Admission of New Partner MCQ Quiz With Answers

This set of multiple choice questions (MCQs) focuses on the admission of a new partner. You can use this quiz to help prepare for your exams, interviews, and other assessments.

To begin, click the "Start quiz" button. If you find any questions challenging, check out our article on the admission of a new partner to learn everything you need to know.

1. If an incoming partner purchases shares from an old partner, it:

Reduces total ownership
Increases ownership
Results in no change in ownership

2. Total proprietorship of the business is increased:

At the admission of a new partner
By the purchase of assets
By admission through investment

3. In a firm, John's capital is $40,000 and Harry's is $60,000. Michael purchases John's interest for $50,000. What is the amount of goodwill paid to John?

$50,000
$10,000
$40,000

4. A & B are partners in a firm with capital of $100,000 and $150,000, respectively. C purchased half the interest of A for $120,000. The amount credited to C's capital will be:

$50,000
$120,000
$100,000
$70,000

5. Goodwill is valued at two years purchased of the average profits of three previous years which are $15,000 the value of goodwill be:

$15,000
$30,000
$20,000

6. The value of goodwill is agreed at $30,000. C, an incoming partner, purchases 1/4th of the share of total profit. Goodwill will be raised in the book at the value of:

$30,000
$15,000
$7,500

7. An incoming partner pays their share of goodwill in cash, and the profit sharing ratio of the old partners is changed. Goodwill will be distributed among the old partners: