Q1: 1. What is the process of admitting a new partner into a partnership firm called?

• A) Dissolution
• B) Reconstitution
• C) Incorporation
• D) Liquidation

Q2: 2. Which of the following is NOT a reason for a partnership firm to admit a new partner?

• A) Need for additional capital
• B) Sharing of profits and losses
• C) Expansion of business
• D) Decrease in business operations

Q3: 3. When a new partner is admitted, how are the old partners' capital accounts affected?

• A) Increased
• B) Decreased
• C) Unchanged
• D) Reset to zero

Q4: 4. Which financial statement is prepared to show the effect of admission of a new partner on the existing partners' capital accounts?

• A) Balance Sheet
• B) Income Statement
• C) Cash Flow Statement
• D) Statement of Retained Earnings

Q5: 5. In a real-life scenario, why might a partnership firm decide to admit a new partner?

• A) To bring in expertise in a new area
• B) To reduce the number of partners
• C) To decrease the firm's profitability
• D) To limit the firm's growth

Q6: 6. Which of the following is a characteristic of a partnership firm after the admission of a new partner?

• A) Decrease in risk
• B) Increase in decision-making time
• C) Change in profit-sharing ratio
• D) Less need for transparency

Q7: 7. How is the new partner's capital contribution recorded in the books of accounts?

• A) As income
• B) As an expense
• C) As a liability
• D) As an asset

Q8: 8. What is the effect of admitting a new partner on the total capital of the partnership firm?

• A) Increases
• B) Decreases
• C) Remains the same
• D) Cannot be determined

Q9: 9. In a partnership firm, what document outlines the rights and obligations of the new partner?

• A) Partnership Deed
• B) Memorandum of Association
• C) Articles of Association
• D) Certificate of Incorporation

Q10: 10. Which financial statement provides information on the profit-sharing ratio of the partners after the admission of a new partner?

• A) Income Statement
• B) Cash Flow Statement
• C) Statement of Changes in Equity
• D) Statement of Profit and Loss Appropriation

Q11: 11. In a real-life scenario, how can the admission of a new partner help a partnership firm grow?

• A) By reducing competition
• B) By bringing in additional resources
• C) By limiting the firm's scope
• D) By increasing internal conflicts

Q12: 12. What is the term used to describe the process of adjusting the balance in the partners' capital accounts after the admission of a new partner?

• A) Reconciliation
• B) Reallocation
• C) Appropriation
• D) Adjustment

Q13: 13. Which of the following is NOT a step in the process of admitting a new partner to a partnership firm?

• A) Revaluation of assets and liabilities
• B) Calculation of goodwill
• C) Allocation of losses to the new partner
• D) Adjustment of capital accounts

Q14: 14. How does the admission of a new partner impact the decision-making process in a partnership firm?

• A) Speeds up decision-making
• B) Slows down decision-making
• C) Does not affect decision-making
• D) Eliminates the need for decision-making

Q15: 15. What is the purpose of revaluing assets and liabilities when admitting a new partner to a partnership firm?

• A) To decrease the value of assets
• B) To increase the value of liabilities
• C) To reflect the current market value
• D) To calculate the new partner's salary

Q16: 16. In a real-life scenario, how can the admission of a new partner improve the financial stability of a partnership firm?

• A) By reducing profits
• B) By increasing competition
• C) By injecting additional capital
• D) By limiting growth opportunities

Q17: 17. Which of the following is a potential drawback of admitting a new partner to a partnership firm?

• A) Increased resources
• B) Conflict of interest
• C) Enhanced decision-making
• D) Simplified profit-sharing

Q18: 18. When a new partner is admitted, what happens to the existing partners' profit-sharing ratio?

• A) Increases
• B) Decreases
• C) Remains the same
• D) Adjusted based on seniority

Q19: 19. What financial statement is prepared to show the effect of revaluation of assets and liabilities on the partners' capital accounts?

• A) Income Statement
• B) Cash Flow Statement
• C) Revaluation Account
• D) Statement of Changes in Equity

Q20: 20. In a real-life scenario, how does the admission of a new partner impact the overall risk of a partnership firm?

• A) Increases risk
• B) Decreases risk
• C) Has no effect on risk
• D) Eliminates risk

Q21: 21. Which of the following is a legal requirement when admitting a new partner to a partnership firm?

• A) Share transfer
• B) Change of business name
• C) Submission of tax returns
• D) Update of partnership deed

Q22: 22. What term is used to describe the process of distributing the profits or losses among the partners after the admission of a new partner?

• A) Appropriation
• B) Liquidation
• C) Amortization
• D) Depreciation

Q23: 23. In a partnership firm, what is the term used to describe the amount paid by the new partner to the existing partners for their share in the firm?

• A) Goodwill
• B) Capital contribution
• C) Revaluation
• D) Salary

Q24: 24. How does the admission of a new partner affect the legal status of a partnership firm?

• A) Dissolves the partnership
• B) Converts it into a corporation
• C) Does not impact the legal status
• D) Changes the business structure

Q25: 25. In a real-life scenario, how can the admission of a new partner improve the competitiveness of a partnership firm?

• A) By reducing market share
• B) By increasing operational costs
• C) By diversifying skills and resources
• D) By limiting growth potential