the old ratio
Formulae= old ratio - new ratio.
Q4) define goodwill.
Ans:- according to Lord Eldon," goodwill is the probability that the old customers will resort to the old place.
Q5) what is the factor that lead to the creation of goodwill in a business concern.?
Ans:- the factor that lead to the creation of goodwill in a business concern are:-
i) personal deputation of the owner.
ii) quality and brand name of the product
iii) location of the business premises
Q6) what is the features and characteristics of goodwill?
And:- i)Goodwill is an intangible asset it cannot be seen or touched like other asset.
ii) it has a definite value.
iii) it helps in earning more profit.
iv) it is created by various factors.
v) its face value fluctuates from time to time.
Q7) what are the need/circumstances for the valuation of goodwill?
Or mention three condition when valuation of goodwill becomes necessary.
Ans:- i) when there is a change in profit sharing ratio of an existing partner.
ii) on the admission of a new partner.
iii) on the retirement of an existing partner.
iv) on the death of an existing partner.
v) when two or more firms are amalgamated.
vi) when the business is dissolved.
vii) when the business is sold.
Q8) what are the methods of valuation of goodwill?explain any two.
Ans:- i) average profit method:-
under this method Goodwill can be calculated in two different ways:-
a) by taking simple average of the net profit of past few year,and.
b) by taking weited average of the net profit of past year.
ii) super profit method:-
this method is based on the super profit earned by a firm .super profit is the access of actual profit over the normal profit of a firm.
Q9)name any five factors/element affecting Goodwill of a partnership firm.
Ans:- i) location of business:-
if the business is situated at a centrally located convenient place, it can attract more customers and hence its good will be
more.
ii) quality of the product or services:-
in case the firm produces or deals in product of better quality, it will have more goodwill.
iii) efficiency of Management:-
if the firm is managed and controlled by the experienced any efficient people, there will be economies in production higher demand goods as a result its profit will go on increasing consequently the value of goodwill will also increase
iv) quality of service provided:-
in case the firm is engaged in service sector,the quality of service provided influences to a great extent to the Goodwill of the firm.
v) reputation of the owner:-
if the proprietors of the firm are known for their financial soundness,honestly ,sincerely,customer-friendliness and are socially, conscious the business will earn super profit due to its popularity which will add to the value of goodwill.
Q10) difference between average profit and super profit.
Ans:- 
Q11) what is hidden goodwill?
Ans:- sometimes,the value of goodwill of the firm or the amount of premium for goodwill to be brought in by the new partner is not stated in the given problem under such circumstances, the amount of goodwill which to exist but not evidently given in the problem will have to be calculated.
Q12) how can a new partner be admitted?
Ans:- according to section 31 of the Indian partnership act 1932,"a person can admitted as a new partner only with consent of all the existing partners.
Q13) give two main right acquired by a new partner.
Ans:- i) right to share for the profit of the firm.
ii) right to share of the asset of the firm.
Q14) what is revaluation account?mention its two objective.
Ans:- revaluation account is an asset account where revaluation of asset and liabilities are adjusted.it is prepared to find out the profit or loss of revaluation of assets and liabilities at the time reconstitution of the firm.
Objective of revaluation account are:-
a) To ascertain profit or loss on account of revaluation of assets and liabilities.
b) To ascertain the present value of asset and liabilities.
Q15) why is revaluation account prepared?
Ans:- when a new partner is admitted in the firm it is always desirable to find out whether the assets of the firm are appearing in the books of account at their current values on net. it is also possible that there are some and recorded liabilities of the firm.the new partner should not suffer from the increase in the value of liabilities that is the reason why the revaluation account is prepared
Q16) how will you deal with accumulated profit and losses at the time of admission of a partner?
Ans:- when a new partner is admitted in a partnership firm,then all past accumulated profits or losses and reserve are distributed among all the partners in their old profit sharing ratio.
a) if there is profit.
Profit and loss A/C dr
To old partners capital A/c(in the old ratio)
ii) if there is loss.
Old partners capital A/C dr
To profit and loss A/C.
Q17) how will we deal with the Goodwill when.
a) new partner bring his share of goodwill in cash.
-----cash/bank A/C dr
To sacrificing partners capital A/C
b) new partner does not bring his share of goodwill in cash.
-----New partners capital A/C dr
To sacrificing partners capital A/C
Q18) state the situation/circumstances when a revaluation of assets and liabilities becomes necessary.
Ans:- revaluation account is prepared under the following circumstances:-
i) when the profit sharing ratio changes.
ii) when the new partner is admitted.
iii) when the existing partner has retired.
iv) when the existing partner dies.
v) when the firm is amalgamated with another firm.
