CPSR

Question 1

What is the formula to calculate the new profit sharing ratio when a new partner is admitted?

Answer 1

New profit sharing ratio = Old profit sharing ratio * Old capital + New partner’s capital / Total capital after admission

Question 2

True or False: When calculating the new profit sharing ratio, the old profit sharing ratio remains the same.

Answer 2

False

Question 3

What does the term ‘Old capital’ represent in the formula for calculating the new profit sharing ratio?

Answer 3

The capital contributed by the existing partners before the admission of the new partner

Question 4

Fill in the blank: New profit sharing ratio = Old profit sharing ratio * Old capital + ________ / Total capital after admission

Answer 4

New partner’s capital

Question 5

What is the significance of calculating the new profit sharing ratio when a new partner is admitted?

Answer 5

It helps determine the distribution of profits among partners in the new scenario

Question 6

In the formula for calculating the new profit sharing ratio, what does ‘Total capital after admission’ represent?

Answer 6

The total capital contributed by all partners after the admission of the new partner

Question 7

What happens to the old profit sharing ratio when a new partner is admitted?

Answer 7

It changes to reflect the new distribution of profits among partners

Question 8

What is the formula to calculate the new profit sharing ratio when an existing partner’s share is reduced?

Answer 8

New profit sharing ratio = Old profit sharing ratio * Old capital - Partner’s capital reduced / Total capital after reduction

Question 9

True or False: When an existing partner’s share is reduced, the total capital after reduction decreases.

Answer 9

False

Question 10

What is the purpose of calculating the new profit sharing ratio when an existing partner’s share is reduced?

Answer 10

To determine the revised distribution of profits among partners

Question 11

Fill in the blank: New profit sharing ratio = Old profit sharing ratio * Old capital - ________ / Total capital after reduction

Answer 11

Partner’s capital reduced

Question 12

What is the role of the old profit sharing ratio in the formula for calculating the new profit sharing ratio with a reduced share for an existing partner?

Answer 12

It serves as the basis for determining the new profit sharing ratio

Question 13

In the context of profit sharing ratios, what does ‘Partner’s capital reduced’ refer to?

Answer 13

The decrease in capital contributed by an existing partner

Question 14

What factors are taken into account when calculating the new profit sharing ratio?

Answer 14

Old profit sharing ratio, old capital, new partner’s capital, total capital after admission or reduction

Question 15

What is the outcome of determining the new profit sharing ratio in a partnership?

Answer 15

It establishes the proportion of profits each partner is entitled to receive

Question 16

How does the new profit sharing ratio impact the financial arrangements within a partnership?

Answer 16

It influences how profits are divided among partners based on their contributions

Question 17

What is the formula to calculate the new profit sharing ratio when an existing partner’s share is increased?

Answer 17

New profit sharing ratio = Old profit sharing ratio * Old capital + Partner’s capital increased / Total capital after increase

Question 18

True or False: When an existing partner’s share is increased, the total capital after increase decreases.

Answer 18

False

Question 19

What is the purpose of determining the new profit sharing ratio when an existing partner’s share is increased?

Answer 19

To adjust the distribution of profits among partners to reflect the change in share

Question 20

Fill in the blank: New profit sharing ratio = Old profit sharing ratio * Old capital + ________ / Total capital after increase

Answer 20

Partner’s capital increased

Question 21

What is the significance of recalculating the profit sharing ratio with an increased share for an existing partner?

Answer 21

It ensures a fair distribution of profits based on the updated capital contributions

Question 22

In the context of partnership agreements, why is it important to have a clear understanding of the profit sharing ratios?

Answer 22

To avoid disputes and ensure transparency in profit distribution

Question 23

What is the key benefit of using formulas to calculate new profit sharing ratios in a partnership?

Answer 23

It provides a systematic approach to adjusting profit distributions based on changes in the partnership structure

Question 24

How does the calculation of new profit sharing ratios contribute to the financial stability of a partnership?

Answer 24

By maintaining a fair and equitable distribution of profits among partners

Question 25

What is the formula for determining the new profit sharing ratio when a partner’s share is completely transferred to another partner?

Answer 25

New profit sharing ratio = Old profit sharing ratio * Old capital - Partner’s capital transferred / Total capital after transfer

Question 26

True or False: When a partner’s share is completely transferred to another partner, the total capital after transfer remains the same.

Answer 26

True