CUET UG•Accountancy•MCQ
Q9. What are the matters that need adjustments at the time of Reconstitution of partnership:
Choose an option
Correct Answer
B
Detailed Explanation
At the time of reconstitution of a partnership (which can happen due to admission, retirement, or death of a partner), certain matters need adjustment:(B) Calculation of Sacrificing ratio: This is necessary particularly when a new partner is admitted. It determines how much profit the existing partners are sacrificing in favour of the incoming partner.(C) Distribution of accumulated profits: Accumulated profits or reserves need to be distributed among the partners as per their profit-sharing ratio. This adjustment ensures that all partners receive their fair share of the profits earned up to the point of reconstitution.(D) Valuation of goodwill: Goodwill of the firm needs to be valued and accounted for at the time of reconstitution. This is crucial as the incoming or outgoing partner must be compensated for their share of goodwill.A. Preparation of Realisation A/c is done during dissolution, not reconstitution.E. Preparation of partner's loan A/c is not a primary adjustment required at the time of reconstitution, though loans might be adjusted later.