(MCQs) related to changes in profit sharing ratios in partnership accounting, along with the answers:
1)When partners decide to change their profit sharing ratios, which account is usually adjusted?
a) Cash Account
b) Bank Account
c) Capital Account
d) Expense Account
Answer: c) Capital Account
2)A change in profit sharing ratios can occur due to:
a) Change in business location
b) Change in partner salaries
c) Change in partner's personal life
d) Change in partner's profit interest
Answer: d) Change in partner's profit interest
3)In a partnership, the adjustment for a change in profit sharing ratios affects which type of account?
a) Nominal Account
b) Personal Account
c) Real Account
d) Tangible Account
Answer: b) Personal Account
4)The adjustment of capital accounts due to a change in profit sharing ratios is done to ensure:
a) Equal distribution of profits
b) Equal distribution of losses
c) Equitable distribution of gains and losses
d) Equitable distribution of expenses
Answer: c) Equitable distribution of gains and losses
5)Which account is debited when a partner's share of goodwill is credited during a change in profit sharing ratios?
a) Goodwill Account
b) Partner's Capital Account
c) Partner's Current Account
d) Reserve Account
Answer: b) Partner's Capital Account
6)When the new profit sharing ratios of partners are decided, they are based on:
a) Past performance
b) Business potential
c) Equal investment
d) Mutual agreement
Answer: d) Mutual agreement
7)A change in profit sharing ratios can result in:
a) Changes to the business name
b) Changes to partnership legal documents
c) Changes to the business location
d) Changes to the business type
Answer: b) Changes to partnership legal documents
8)If a partner gains a larger share of profits in the new ratio, what happens to their capital account?
a) It is credited
b) It is debited
c) No change
d) It is closed
Answer: a) It is credited
9)A partner's share of goodwill is credited to their capital account to:
a) Increase their share of profits
b) Reflect their claim to the business's reputation
c) Decrease their capital investment
d) Settle a liability
Answer: b) Reflect their claim to the business's reputation
10)Which financial statement is affected by a change in profit sharing ratios?
a) Income Statement
b) Balance Sheet
c) Cash Flow Statement
d) Statement of Changes in Equity
Answer: b) Balance Sheet
11)When partners decide to change their profit sharing ratios, which account is credited to adjust for the change?
a) Drawings Account
b) Salary Account
c) Capital Account
d) Current Account
Answer: c) Capital Account
12)A partner's share of reserves and accumulated profits is adjusted during a change in profit sharing ratios by:
a) Debiting the partner's current account
b) Debiting the partner's capital account
c) Crediting the partner's capital account
d) Crediting the partner's current account
Answer: c) Crediting the partner's capital account
13)A change in profit sharing ratios may occur due to:
a) Change in business name
b) Change in business location
c) Change in management
d) Change in market demand
Answer: b) Change in business location
14)If a partner's new share of profits is decreased, how is their capital account affected?
a) It is credited
b) It is debited
c) No change
d) It is closed
Answer: b) It is debited
15)What is the primary objective of adjusting capital accounts during a change in profit sharing ratios?
a) To record partner withdrawals
b) To allocate goodwill
c) To adjust for changes in partners' claims
d) To determine business expenses
Answer: c) To adjust for changes in partners' claims
16)A partner's share of losses is adjusted during a change in profit sharing ratios by:
a) Debiting the partner's current account
b) Debiting the partner's capital account
c) Crediting the partner's capital account
d) Crediting the partner's current account
Answer: a) Debiting the partner's current account
17)Which account is credited when a partner's share of goodwill is debited during a change in profit sharing ratios?
a) Goodwill Account
b) Partner's Capital Account
c) Partner's Current Account
d) Reserve Account
Answer: a) Goodwill Account
18)In a change of profit sharing ratios, a partner's capital account is credited when:
a) Their new share of profits increases
b) Their new share of profits decreases
c) Their new share of losses increases
d) Their new share of losses decreases
Answer: a) Their new share of profits increases
19)When a partner's share of reserves is debited during a change in profit sharing ratios, which account is credited?
a) Reserves Account
b) Partner's Capital Account
c) Partner's Current Account
d) Drawings Account
Answer: b) Partner's Capital Account
20)The process of adjusting partners' capital accounts during a change in profit sharing ratios ensures:
a) Constant total capital in the firm
b) Equal allocation of expenses
c) Equal distribution of losses
d) No need for a Balance Sheet adjustment
Answer: a) Constant total capital in the firm
21)When a partner's share of accumulated profits is debited, which account is credited?
a) Accumulated Profits Account
b) Partner's Capital Account
c) Partner's Current Account
d) Drawings Account
Answer: b) Partner's Capital Account
22)The change in profit sharing ratios can be due to a partner's:
a) Salary increase
b) Change in lifestyle
c) Change in investment
d) Change in mutual understanding
Answer: c) Change in investment
23)During a change in profit sharing ratios, if a partner's current account balance is debited, it indicates:
a) Their increased share of profits
b) Their decreased share of profits
c) Their increased share of losses
d) Their decreased share of losses
Answer: c) Their increased share of losses
24)During a change in profit sharing ratios, a partner's capital account is debited when:
a) Their new share of profits increases
b) Their new share of profits decreases
c) Their new share of losses increases
d) Their new share of losses decreases
Answer: b) Their new share of profits decreases
25)Which account is debited when a partner's share of accumulated profits is credited during a change in profit sharing ratios?
a) Partner's Capital Account
b) Accumulated Profits Account
c) Partner's Current Account
d) Drawings Account
Answer: b) Accumulated Profits Account
26)In a partnership, a change in profit sharing ratios may lead to changes in the allocation of:
a) Expenses
b) Losses only
c) Profits only
d) Gains and losses
Answer: d) Gains and losses
27)The primary reason for adjusting capital accounts during a change in profit sharing ratios is to reflect changes in partners':
a) Personal lives
b) Investment amounts
c) Salary payments
d) Drawings
Answer: b) Investment amounts
28)When a partner's share of reserves is credited during a change in profit sharing ratios, which account is debited?
a) Reserves Account
b) Partner's Capital Account
c) Partner's Current Account
d) Drawings Account
Answer: b) Partner's Capital Account
29)In a change of profit sharing ratios, a partner's capital account is debited when:
a) Their new share of profits increases
b) Their new share of profits decreases
c) Their new share of losses increases
d) Their new share of losses decreases
Answer: c) Their new share of losses increases
30)When a partner's share of accumulated losses is debited, which account is credited?
a) Accumulated Losses Account
b) Partner's Capital Account
c) Profit and Loss Account
d) Cash Account
answer is b) Partner's Capital Account.
