Complete Summary and Solutions for Reconstitution of a Partnership Firm – Admission of a Partner – NCERT Class XII Accountancy, Chapter 2 – Partnership Reconstitution, Admission, Profit Sharing, Goodwill, Revaluation, Capital Adjustment
Detailed summary and explanations of Chapter 2 'Reconstitution of a Partnership Firm – Admission of a Partner' from the NCERT Class XII Accountancy textbook, covering the concept and modes of reconstitution, admission procedures, calculation of new and sacrificing profit sharing ratios, valuation and treatment of goodwill, revaluation of assets and liabilities, adjustment of accumulated profits and losses, capital adjustments, and all related NCERT exercises and solutions.
Updated: 7 months ago
Categories: NCERT, Class XII, Accountancy, Chapter 2, Reconstitution of Partnership Firm, Admission of a Partner, Profit Sharing Ratio, Goodwill, Revaluation, Capital Adjustment, Summary, Questions, Answers, Accounting
Tags: Reconstitution of Partnership, Admission of Partner, New Profit Sharing Ratio, Sacrificing Ratio, Goodwill Valuation, Goodwill Adjustment, Revaluation Account, Capital Adjustment, NCERT, Class 12, Accountancy, Summary, Explanation, Questions, Answers, Chapter 2
Reconstitution of a Partnership Firm: Admission of a Partner - Class 12 Accountancy Chapter 2 Ultimate Study Guide 2025
Reconstitution of a Partnership Firm: Admission of a Partner
Chapter 2: Accountancy - Ultimate Study Guide | NCERT Class 12 Notes, Questions, Proforma Examples & Quiz 2025
Full Chapter Summary & Detailed Notes - Reconstitution of a Partnership Firm: Admission of a Partner Class 12 NCERT
Overview & Key Concepts
Chapter Goal: Changes in partnership via reconstitution; focus on admission, new PSR, sacrificing ratio, goodwill. Exam Focus: Illustrations 1-8, TYU-I, factors of goodwill; 2025 Updates: Emphasis on ratio calcs, premium for goodwill. Fun Fact: Consent of all for admission. Core Idea: Old partners sacrifice for new. Real-World: Firm expansion. Expanded: All subtopics point-wise with evidence (e.g., Ill 1-5), examples (e.g., Anil/Vishal), debates (e.g., equal vs specified sacrifice).
Wider Scope: From modes to goodwill intro; sources: Pages 49-56, Ill 1-8.
Expanded Content: Include modes tease; point-wise for recall; add 2025 relevance like digital agreements.
Introduction & Reconstitution Need
Reconstitution: End of old agreement, new one; firm continues. Triggers: Admission, ratio change, retirement, death, insolvency.
Methods: Various (avg/super profits, capitalization); intro only.
Expanded: Exists only in super profits; evidence: Factors list.
Summary & TYU
Key Takeaways: Consent for admission; ratios key; goodwill compensates. TYU: Multiple choice on PSR/sacrifice.
Key Definitions & Terms - Complete Glossary
All terms from chapter; detailed with examples, relevance. Expanded: 30+ terms grouped by subtopic; added advanced like "Premium", "Revaluation A/c" for depth/easy flashcards.
Reconstitution
Change in agreement; firm continues. Ex: Admission. Relevance: New relations.
Admission
New partner entry. Ex: John 1/6 share. Relevance: Consent required.
New PSR
Post-admission ratio. Ex: 12:8:5. Relevance: From old sacrifice.
Sacrificing Ratio
Old share sacrificed. Ex: 3:5. Relevance: Premium sharing.
Goodwill
Intangible super profit value. Ex: Reputation. Relevance: Premium paid.
Premium
Extra for goodwill. Ex: Cash/kind. Relevance: Compensates old.
Affects goodwill. Ex: Central place high. Relevance: Valuation.
Efficiency
Management impact. Ex: High productivity. Relevance: Goodwill up.
Monopoly
Market situation. Ex: Limited comp. Relevance: Super profits.
Special Advantages
Licences/patents. Ex: Import export. Relevance: High goodwill.
Valuation Methods
Avg profits etc. Ex: Super profit method. Relevance: Accurate calc.
Gain Ratio (Advanced)
On retirement. Ex: New PSR basis. Relevance: Opposite sacrifice.
Capital Adjustment (Advanced)
To new PSR. Ex: Transfer excess. Relevance: Fair capitals.
Tip: Group by modes/ratios/goodwill; examples for recall. Depth: Debates (e.g., goodwill valuation subjectivity). Historical: Act 1932. Interlinks: To Ch3 Retirement. Advanced: Reval entries. Real-Life: Firm buyouts. Graphs: Ratio pies. Coherent: Evidence → Interpretation. For easy learning: Flashcard per term with Ill snippet.
60+ Questions & Answers - NCERT Based (Class 12) - From TYU & Variations
Based on chapter + expansions (e.g., TYU-I). Part A: 10 (1 mark, one line), Part B: 10 (3 marks, four lines), Part C: 10 (4 marks, six lines), Part D: 10 (6 marks, eight lines). Answers point-wise in black text. Include calcs where apt.
Part A: 1 Mark Questions (10 Qs - Short)
1. Define reconstitution.
1 Mark Answer:
Change in agreement; firm continues.
2. Consent for admission?
1 Mark Answer:
Unanimous.
3. New partner's right?
1 Mark Answer:
Share assets/profits.
4. Sacrificing ratio = ?
1 Mark Answer:
Old - New share.
5. Goodwill is?
1 Mark Answer:
Intangible asset.
6. Premium for?
1 Mark Answer:
Goodwill compensation.
7. Factor affecting goodwill?
1 Mark Answer:
Location.
8. Need for goodwill val?
1 Mark Answer:
Admission.
9. TYU-I (a) new PSR?
1 Mark Answer:
9:3:4.
10. Super profits = ?
1 Mark Answer:
Above normal.
Part B: 3 Marks Questions (10 Qs - Medium, Exactly 4 Lines Each)
1. List 3 modes of reconstitution.
3 Marks Answer:
Admission.
Ratio change.
Retirement.
Ex: Death.
2. Why premium on admission?
3 Marks Answer:
Compensate sacrifice.
For super profits.
Ex: Cash/kind.
Old ratio share.
3. Calculate new PSR (Ill 1 type).
3 Marks Answer:
Remaining = 4/5.
Anil 3/5 of 4/5 = 12/25.
Vishal 8/25.
Sumit 5/25.
4. Sacrificing ratio purpose.
3 Marks Answer:
Share premium.
Old - new share.
Ex: Ill 6 3:5.
If gain, adjust.
5. 3 factors of goodwill.
3 Marks Answer:
Nature of business.
Location.
Efficiency.
Ex: Monopoly.
6. When goodwill valued?
3 Marks Answer:
Admission.
Ratio change.
Retirement.
Ex: Death.
7. Adjustment on admission (3).
3 Marks Answer:
New PSR.
Goodwill.
Revaluation.
Ex: Reserves.
8. TYU-I (b) PSR if acquire specified.
3 Marks Answer:
X new 12/20 - 3/20 = 9/20.
Y 8/20 - 1/20 = 7/20.
Z 4/20.
9:7:4.
9. Meaning of goodwill.
3 Marks Answer:
Reputation value.
Super profits.
Ex: Excess earnings.
Intangible.
10. Special advantages factor.
3 Marks Answer:
Licences/patents.
Long contracts.
Ex: Trademarks.
High goodwill.
Part C: 4 Marks Questions (10 Qs - Medium-Long, Exactly 6 Lines Each)
1. Explain modes of reconstitution (3).
4 Marks Answer:
Admission: New capital. Ex: John 1/6.
Ratio change: Equal share. Ex: 3:2:1 to 1:1:1.
Retirement: Exit. Ex: Ravi illness.
Death: Survivors continue.
Consent key.
Firm reconstitutes.
2. Calculate sacrificing ratio (Ill 6 type).
4 Marks Answer:
Rohit old 5/8, new 4/7 = 3/56 sac.
Mohit old 3/8, new 2/7 = 5/56 sac.
Ratio 3:5.
If new PSR given, deduct.
Old ratio if not.
Premium basis.
3. List 4 factors affecting goodwill.
4 Marks Answer:
Nature: High value products.
Location: Central traffic.
Efficiency: Management.
Market: Monopoly.
Special: Licences.
Leads to super profits.
4. New PSR calculation cases (2).
4 Marks Answer:
Old ratio: Remaining x old. Ex: Ill 1 12:8:5.
Specified: Deduct from each. Ex: Ill 3 4:3:3.
Sacrifice given: New = old - sac. Ex: Ill 4 27:16:17.
Whole from one: Ill 5 11:4:5.
Mutual agreement.
5. Need for goodwill valuation (4).
4 Marks Answer:
Ratio change.
Admission new.
Retirement.
Death partner.
Dissolution sale.
Amalgamation.
6. TYU-I (c) sacrificing ratio.
4 Marks Answer:
A old 3/4, new 3/4 - 1/4/2 = 1/2 sac? Wait, calc: For 1/4 C, equal sac 3:1? No.
A sac 3/16, B 1/16.
Ratio 3:1.
Old ratio assume.
Provision (b).
Fair sacrifice.
7. Adjustments on admission (4).
4 Marks Answer:
PSR new.
Sacrifice calc.
Goodwill treat.
Reval assets.
Reserves dist.
Capitals adjust.
8. Meaning & super profits.
4 Marks Answer:
Excess over normal.
From reputation.
Ex: High demand.
No goodwill if normal/loss.
Capitalised value.
Present value excess.
9. Ill 8 gain/sacrifice.
4 Marks Answer:
Ramesh sac 10/42.
Suresh gain 3/42.
Whole sac by Ramesh.
Mohan 7/42.
New 2:3:1.
Adjust premium.
10. Methods of goodwill (intro).
4 Marks Answer:
Avg profits.
Super profits.
Capitalisation.
Difficult accurate.
Various advocated.
One may differ.
Part D: 6 Marks Questions (10 Qs - Long, Exactly 8 Lines Each)
Advanced: Full goodwill methods (later), dissolution. Pitfalls: Ratio fractions. Interlinks: Ch1 provisions. Real: Merger calcs. Depth: 12 concepts details. Examples: Ill. Graphs: Ratio charts. Errors: Denom mismatch. Tips: Steps evidence; compare tables (PSR vs sac).
Proforma Examples & Tables - From Text with Simple Explanations
Expanded with evidence, analysis; focus on illustrations. Added variations for practice.
Example 1: New PSR - Old Ratio Assume (Ill 1)
Simple Explanation: Remaining share x old ratio.
Partner
Old Share
New Share Calc
New Share
Anil
3/5
(3/5) x (4/5) = 12/25
12/25
Vishal
2/5
(2/5) x (4/5) = 8/25
8/25
Sumit
-
1/5
5/25
Step 1: Sumit 1/5, remaining 4/5.
Step 2: Allocate old 3:2.
Step 3: Ratio 12:8:5.
Simple Way: Default assume.
Example 2: New PSR - Equal Sacrifice (Ill 2)
Simple Explanation: New share equal from old.
Partner
Old Share
Sacrifice
New Share
Akshay
3/5
1/10
5/10
Bharati
2/5
1/10
3/10
Dinesh
-
-
2/10
Step 1: 1/5 = 2/10 equal sac 1/10 each.
Step 2: New = old - sac.
Step 3: 5:3:2.
Simple Way: Specified equal.
Example 3: Sacrificing Ratio - From New PSR (Ill 6)
Simple Explanation: Deduct old from new; common denom.
Partner
Old Share
New Share
Sacrifice
Rohit
5/8
4/7
3/56
Mohit
3/8
2/7
5/56
Step 1: 5/8 - 4/7 = (35-32)/56 = 3/56.
Step 2: 3/8 - 2/7 = 5/56.
Step 3: 3:5.
Simple Way: If gain, negative.
Example 4: Factors of Goodwill Table
Simple Explanation: 5 main impacts.
Factor
Impact
Example
Nature
High value added
Stable demand
Location
Central high
Traffic area
Efficiency
Cost saving
Good mgmt
Market
Low comp
Monopoly
Special
Extra value
Patents
Step 1: Assess each.
Step 2: Quantify super profit.
Step 3: Higher = more GW.
Simple Way: List for val.
Example 5: Adjustments Quick Ref
Simple Explanation: 6 key on admission.
Adjustment
Method
Ratio
New PSR
Remaining x old
New
Sac Ratio
Old - new
Sac
Goodwill
Val & treat
Sac
Reval
A/c gain/loss
Old
Reserves
Dist accum
Old
Capitals
Adjust bal
New
Step 1: Calc PSR first.
Step 2: Sequential.
Step 3: Books update.
Simple Way: Old for past, new future.
Example 6: Ill 5 Whole from One
Simple Explanation: Specified from one partner.
Partner
Old Share
Sac
New Share
Das
4/5
1/4
11/20
Sinha
1/5
0
4/20
Pal
-
-
5/20
Step 1: Pal 1/4 from Das.
Step 2: Das new 4/5 - 1/4 = 11/20.
Step 3: 11:4:5.
Simple Way: Direct deduct.
Tip: Practice fractions; troubleshoot (e.g., LCM). Added for ratios, goodwill.
Interactive Quiz - Master Admission Basics
10 MCQs in full sentences; 80%+ goal. Covers modes, ratios, goodwill.
Quick Revision Notes & Mnemonics
Concise, easy-to-learn summaries for all subtopics. Structured in tables for quick scan: Key points, examples, mnemonics. Covers modes, ratios, goodwill. Bold key terms; short phrases for fast reading.
Subtopic
Key Points
Examples
Mnemonics/Tips
Modes
5 Modes: Admission, Ratio change, Retirement, Death, Insolvency.
Consent key, firm cont.
John 1/6, Ravi retire.
AR RDI (Admit Ratio Retire Death Insolv). Tip: "Admit Changes, Retire Ends Role Daily" – Triggers list.
New PSR
Calc: New share, remaining x old ratio.
Cases: Equal, specified, sac given.
Ill 1 12:8:5.
R O S (Remaining Old Specified Sac). Tip: "New Partner: Remaining Old, Specify Sac" – Default old.
Sac Ratio
Old - New; premium share.
Gain possible, old if not spec.
Ill 6 3:5.
O N P (Old minus New = Premium). Tip: "Sacrifice Old for New Partner" – Compensation key.
Adjustments
6 Adj: PSR, Sac, GW, Reval, Reserves, Capitals.
Old for past, new future.
Reval A/c, reserves old.
PS GR CC (PSR Sac GW Reval Reserves Cap). Tip: "Admit: Adjust PSR, Sacrifice GW, Revalue Reserves, Capitalize" – Sequential.
Goodwill
Meaning: Super profit intangible.
Factors: 5 (Nature Loc Eff Mkt Spec).
Need: 6 events.
Monopoly high.
N L E M S (Nature Location Efficiency Market Special). Tip: "Goodwill: Normal Locates Efficient Markets Specially" – Factors mnemonic.
Val Methods
Intro: Avg/Super/Capitalisation.
Difficult, vary.
Super profit method.
A S C (Avg Super Capital). Tip: "Value Goodwill: Average Super Capitalises" – Basic methods.
Overall Tip: Use AR RDI - ROS - ONP - PSGRCC - NLEMS - ASC for full scan (5 mins). Flashcards: Front (term), Back (points + mnemonic). Print table for wall revision. Covers 100% chapter – easy for exams!
Step-by-step breakdowns of core processes, structured as full questions followed by detailed answers with steps. Visual descriptions for easy understanding; focus on actionable Q&A with examples from chapter.
Question 1: How to calculate new PSR (Ill 1)?
Answer:
Step 1: Identify new share (1/5).
Step 2: Remaining = 1 - 1/5 = 4/5.
Step 3: Allocate old ratio 3:2 to 4/5 (Anil 3/5 x 4/5 = 12/25).
Step 4: Vishal 2/5 x 4/5 = 8/25.
Step 5: Sumit 1/5 = 5/25.
Step 6: Ratio 12:8:5.
Visual: Pie old → Slice new → Remaining divide. Example: Default old ratio.
Question 2: Steps for sacrificing ratio (Ill 6)?
Answer:
Step 1: Old shares 5/8, 3/8.
Step 2: New PSR 4:2:1, total 7, Rohit 4/7, Mohit 2/7.
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10 Qs · ~10 min
#108
Class 12 Accountancy — Analysis of Financial Statements (Practice Quiz)
10 Qs · ~10 min
#109
Class 12 Accountancy — Financial Statements of a Company (Practice Quiz)
10 Qs · ~10 min
#110
Class 12 Accountancy — Issue and Redemption of Debentures (Practice Quiz)
10 Qs · ~10 min
#111
Class 12 Accountancy — Accounting for Share Capital (Practice Quiz)
10 Qs · ~10 min
#112
Class 12 Accountancy — Dissolution of Partnership Firm (Practice Quiz)
10 Qs · ~10 min
#113
Class 12 Accountancy — Reconstitution of a Partnership Firm – Retirement/Death of a Partner (Practice Quiz)
10 Qs · ~10 min
#114
Class 12 Accountancy — Reconstitution of a Partnership Firm – Admission of a Partner (Practice Quiz)
10 Qs · ~10 min
#115
Class 12 Accountancy — Accounting for Partnership: Basic Concepts (Practice Quiz)
10 Qs · ~10 min
#116
Class 12 Maths — Probability (Practice Quiz)
10 Qs · ~10 min
#117
Class 12 Maths — Linear Programming (Practice Quiz)
10 Qs · ~10 min
#118
Class 12 Maths — Three Dimensional Geometry (Practice Quiz)
10 Qs · ~10 min
#119
Class 12 Maths — Vector Algebra (Practice Quiz)
10 Qs · ~10 min
#120
Class 12 Maths — Differential Equations (Practice Quiz)
10 Qs · ~10 min
#121
Class 12 Maths — Application of Integrals (Practice Quiz)
10 Qs · ~10 min
#122
Class 12 Maths — Integrals (Practice Quiz)
10 Qs · ~10 min
#123
Class 12 Maths — Application of Derivatives (Practice Quiz)
10 Qs · ~10 min
#124
Class 12 Maths — Continuity and Differentiability (Practice Quiz)
10 Qs · ~10 min
#125
Class 12 Maths — Determinants (Practice Quiz)
10 Qs · ~10 min
#126
Class 12 Maths — Matrices (Practice Quiz)
10 Qs · ~10 min
#127
Class 12 Maths — Inverse Trigonometric Functions (Practice Quiz)
10 Qs · ~10 min
#128
Class 12 Maths — Relations and Functions (Practice Quiz)
10 Qs · ~10 min
#129
Class 12 Biology — Biodiversity and its Conservation (Practice Quiz)
10 Qs · ~10 min
#130
Class 12 Biology — Ecosystem (Practice Quiz)
10 Qs · ~10 min
#131
Class 12 Biology — Organisms and Populations (Practice Quiz)
10 Qs · ~10 min
#132
Class 12 Biology — Biotechnology and its Applications (Practice Quiz)
10 Qs · ~10 min
#133
Class 12 Biology — Biotechnology: Principles and Processes (Practice Quiz)
10 Qs · ~10 min
#134
Class 12 Biology — Microbes in Human Welfare (Practice Quiz)
10 Qs · ~10 min
#135
Class 12 Biology — Human Health and Disease (Practice Quiz)
10 Qs · ~10 min
#136
Class 12 Biology — Evolution (Practice Quiz)
10 Qs · ~10 min
#137
Class 12 Biology — Molecular Basis of Inheritance (Practice Quiz)
10 Qs · ~10 min
#138
Class 12 Biology — Principles of Inheritance and Variation (Practice Quiz)
10 Qs · ~10 min
#139
Class 12 Biology — Reproductive Health (Practice Quiz)
10 Qs · ~10 min
#140
Class 12 Biology — Human Reproduction (Practice Quiz)
10 Qs · ~10 min
#141
Class 12 Biology — Sexual Reproduction in Flowering Plants (Practice Quiz)
10 Qs · ~10 min
#142
Class 12 Chemistry — Biomolecules (Practice Quiz)
10 Qs · ~10 min
#143
Class 12 Chemistry — Amines (Practice Quiz)
10 Qs · ~10 min
#144
Class 12 Chemistry — Aldehydes, Ketones and Carboxylic Acids (Practice Quiz)
10 Qs · ~10 min
#145
Class 12 Chemistry — Alcohols, Phenols and Ethers (Practice Quiz)
10 Qs · ~10 min
#146
Class 12 Chemistry — Haloalkanes and Haloarenes (Practice Quiz)
10 Qs · ~10 min
#147
Class 12 Chemistry — Coordination Compounds (Practice Quiz)
10 Qs · ~10 min
#148
Class 12 Chemistry — The d- and f-Block Elements (Practice Quiz)
10 Qs · ~10 min
#149
Class 12 Chemistry — Chemical Kinetics (Practice Quiz)
10 Qs · ~10 min
#150
Class 12 Chemistry — Electrochemistry (Practice Quiz)
10 Qs · ~10 min
#151
Class 12 Chemistry — Solutions (Practice Quiz)
10 Qs · ~10 min
#152
Class 12 Physics — Semiconductor Electronics: Materials, Devices and Simple Circuits (Practice Quiz)
10 Qs · ~10 min
#153
Class 12 Physics — Nuclei (Practice Quiz)
10 Qs · ~10 min
#154
Class 12 Physics — Atoms (Practice Quiz)
10 Qs · ~10 min
#155
Class 12 Physics — Dual Nature of Radiation and Matter (Practice Quiz)
10 Qs · ~10 min
#156
Class 12 Physics — Wave Optics (Practice Quiz)
10 Qs · ~10 min
#157
Class 12 Physics — Ray Optics and Optical Instruments (Practice Quiz)
10 Qs · ~10 min
#158
Class 12 Physics — Electromagnetic Waves (Practice Quiz)
10 Qs · ~10 min
#159
Class 12 Physics — Alternating Current (Practice Quiz)
10 Qs · ~10 min
#160
Class 12 Physics — Electromagnetic Induction (Practice Quiz)
10 Qs · ~10 min
#161
Class 12 Physics — Magnetism and Matter (Practice Quiz)
10 Qs · ~10 min
#162
Class 12 Physics — Moving Charges and Magnetism (Practice Quiz)
10 Qs · ~10 min
#163
Class 12 Physics — Electrostatic Potential and Capacitance (Practice Quiz)
10 Qs · ~10 min
#164
Class 12 Physics — Electric Charges and Fields (Practice Quiz)
10 Qs · ~10 min
#165
Class 12 Business Studies — Principles of Management (Practice Quiz)
10 Qs · ~10 min
#166
CBSE Class 12 — Genetics and Evolution (Practice Quiz)
10 Qs · ~10 min
#167
CBSE Class 12 — Matrices and Determinants (Practice Quiz)
10 Qs · ~10 min
#168
CBSE Class 12 — Solutions and Colligative Properties (Practice Quiz)
10 Qs · ~10 min
#169
Class 12 Physics — Current Electricity (Practice Quiz)
10 Qs · ~10 min
#170
CBSE Class 12 — Electrostatics and Electric Field (Practice Quiz)
10 Qs · ~10 min
#171
Humanities Subjects Practice Quiz | CBSE Class 12 Board Examination