Accountancy

Admission of a Partner

Questions Bank

  • Section 31(1) of Partnership Act, states a person can be admitted as a new partner only with the consent of all existing partners, unless otherwise agreed upon.
    2018-02-12 16:57:34
  • New Partner is admitted for following purpose, (i) Procuring Additional Capital, (ii) Acquiring Additional Skills, (iii) Benefit from Goodwill of Admitted Partner, (iv) Benefit from efficiency of an exxperienced person.
    2018-02-12 16:57:20
  • Sacrificing Ratio is the ratio in which the old partners agree to sacrifice their shares of profit in favour of the new / incoming partner.
    2018-02-12 16:56:42
  • New Ratio is the ratio in which all the partner (including the new partner) agree to share profit and loss.
    2018-02-12 16:56:31
  • Newly Admitted Partner acquires following rights (i) Sharing in Future Profits of firm goodwill brought in for this right, (ii) Share in assets of the firm - Capital brought in for this right.
    2018-02-12 16:56:19
  • Effect of Admission of a Partner are (i) Combined share of old partner gets reduced, (ii) Incoming partner contribute an agreed amount of capital, (iii) Incoming partner is liable for firm's liabilities, (iv) On Admission, assets and liabilities are to be re-valued.
    2018-02-12 16:56:00
  • At the time of Admission of a partner, the assets and liabilities are revalued or some asset or liability is found unrecorded, necessary adjustments are made through the Revaluation Account
    2018-02-12 16:55:18
  • At the Time of Admission of a partner, any reserve and accumulated profits or losses exist in books of the firm, these should be transferred to old partner’s capital / current accounts in their old profit sharing ratio
    2018-02-12 16:55:03

  • 2018-02-12 16:54:35

Questions Bank -

Ans. The account prepared to carry out the scheme of revaluation of asset and reassessment of liabilities on the reconstitution of firm.

Ans. Admission of a partner means joining the firm by a person as a partner.

Ans. A new partner can be admitted in a partnership firm with the consent of all the partners.

Ans. The effect of admission of a new partner on the firm is that there is a change in the relations of the partners and reconstitution of the partnership firm takes place.

Ans. Section 31 of Indian Partnership Act, the position of a new partner will be as under :
(i) New partner will not liable to pay any debts of the firm incurred before the admission.
(ii) New partner will not be held responsible for the acts of the old partners.

Ans. No, the incoming partner liable for firm's debts before his admission.

Ans. The matter that needs to be adjusted at the time of admission of a partner are:
(i) Determination of new profit sharing ratio.
(ii) Revaluation of assets and reassessment of liabilities.

Ans. When a new partner is admitted, he acquires his share in profits from the old partners. This reduces the partners' share in profits. Hence, the calculation of new profit sharing ratio is necessary.



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