IGCSE Accounting Paper-2: Specimen Questions with Answers 1 - 4 of 103
Passage
M, N & O are partners sharing profit & loss in the ratio of 7: 5: 4. On April 1st 2014 they decide to change this sharing ratio to 3: 2: 1
Question number: 1 (1 of 5 Based on Passage) Show Passage
Describe in Detail
What does Gaining ratio refer to?
Explanation
The ratio in which one or more partner gains the share of profit of another partner is called as gaining ratio. This is obtained by the formula
It increases the share of the existing partner.
Question number: 2 (2 of 5 Based on Passage) Show Passage
Describe in Detail
State two reasons for bringing about a change in the profit sharing ratio
Explanation
Two reasons for changing the profit sharing ratio are
(i) Admission of a new partner
(ii) Retirement of an old partner
Question number: 3 (3 of 5 Based on Passage) Show Passage
Describe in Detail
Explain the term sacrificing ratio.
Explanation
The ratio in which one or more partner surrenders their share of profit to another partner is called as sacrificing ratio. This is obtained by the formula
It reduces the share of the existing partner.
Question number: 4 (4 of 5 Based on Passage) Show Passage
Describe in Detail
Fill up the following journal entry
| Date | Particulars | L. F | Debit Amt | Credit Amt |
| 01.04. 2014 | M’s capital A/C Dr | …………. . | ||
| N’s capital A/C Dr | …………. | |||
| To O’s Capital A/C | 36000 | |||
| (Being Goodwill adjusted due to change in profit sharing ratio) |
Explanation
| Date | Particulars | L. F | Debit Amt £ | Credit Amt £ |
| 01.04. 2014 | M’s capital A/C Dr | 27000 | ||
| N’s capital A/C Dr | 9000 | |||
| To O’s Capital A/C | 36000 | |||
| (Being Goodwill adjusted due to change in profit sharing ratio) |
Old ratio of M, N & O = 7: 5: 4
New ratio of M, N & O = 3: 2: 1
Sacrificing or Gaining ratio = Old ratio – New ratio
M = (Gaining ratio)
N = (Gaining ratio)
O = (Sacrificing ratio)
Therefore M & N Gain in the ratio of 3: 1
M =
N=