CBSE Class 12 Commerce: Partnership Accounting — Important Questions with Answers 2026

Key Concepts & Short Answer Questions

• Q: What is a Partnership? How is goodwill valued in a partnership?
  Ans: A partnership is a business owned by two or more persons who share profits/losses as per agreement. Goodwill is the reputation of a business that earns it excess profits. Methods of valuation: (1) Average Profit Method: Goodwill = Average profit × Number of years' purchase. (2) Super Profit Method: Super profit = Actual profit - Normal profit. Goodwill = Super profit × Years' purchase. (3) Capitalisation Method: Goodwill = Capitalised value - Actual capital employed.
• Q: Prepare the journal entry for admission of a new partner when goodwill is raised and written off.
  Ans: Step 1: Raise goodwill — Goodwill A/c Dr. To Old Partners' Capital A/c (in old ratio). Step 2: Write off goodwill — Old Partners' Capital A/c Dr. (in new ratio) To Goodwill A/c. Net effect: Gaining partners compensate sacrificing partners. Example: A & B (3:2), C admitted for 1/5. New ratio 12:8:5. Sacrifice: A gives 3/25, B gives 2/25. If goodwill = ₹50,000: A gets 3/5 × 50000 = ₹30,000, B gets 2/5 × 50000 = ₹20,000.

Long Answer / Application Questions

• Q: What is the treatment of reserves and accumulated profits at the time of admission of a partner?
  Ans: All reserves and accumulated profits/losses existing on the date of admission must be distributed among old partners in their old profit-sharing ratio. Journal entry: General Reserve A/c Dr., P&L Suspense A/c (Cr. balance) Dr. To Old Partners' Capital A/c (in old ratio). For accumulated losses: Old Partners' Capital A/c Dr. To P&L Suspense A/c (Dr. balance). This ensures new partner does not share profits earned before their admission.

Exam Tips

• Write structured answers with headings and points for Partnership Accounting
• Use real-world examples wherever possible — examiners reward application
• For numerical problems, show all steps and calculations clearly