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All questions of Dissolution of a partnership firm for Commerce Exam
Unrecorded liability will be shown in:- a)Credit side of Realisation A/c
- b)Debit side of partners’ capital A/c
- c)Debit side of Realisation A/c
- d)Debit side of cash A/c
Correct answer is option 'C'. Can you explain this answer?
Unrecorded liability will be shown in:
a)
Credit side of Realisation A/c
b)
Debit side of partners’ capital A/c
c)
Debit side of Realisation A/c
d)
Debit side of cash A/c
|
Kiran Mehta answered |
Unrecorded liabilities are those liabilities that are not shown in the Balance Sheet but they still exist in the business. Although these liabilities are not shown in the books, they still need to the discharged off at the time of dissolution and hence are debited to the Realisation account.
Money realised from the sale of unrecorded assets is debited to the _________- a)Balance Sheet
- b)Revaluation Account
- c)Partners capital account
- d)Cash Account
Correct answer is option 'D'. Can you explain this answer?
Money realised from the sale of unrecorded assets is debited to the _________
a)
Balance Sheet
b)
Revaluation Account
c)
Partners capital account
d)
Cash Account
|
Sounak Chaudhary answered |
Debiting the Cash Account for the money realised from the sale of unrecorded assets
When a business sells an unrecorded asset, it receives cash in exchange. This cash receipt needs to be recorded in the accounting system to ensure accurate financial reporting. The money realised from the sale of unrecorded assets is debited to the Cash Account because it represents an increase in the business's cash balance.
Importance of recording the sale of unrecorded assets
The sale of unrecorded assets can have an impact on the financial statements of a business. If the sale is not recorded, it can lead to incorrect financial reporting and misrepresent the financial position of the business. For example, if the business sells a valuable asset for a significant amount of cash, but fails to record the sale, its cash balance will be understated, and its assets will be overstated. This can lead to inaccurate financial ratios, such as the current ratio, and mislead stakeholders about the business's ability to meet its short-term obligations.
Conclusion
In conclusion, the money realised from the sale of unrecorded assets should be debited to the Cash Account to ensure accurate financial reporting and prevent misrepresentation of the business's financial position. It is important to record all transactions accurately and in a timely manner to maintain the integrity of the accounting system.
When a business sells an unrecorded asset, it receives cash in exchange. This cash receipt needs to be recorded in the accounting system to ensure accurate financial reporting. The money realised from the sale of unrecorded assets is debited to the Cash Account because it represents an increase in the business's cash balance.
Importance of recording the sale of unrecorded assets
The sale of unrecorded assets can have an impact on the financial statements of a business. If the sale is not recorded, it can lead to incorrect financial reporting and misrepresent the financial position of the business. For example, if the business sells a valuable asset for a significant amount of cash, but fails to record the sale, its cash balance will be understated, and its assets will be overstated. This can lead to inaccurate financial ratios, such as the current ratio, and mislead stakeholders about the business's ability to meet its short-term obligations.
Conclusion
In conclusion, the money realised from the sale of unrecorded assets should be debited to the Cash Account to ensure accurate financial reporting and prevent misrepresentation of the business's financial position. It is important to record all transactions accurately and in a timely manner to maintain the integrity of the accounting system.
If a partner agreed to pay the unrecorded liability then ______- a)Realisation account is credited and concerned partner’s account debited
- b)Only Realisation account is credited
- c)Realisation account is debited and concerned partner’s capital account is credited.
- d)Concerned partner’s account is debited
Correct answer is option 'C'. Can you explain this answer?
If a partner agreed to pay the unrecorded liability then ______
a)
Realisation account is credited and concerned partner’s account debited
b)
Only Realisation account is credited
c)
Realisation account is debited and concerned partner’s capital account is credited.
d)
Concerned partner’s account is debited
|
Sai Mishra answered |
When a partner agreed to pay any unrecorded liability, in such a case, realization account should be debited and concerned partner’s capital account should be credited. No effect on cash account.
Debtors given in the balance sheet ?17,000. In additional information bad debts of ?2,000 given and it is also given that debtors have paid their money in full and final settlement after 10% discount. How much amount is received from debtors?- a)15,000
- b)17,000
- c)15,300
- d)13,500
Correct answer is option 'D'. Can you explain this answer?
Debtors given in the balance sheet ?17,000. In additional information bad debts of ?2,000 given and it is also given that debtors have paid their money in full and final settlement after 10% discount. How much amount is received from debtors?
a)
15,000
b)
17,000
c)
15,300
d)
13,500
|
Ashwini Majumdar answered |
Amount received from debtors:
Total amount due ?17,000
Bad debts ?2,000
Final amount received = 17,000 – 2,000 = 15,000 – 10% = 13,500
Total amount due ?17,000
Bad debts ?2,000
Final amount received = 17,000 – 2,000 = 15,000 – 10% = 13,500
A partnership deed usually contain the particulars relating to- a)Name of firm and partners.
- b)Nature of business and duration of firm.
- c)Capital contribution, profit/loss sharing ration and other agreed terms.
- d)All of these.
Correct answer is option 'D'. Can you explain this answer?
A partnership deed usually contain the particulars relating to
a)
Name of firm and partners.
b)
Nature of business and duration of firm.
c)
Capital contribution, profit/loss sharing ration and other agreed terms.
d)
All of these.
|
Anjali Reddy answered |
Particulars in Partnership Deed
A partnership deed is a legal document that outlines the terms and conditions of a partnership and the roles and responsibilities of each partner. It is a crucial document that helps to avoid misunderstandings and conflicts between partners in the future. The particulars that are usually included in a partnership deed are:
1. Name of the firm and partners:
The name of the partnership firm should be unique and should not be similar to any existing firm. The names of all partners along with their addresses and contact details should be mentioned in the deed.
2. Nature of business and duration of the firm:
The partnership deed should clearly state the nature of the business that the firm will engage in. It should also mention the duration for which the partnership will exist. The duration can be for a fixed period or until the completion of a particular project.
3. Capital contribution, profit/loss sharing ratio, and other agreed terms:
The partnership deed should specify the amount of capital that each partner will contribute to the business. It should also mention the profit/loss sharing ratio among the partners. Other terms that may be included are the salaries or drawings that partners are entitled to, the method of accounting to be used, and the procedures for admitting or expelling partners.
Conclusion:
In conclusion, a partnership deed is a crucial document that outlines the terms and conditions of a partnership. It should include the name of the firm and partners, the nature of business and duration of the firm, capital contribution, profit/loss sharing ratio, and other agreed terms. A well-drafted partnership deed can help to avoid misunderstandings and conflicts between partners and ensure the smooth running of the business.
A partnership deed is a legal document that outlines the terms and conditions of a partnership and the roles and responsibilities of each partner. It is a crucial document that helps to avoid misunderstandings and conflicts between partners in the future. The particulars that are usually included in a partnership deed are:
1. Name of the firm and partners:
The name of the partnership firm should be unique and should not be similar to any existing firm. The names of all partners along with their addresses and contact details should be mentioned in the deed.
2. Nature of business and duration of the firm:
The partnership deed should clearly state the nature of the business that the firm will engage in. It should also mention the duration for which the partnership will exist. The duration can be for a fixed period or until the completion of a particular project.
3. Capital contribution, profit/loss sharing ratio, and other agreed terms:
The partnership deed should specify the amount of capital that each partner will contribute to the business. It should also mention the profit/loss sharing ratio among the partners. Other terms that may be included are the salaries or drawings that partners are entitled to, the method of accounting to be used, and the procedures for admitting or expelling partners.
Conclusion:
In conclusion, a partnership deed is a crucial document that outlines the terms and conditions of a partnership. It should include the name of the firm and partners, the nature of business and duration of the firm, capital contribution, profit/loss sharing ratio, and other agreed terms. A well-drafted partnership deed can help to avoid misunderstandings and conflicts between partners and ensure the smooth running of the business.
At the time of dissolution, how would you treat the loss shown by Profit and Loss A/c in the Balance Sheet?- a)Dr. Side of Partners capital account
- b)Credit side of partners’ capital account
- c)Cash Account
- d)Realisation Account
Correct answer is option 'A'. Can you explain this answer?
At the time of dissolution, how would you treat the loss shown by Profit and Loss A/c in the Balance Sheet?
a)
Dr. Side of Partners capital account
b)
Credit side of partners’ capital account
c)
Cash Account
d)
Realisation Account
|
Manisha Patel answered |
Profit and Loss (Dr. balance) given in the balance sheet will be transferred to the debit side of partners capital account in their respective profit sharing ratio. It should not be transferred to the realization account.
If a liability is assumed (to be paid) by a partner such partner capital account is ___- a)No effect on capital account
- b)Debited
- c)Credited
- d)Both Credited and Debited
Correct answer is option 'C'. Can you explain this answer?
If a liability is assumed (to be paid) by a partner such partner capital account is ___
a)
No effect on capital account
b)
Debited
c)
Credited
d)
Both Credited and Debited
|
Sushil Kumar answered |
If a partner is agreed to pay off any liability at the time of dissolution of a partnership firm, in such a case following entry should be recorded in the books: Journal Entry: Realisation A/c Dr.
To Partner’s Capital A/c
To Partner’s Capital A/c
Asset taken over by partner will be shown in:- a)Debit side of Cash A/c
- b)Debit side of Realisation A/c
- c)Credit side of Cash A/c
- d)Credit side of Realisation A/c
Correct answer is option 'D'. Can you explain this answer?
Asset taken over by partner will be shown in:
a)
Debit side of Cash A/c
b)
Debit side of Realisation A/c
c)
Credit side of Cash A/c
d)
Credit side of Realisation A/c
|
Mansi Chopra answered |
Any asset taken by a partner will be shown in the credit side of realization account and in partner’s capital account.
All the assets of the firm are _____ and all outsiders’ liabilities and partners’ loan and partners capitals are ___ at the time of dissolution of firm.- a)Paid , Disposed Off
- b)Realised , Paid
- c)Disposed Off , Acquired
- d)Acquired , Paid
Correct answer is option 'B'. Can you explain this answer?
All the assets of the firm are _____ and all outsiders’ liabilities and partners’ loan and partners capitals are ___ at the time of dissolution of firm.
a)
Paid , Disposed Off
b)
Realised , Paid
c)
Disposed Off , Acquired
d)
Acquired , Paid
|
|
Sai Mishra answered |
At the time of dissolution of a partnership firm, all assets available in the business will be realized (sold) and all liabilities will be paid off.
A partnership firm will not be Compulsory dissolved if __________.- a)One of the partners of the firm becomes insolvent
- b)The business of the firm becomes illegal.
- c)Only one of the several business which can be separated from the other business of the firm becomes illegal.
- d)The different business run by the firm cannot be separated.
Correct answer is option 'C'. Can you explain this answer?
A partnership firm will not be Compulsory dissolved if __________.
a)
One of the partners of the firm becomes insolvent
b)
The business of the firm becomes illegal.
c)
Only one of the several business which can be separated from the other business of the firm becomes illegal.
d)
The different business run by the firm cannot be separated.
|
Arjun Singhania answered |
A partnership firm can be dissolved by an agreement among all the partners. Section 40 of Indian Partnership Act, 1932 allows the dissolution of a partnership firm if all the partners agree to dissolve it. Partnership concern is created by agreement and similarly it can be dissolved by agreement.
When Asset is taken over by a creditor:- a)Debit side of Realisation A/c
- b)Only in Cash A/c
- c)Credit side of Realisation A/c
- d)No Entry in this case
Correct answer is option 'D'. Can you explain this answer?
When Asset is taken over by a creditor:
a)
Debit side of Realisation A/c
b)
Only in Cash A/c
c)
Credit side of Realisation A/c
d)
No Entry in this case
|
Simran Mishra answered |
Any asset taken over by the creditor at the time of dissolution of partnership firm, will not be shown separately or no separate entry will be recorded for the same.
If creditors given in the balance sheet ?30,000. Stock costing ?10,000 taken over by creditors at market price of ?8,000 at the time of dissolution of partnership firm and balance amount paid in cash after deducting a discount of 10%. How much amount is paid in cash?- a)19,800
- b)18,000
- c)30,000
- d)22,000
Correct answer is option 'A'. Can you explain this answer?
If creditors given in the balance sheet ?30,000. Stock costing ?10,000 taken over by creditors at market price of ?8,000 at the time of dissolution of partnership firm and balance amount paid in cash after deducting a discount of 10%. How much amount is paid in cash?
a)
19,800
b)
18,000
c)
30,000
d)
22,000
|
Naina Sharma answered |
Calculation of the amount payable to the creditors:
Total amount payable to the creditors ?30,000
Asset taken over by creditors at market price ?8,000.
Now amount due to the creditors is ?22,000 (30,000 – 8,000)
Final payment to creditors in cash = 22,000 – 2,200 (discount) = 19,800
Total amount payable to the creditors ?30,000
Asset taken over by creditors at market price ?8,000.
Now amount due to the creditors is ?22,000 (30,000 – 8,000)
Final payment to creditors in cash = 22,000 – 2,200 (discount) = 19,800
XYZ firms consists of 4 partner viz, X, Y, Z and A, having one fourth share each in the profits of the firm. According to X, Y and Z activities of A are not in the interest of the partnership and thus want to expel A from the firm. Advise whether:
- a)X, Y and Z should seek retirement from the firm
- b)Yes, X, Y and Z can expel A from the firm
- c)No, X, Y and Z cannot expel A from the firm
- d)None of the above.
Correct answer is option 'B'. Can you explain this answer?
XYZ firms consists of 4 partner viz, X, Y, Z and A, having one fourth share each in the profits of the firm. According to X, Y and Z activities of A are not in the interest of the partnership and thus want to expel A from the firm. Advise whether:
a)
X, Y and Z should seek retirement from the firm
b)
Yes, X, Y and Z can expel A from the firm
c)
No, X, Y and Z cannot expel A from the firm
d)
None of the above.
|
|
Nikita Singh answered |
Correct Answer :- B
Explanation : Yes, X, Y and Z can expel A from the firm. If A is not interested in the firm then the proprietor of the firm XYZ can expel A from the firm.
When realized value of goodwill is given in adjustment, it indicates that ________
- a) Goodwill is taken over by creditors.
- b) Goodwill is written off by the old partners
- c) Goodwill is sold
- d) Goodwill is purchased
Correct answer is option 'C'. Can you explain this answer?
When realized value of goodwill is given in adjustment, it indicates that ________
a)
Goodwill is taken over by creditors.b)
Goodwill is written off by the old partnersc)
Goodwill is soldd)
Goodwill is purchased|
|
Arjun Singhania answered |
Goodwill is a premium paid over the fair value of assets during the purchase of a company. Hence, it is tagged to a company or business and cannot be sold or purchased independently, whereas other intangible assets like licenses, patents, etc. can be sold and purchased independently.
The status of a partner making advances to a firm for its business in addition to his Capital, is that of- a)A partner of the Firm
- b)An employee of the Firm
- c)A creditor of the Firm
- d)All the above.
Correct answer is option 'C'. Can you explain this answer?
The status of a partner making advances to a firm for its business in addition to his Capital, is that of
a)
A partner of the Firm
b)
An employee of the Firm
c)
A creditor of the Firm
d)
All the above.
|
H.k Dance Talent Hub answered |
Yes because additional capital given by partner is liability of the firm. when any partner not given additional capital to the firm. firm take loan from any outsiders and that is creditor of the firm.
Which of the following Reserve or fund is not transferred to the Realisation Account?- a)Contingency Reserve
- b)Investment Fluctuation Reserve
- c)Reserve for doubtful debts
- d)Employee Provident Fund
Correct answer is option 'A'. Can you explain this answer?
Which of the following Reserve or fund is not transferred to the Realisation Account?
a)
Contingency Reserve
b)
Investment Fluctuation Reserve
c)
Reserve for doubtful debts
d)
Employee Provident Fund
|
|
Aryan Khanna answered |
Contingency Reserves is a free reserve which is not transferred to the Realisation account at the time of dissolution of a partnership firm. Other reserves or funds (given in the above question) will be transferred to the Realisation account.
XYZ firms consists of 4 partner viz, X, Y, Z and A, having one fourth share each in the profits of the firm. According to X, Y and Z activities of A are not in the interest of the partnership and thus want to expel A from the firm. Advise whether:
- a)X, Y and Z should seek retirement from the firm
- b)Yes, X, Y and Z can expel A from the firm
- c)No, X, Y and Z cannot expel A from the firm
- d)None of the above.
Correct answer is option 'B'. Can you explain this answer?
XYZ firms consists of 4 partner viz, X, Y, Z and A, having one fourth share each in the profits of the firm. According to X, Y and Z activities of A are not in the interest of the partnership and thus want to expel A from the firm. Advise whether:
a)
X, Y and Z should seek retirement from the firm
b)
Yes, X, Y and Z can expel A from the firm
c)
No, X, Y and Z cannot expel A from the firm
d)
None of the above.
|
Poonam Reddy answered |
Correct Answer :- B
Explanation : Yes, X, Y and Z can expel A from the firm. If A is not interested in the firm then the proprietor of the firm XYZ can expel A from the firm.
Non registration of Partnership is not a bar for: - a)Civil proceeding
- b)Criminal proceeding
- c)Both (a) and (b)
- d)Neither (a) nor (b)
Correct answer is option 'B'. Can you explain this answer?
Non registration of Partnership is not a bar for:
a)
Civil proceeding
b)
Criminal proceeding
c)
Both (a) and (b)
d)
Neither (a) nor (b)
|
Yash Jain answered |
As registration is optional and not adherence to it is no crime, so it is not a bar for criminal proceeding
Accumulated losses are transfer to ______ in ________ ratio- a)Capital account , Profit sharing ratio
- b)Capital account , Gaining ratio
- c)Realisation account, Gaining sharing ratio
- d)Realisation account , Profit sharing ratio
Correct answer is option 'A'. Can you explain this answer?
Accumulated losses are transfer to ______ in ________ ratio
a)
Capital account , Profit sharing ratio
b)
Capital account , Gaining ratio
c)
Realisation account, Gaining sharing ratio
d)
Realisation account , Profit sharing ratio
|
Raghav Chakraborty answered |
At the time of dissolution all accumulated profits and losses should be transferred to the partners capital account in their profit sharing ratio.
M is employed by P Q R Bros. a Partnership Firm. M is entitled to a remuneration of Rs. 40,000 p.m. plus 12% on the profit of the firm if profits exceed Rs. 10 lacs. Hence: - a)M is not deemed as a partner in the firm
- b)M is deemed as partner in the firm
- c)M’s appointment is invalid
- d)M can claim only Rs. 40,000 p.m. but not share of profits
Correct answer is option 'A'. Can you explain this answer?
M is employed by P Q R Bros. a Partnership Firm. M is entitled to a remuneration of Rs. 40,000 p.m. plus 12% on the profit of the firm if profits exceed Rs. 10 lacs. Hence:
a)
M is not deemed as a partner in the firm
b)
M is deemed as partner in the firm
c)
M’s appointment is invalid
d)
M can claim only Rs. 40,000 p.m. but not share of profits
|
Ankita Mukherjee answered |
Explanation:
Partnership Firm Structure:
- In a partnership firm, partners share profits and losses as per the terms of the partnership agreement.
M's Remuneration:
- M is entitled to a fixed remuneration of Rs. 40,000 per month.
- Additionally, M is entitled to 12% of the firm's profit if it exceeds Rs. 10 lakhs.
Non-Partner Status:
- M's entitlement to a fixed remuneration and a share of profits based on a specific condition does not make M a partner in the firm.
- M's role is more of an employee receiving a salary and a performance-based incentive rather than being a partner who shares in the management and decision-making of the firm.
Conclusion:
- Therefore, M is not deemed as a partner in the firm despite being entitled to a share of profits based on the firm's performance.
Partnership Firm Structure:
- In a partnership firm, partners share profits and losses as per the terms of the partnership agreement.
M's Remuneration:
- M is entitled to a fixed remuneration of Rs. 40,000 per month.
- Additionally, M is entitled to 12% of the firm's profit if it exceeds Rs. 10 lakhs.
Non-Partner Status:
- M's entitlement to a fixed remuneration and a share of profits based on a specific condition does not make M a partner in the firm.
- M's role is more of an employee receiving a salary and a performance-based incentive rather than being a partner who shares in the management and decision-making of the firm.
Conclusion:
- Therefore, M is not deemed as a partner in the firm despite being entitled to a share of profits based on the firm's performance.
In the absence of any contract to the contrary insolvency of a partner results in: - a)Dissolution of partnership, but not of the firm
- b)Dissolution of firm as well as partnership
- c)Neither dissolution of firm, nor dissolution of partnership
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
In the absence of any contract to the contrary insolvency of a partner results in:
a)
Dissolution of partnership, but not of the firm
b)
Dissolution of firm as well as partnership
c)
Neither dissolution of firm, nor dissolution of partnership
d)
None of the above
|
|
Kiran Kiru answered |
Because there is none of the contract if the head asks for contract there is no any such contract. that's why both will dissolve
Unrecorded asset when realised (in cash) will be _________- a)Credited to partners capital account
- b)Debited to Realisation Account
- c)Debited to Partners capital account
- d)Credited to Realisation Account
Correct answer is option 'D'. Can you explain this answer?
Unrecorded asset when realised (in cash) will be _________
a)
Credited to partners capital account
b)
Debited to Realisation Account
c)
Debited to Partners capital account
d)
Credited to Realisation Account
|
|
Sai Mishra answered |
Unrecorded asset (if any) given in the additional information, which is realized (sold) at the time of dissolution, should be shown in the credit side of Realisation Account because realized value of all the assets is recorded in the credit side of Realisation Account.
All _____ liabilities are transferred to the ____ side of Realisation account- a)Internal , Debit
- b)Capitals of the partner, Credit
- c)Internal , Credit
- d)External , Credit
Correct answer is option 'D'. Can you explain this answer?
All _____ liabilities are transferred to the ____ side of Realisation account
a)
Internal , Debit
b)
Capitals of the partner, Credit
c)
Internal , Credit
d)
External , Credit
|
|
Sai Mishra answered |
All external liabilities are transferred to the credit side of realization account at the time of dissolution and same will be paid off in the debit side of realization account.
If Creditors are given ?20,000 in the balance sheet. But nothing is mentioned under additional information about the payment of the same. How much amount will be paid to the creditors?- a)No Payment to Creditors
- b)Payment after 10% Discount
- c)Full Amount ?20,000
- d)Half Amount Rs.10,000
Correct answer is option 'C'. Can you explain this answer?
If Creditors are given ?20,000 in the balance sheet. But nothing is mentioned under additional information about the payment of the same. How much amount will be paid to the creditors?
a)
No Payment to Creditors
b)
Payment after 10% Discount
c)
Full Amount ?20,000
d)
Half Amount Rs.10,000
|
|
Sai Mishra answered |
All liabilities will be paid at the time of dissolution of a partnership firm. Whether some information is given or not about the payment of the same. In this case nothing is mentioned about the payment of creditors but it is mandatory to pay the full amount ?20,000 to the creditors.
Registrar of firms under Section 57 of the Indian Partnership Act is appointed by:- a)Central Government
- b)State Government
- c)Trade Associations
- d)Local Bodies
Correct answer is option 'B'. Can you explain this answer?
Registrar of firms under Section 57 of the Indian Partnership Act is appointed by:
a)
Central Government
b)
State Government
c)
Trade Associations
d)
Local Bodies
|
Unknown answered |
Section 57 in The Indian Partnership Act, 1932
57. Appointment of Registrars.—
(1) The State Government may appoint Registrars of Firms for the purposes of this Act, and may define the areas within which they shall exercise their powers and perform their duties.
In the absence of any contract to the contrary, capital profit on the dissolution of a Partnership Firm is shared among partners in:- a)Equal ratio
- b)Capital ratio
- c)Profit-sharing ratio
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
a)
Equal ratio
b)
Capital ratio
c)
Profit-sharing ratio
d)
None of these
|
KP Classes answered |
In the event of the dissolution of a partnership firm, capital profit (surplus) is shared among the partners in their profit-sharing ratio unless stated otherwise in a partnership agreement. According to Section 48 of the Indian Partnership Act, 1932, the surplus remaining after settling liabilities, advances, and capital contributions is distributed among the partners in their agreed profit-sharing ratio. If no agreement exists, the default rule is to use the profit-sharing ratio.
The loss arising out of partner’s insolvency shall be borne by _________according to Gamer Vs. Murray case:- a)All the Partner’s equally
- b)Solvent partners in capital ratio
- c)All the partners in profit & Loss sharing ratio
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
The loss arising out of partner’s insolvency shall be borne by _________according to Gamer Vs. Murray case:
a)
All the Partner’s equally
b)
Solvent partners in capital ratio
c)
All the partners in profit & Loss sharing ratio
d)
None of the above
|
|
Arya Shah answered |
Upon the insolvency of a partner, we divide his deficiency amongst the other solvent partners in capital ratio.
The journal entry passed will be
Solvent partners cap a/c dr (cap ratio)
To Insolvent partners cap ac (deficiency amt)
The journal entry passed will be
Solvent partners cap a/c dr (cap ratio)
To Insolvent partners cap ac (deficiency amt)
A and B become partners for 16 years. A pays B a premium of Rs. 5000. At the end of 8 years, there is dispute between A and B and they declare a dissolution:- a)A can get back the entire amount of the premium paid by him to B
- b)A can get back a reasonable part of the premium
- c)A can get back Rs. 2500 form
- d)A cannot get back any amount of premium paid by him
Correct answer is option 'B'. Can you explain this answer?
A and B become partners for 16 years. A pays B a premium of Rs. 5000. At the end of 8 years, there is dispute between A and B and they declare a dissolution:
a)
A can get back the entire amount of the premium paid by him to B
b)
A can get back a reasonable part of the premium
c)
A can get back Rs. 2500 form
d)
A cannot get back any amount of premium paid by him
|
|
Dhruba Choudhary answered |
Partnership Dissolution
When a partnership is dissolved, it means that the partnership agreement has come to an end. In this situation, the partners have to determine how the partnership's assets and liabilities will be divided.
Premium Paid by A to B
In the given scenario, A paid a premium of Rs. 5000 to B when they became partners. However, after 8 years, there was a dispute between them, and they decided to dissolve the partnership.
Options for A
The question asks which of the following options is true for A regarding the premium paid by him to B:
A) A can get back the entire amount of the premium paid by him to B
B) A can get back a reasonable part of the premium
C) A can get back Rs. 2500 form
D) A cannot get back any amount of premium paid by him
Explanation of Option B
Option B is the correct answer because A cannot get back the entire premium paid to B, nor can he get back nothing. The amount that A can get back depends on the circumstances of the dissolution.
If the dissolution is due to a breach of contract by B, A may be entitled to a larger portion of the premium. However, if A is at fault, he may not be entitled to any refund.
Therefore, A can get back a reasonable part of the premium paid by him to B, based on the circumstances of the dissolution.
Conclusion
In conclusion, when a partnership is dissolved, the partners have to determine how the partnership's assets and liabilities will be divided. In the given scenario, A can get back a reasonable part of the premium paid by him to B, based on the circumstances of the dissolution.
When a partnership is dissolved, it means that the partnership agreement has come to an end. In this situation, the partners have to determine how the partnership's assets and liabilities will be divided.
Premium Paid by A to B
In the given scenario, A paid a premium of Rs. 5000 to B when they became partners. However, after 8 years, there was a dispute between them, and they decided to dissolve the partnership.
Options for A
The question asks which of the following options is true for A regarding the premium paid by him to B:
A) A can get back the entire amount of the premium paid by him to B
B) A can get back a reasonable part of the premium
C) A can get back Rs. 2500 form
D) A cannot get back any amount of premium paid by him
Explanation of Option B
Option B is the correct answer because A cannot get back the entire premium paid to B, nor can he get back nothing. The amount that A can get back depends on the circumstances of the dissolution.
If the dissolution is due to a breach of contract by B, A may be entitled to a larger portion of the premium. However, if A is at fault, he may not be entitled to any refund.
Therefore, A can get back a reasonable part of the premium paid by him to B, based on the circumstances of the dissolution.
Conclusion
In conclusion, when a partnership is dissolved, the partners have to determine how the partnership's assets and liabilities will be divided. In the given scenario, A can get back a reasonable part of the premium paid by him to B, based on the circumstances of the dissolution.
ABC is a registered firm. C died on 30th June. A and B sue X in the name of ABC. What is the consequence?- a)The suit cannot be maintained
- b)The suit can be maintained
- c)The suit can be maintained when the firm is freshly registered
- d)None of the above
Correct answer is option 'B'. Can you explain this answer?
ABC is a registered firm. C died on 30th June. A and B sue X in the name of ABC. What is the consequence?
a)
The suit cannot be maintained
b)
The suit can be maintained
c)
The suit can be maintained when the firm is freshly registered
d)
None of the above
|
Prashanth Datta answered |
The consequence of C's death on the suit filed by A and B in the name of ABC
The correct answer is option 'B': The suit can be maintained.
Explanation:
When a firm is registered, it becomes a separate legal entity with its own rights and liabilities. It can sue and be sued in its own name.
1. Status of ABC as a registered firm
- The fact that ABC is a registered firm implies that it has a legal existence separate from its partners.
- As a registered firm, ABC can sue and be sued in its own name.
- The registration of ABC provides it with the capacity to enter into contracts, own property, and take legal actions.
2. Death of C
- C's death on 30th June does not automatically dissolve the firm or affect its legal existence.
- Even after C's death, ABC continues to exist as a registered firm.
- The remaining partners, A and B, can continue to carry on the business of the firm.
3. A and B suing X in the name of ABC
- A and B, as partners of ABC, have the authority to represent the firm in legal matters.
- They have the right to sue on behalf of the firm and enforce its rights.
- A and B can file a suit against X in the name of ABC, seeking appropriate legal remedies.
4. Consequence of C's death on the suit
- The death of a partner does not invalidate the firm's legal capacity to sue or be sued.
- As long as the firm is registered, the suit filed by A and B in the name of ABC can be maintained.
- The death of C does not affect the firm's ability to enforce its rights through legal proceedings.
Conclusion:
In this scenario, since ABC is a registered firm, the death of C does not prevent A and B from suing X in the name of the firm. The suit can be maintained, and A and B can seek legal remedies on behalf of ABC.
The correct answer is option 'B': The suit can be maintained.
Explanation:
When a firm is registered, it becomes a separate legal entity with its own rights and liabilities. It can sue and be sued in its own name.
1. Status of ABC as a registered firm
- The fact that ABC is a registered firm implies that it has a legal existence separate from its partners.
- As a registered firm, ABC can sue and be sued in its own name.
- The registration of ABC provides it with the capacity to enter into contracts, own property, and take legal actions.
2. Death of C
- C's death on 30th June does not automatically dissolve the firm or affect its legal existence.
- Even after C's death, ABC continues to exist as a registered firm.
- The remaining partners, A and B, can continue to carry on the business of the firm.
3. A and B suing X in the name of ABC
- A and B, as partners of ABC, have the authority to represent the firm in legal matters.
- They have the right to sue on behalf of the firm and enforce its rights.
- A and B can file a suit against X in the name of ABC, seeking appropriate legal remedies.
4. Consequence of C's death on the suit
- The death of a partner does not invalidate the firm's legal capacity to sue or be sued.
- As long as the firm is registered, the suit filed by A and B in the name of ABC can be maintained.
- The death of C does not affect the firm's ability to enforce its rights through legal proceedings.
Conclusion:
In this scenario, since ABC is a registered firm, the death of C does not prevent A and B from suing X in the name of the firm. The suit can be maintained, and A and B can seek legal remedies on behalf of ABC.
The surplus remaining after settlement of debts and liabilities of the firm in case of dissolution shall be __________.- a)Credited to Central Revenue Account of the Government of India
- b)Credited to Reserve Bank of India
- c)Distributed among the partner equally
- d)Distributed among the partner according to their profit sharing ratio
Correct answer is option 'D'. Can you explain this answer?
The surplus remaining after settlement of debts and liabilities of the firm in case of dissolution shall be __________.
a)
Credited to Central Revenue Account of the Government of India
b)
Credited to Reserve Bank of India
c)
Distributed among the partner equally
d)
Distributed among the partner according to their profit sharing ratio
|
Ankita Deshmukh answered |
D
Loss arising out of partner’s insolvency can be recouped form_________:- a)Solvent partners
- b)The firm itself
- c)The partner’s estate
- d)The partner’s legal heirs
Correct answer is option 'A'. Can you explain this answer?
Loss arising out of partner’s insolvency can be recouped form_________:
a)
Solvent partners
b)
The firm itself
c)
The partner’s estate
d)
The partner’s legal heirs
|
Neel Kothari answered |
According to Indian Partnership Act .....it is stated that the partners have unlimited liability but when the firm is dissolved and if any of the partners become insolvent ...then the solvent partners need to coupe that deficiency of insolvent partner in the Profit sharing Ratio
When an agreement to form a partnership is signed by all the partners, the document is called - a)Promote
- b)Partnership deed
- c)Memorandum of Association
- d)None of the above.
Correct answer is option 'B'. Can you explain this answer?
When an agreement to form a partnership is signed by all the partners, the document is called
a)
Promote
b)
Partnership deed
c)
Memorandum of Association
d)
None of the above.
|
|
Sanjana Khanna answered |
When two or more people want to start a new business & to share the profits & losses they come together to form a partnership such written agreement is known as 'Partnership Deed'. One can also call it is a 'Partnership Agreement'.
The conclusive evidence of registration of firm is: - a)The certificate of registration of firms
- b)The certified copy of register of firm
- c)The register of central government
- d)None of these
Correct answer is option 'A'. Can you explain this answer?
The conclusive evidence of registration of firm is:
a)
The certificate of registration of firms
b)
The certified copy of register of firm
c)
The register of central government
d)
None of these
|
|
Arjun Singhania answered |
Any statement, intimation or notice recorded or noted in the Register of Firms shall, as against any person by whom or on whose behalf such statement, intimation or notice was signed, be conclusive proof of any fact therein stated.A certified copy of an entry relating to a firm in the Register of Firms may be produced in proof of the fact of the registration of such firm, and of the contents of any statement, intimation or notice recorded or noted therein.
A partnership deed must be drafted properly and stamped according to provisions of:- a)Indian Stamp Act
- b)Indian Tax Act
- c)The companies Act
- d)The Indian Partnership Act
Correct answer is option 'A'. Can you explain this answer?
A partnership deed must be drafted properly and stamped according to provisions of:
a)
Indian Stamp Act
b)
Indian Tax Act
c)
The companies Act
d)
The Indian Partnership Act
|
|
Pallabi Khanna answered |
The correct option is A, the partnership deed must be drafted properly and stamped according to the provisions of the Indian Stamp Act.
Explanation:
A partnership deed is a legal document that outlines the terms and conditions of a partnership between two or more individuals. It is important to draft this document properly because it lays the foundation for the partnership and sets out the rights and responsibilities of each partner.
Stamp duty is a tax that is levied on certain legal documents to make them legally valid. In India, the Indian Stamp Act governs the stamp duty payable on various legal documents, including partnership deeds.
Therefore, it is important to ensure that the partnership deed is stamped in accordance with the Indian Stamp Act to ensure its legal validity. Failure to do so could result in the partnership deed being declared invalid by a court of law.
In summary, a partnership deed must be drafted properly and stamped in accordance with the Indian Stamp Act to ensure its legal validity.
Explanation:
A partnership deed is a legal document that outlines the terms and conditions of a partnership between two or more individuals. It is important to draft this document properly because it lays the foundation for the partnership and sets out the rights and responsibilities of each partner.
Stamp duty is a tax that is levied on certain legal documents to make them legally valid. In India, the Indian Stamp Act governs the stamp duty payable on various legal documents, including partnership deeds.
Therefore, it is important to ensure that the partnership deed is stamped in accordance with the Indian Stamp Act to ensure its legal validity. Failure to do so could result in the partnership deed being declared invalid by a court of law.
In summary, a partnership deed must be drafted properly and stamped in accordance with the Indian Stamp Act to ensure its legal validity.
When all the partners except one become insolvent, the firm is _________.- a)Compulsorily dissolved
- b)Not compulsorily dissolved
- c)Reconstituted
- d)Renewed.
Correct answer is option 'A'. Can you explain this answer?
When all the partners except one become insolvent, the firm is _________.
a)
Compulsorily dissolved
b)
Not compulsorily dissolved
c)
Reconstituted
d)
Renewed.
|
|
Akshat Choudhary answered |
When all the partners except one become insolvent, the firm is compulsorily dissolved.
Explanation:
- When a partnership firm is formed, it consists of two or more partners who agree to carry on a business with the objective of making a profit.
- However, there are certain situations where a partnership firm may need to be dissolved, including when all partners except one become insolvent.
- Insolvency refers to a situation where an individual or entity is unable to pay off its debts as they become due.
- When all partners except one become insolvent, it means that they are no longer able to contribute to the firm's liabilities and obligations.
- In such a scenario, the remaining partner is left as the sole responsible party for the firm's debts and liabilities.
- This puts an unfair burden on the remaining partner, as they may not have the financial resources to single-handedly manage the firm's debts and continue its operations.
- As a result, in order to protect the interests of the remaining partner and to ensure a fair distribution of liabilities, the firm is compulsorily dissolved.
- Compulsory dissolution means that the partnership firm is dissolved by operation of law, without the need for any formal agreement or consent from the partners.
- Once the firm is dissolved, its assets and liabilities are liquidated and distributed among the partners, in accordance with the partnership agreement or the applicable laws.
- The remaining partner may choose to start a new business or enter into a new partnership arrangement, if they wish to continue with their entrepreneurial pursuits.
In conclusion, when all the partners except one become insolvent, the partnership firm is compulsorily dissolved to protect the interests of the remaining partner and ensure a fair distribution of liabilities.
Explanation:
- When a partnership firm is formed, it consists of two or more partners who agree to carry on a business with the objective of making a profit.
- However, there are certain situations where a partnership firm may need to be dissolved, including when all partners except one become insolvent.
- Insolvency refers to a situation where an individual or entity is unable to pay off its debts as they become due.
- When all partners except one become insolvent, it means that they are no longer able to contribute to the firm's liabilities and obligations.
- In such a scenario, the remaining partner is left as the sole responsible party for the firm's debts and liabilities.
- This puts an unfair burden on the remaining partner, as they may not have the financial resources to single-handedly manage the firm's debts and continue its operations.
- As a result, in order to protect the interests of the remaining partner and to ensure a fair distribution of liabilities, the firm is compulsorily dissolved.
- Compulsory dissolution means that the partnership firm is dissolved by operation of law, without the need for any formal agreement or consent from the partners.
- Once the firm is dissolved, its assets and liabilities are liquidated and distributed among the partners, in accordance with the partnership agreement or the applicable laws.
- The remaining partner may choose to start a new business or enter into a new partnership arrangement, if they wish to continue with their entrepreneurial pursuits.
In conclusion, when all the partners except one become insolvent, the partnership firm is compulsorily dissolved to protect the interests of the remaining partner and ensure a fair distribution of liabilities.
Rohan, Mohan, and Sohan were partners, sharing profits equally. At the time of the dissolution of the partnership firm, Rohan’s loan to the firm will be:- a)Debited to Rohan’s Capital Account
- b)Debited to Realisation Account
- c)Credited to Realisation Account
- d)Credited to Bank Account
Correct answer is option 'D'. Can you explain this answer?
a)
Debited to Rohan’s Capital Account
b)
Debited to Realisation Account
c)
Credited to Realisation Account
d)
Credited to Bank Account
|
|
KP Classes answered |
When a partner has given a loan to the firm, this loan is treated as a liability of the firm at the time of dissolution. The loan amount is settled by paying it through the Bank Account. Thus, Rohan's loan to the firm will be credited to the Bank Account when the loan is repaid.
In the event of dissolution, assets are transferred to the Realization Account:- a)At Book Value
- b)At Market Value
- c)Cost or Market Value, whichever is lower
- d)More than one of the above
Correct answer is option 'A'. Can you explain this answer?
a)
At Book Value
b)
At Market Value
c)
Cost or Market Value, whichever is lower
d)
More than one of the above
|
Nipun Tuteja answered |
At the time of dissolution of a partnership firm, all assets (except cash and bank) are transferred to the Realization Account at their Book Value. The Realization Account is a nominal account prepared to record the realization (sale) of assets and payment of liabilities. Assets are debited to the Realization Account at their book value, and the actual proceeds from the sale of these assets are credited. The resulting balance, which is the profit or loss on realization, is transferred to the Partners' Capital Accounts in their profit-sharing ratio.
How is Goodwill treated at the time of dissolution of a partnership firm?- a)Not recorded anywhere
- b)Recorded in realisation account like any other asset
- c)Distributed among partners in old ratio
- d)More than one of the above
Correct answer is option 'B'. Can you explain this answer?
a)
Not recorded anywhere
b)
Recorded in realisation account like any other asset
c)
Distributed among partners in old ratio
d)
More than one of the above
|
Arnav Chawla answered |
Understanding Goodwill in Partnership Dissolution
When a partnership firm is dissolved, the treatment of goodwill is an important accounting consideration. Goodwill, which represents the intangible value of a business, must be properly accounted for during the dissolution process.
Why Option B is Correct
- Goodwill is recorded in the Realisation Account.
- This account is used to document the assets and liabilities of the partnership as they are settled during dissolution.
- By recording goodwill, partners acknowledge its value and ensure it is considered in the overall settlement of accounts.
Procedure of Recording Goodwill
1. Valuation of Goodwill:
- Before recording, goodwill must be accurately valued. This can be based on various methods, such as average profits or capitalisation of earnings.
2. Realisation Account:
- Goodwill is transferred to the Realisation Account alongside other assets.
- This account helps in determining the net assets to be distributed among partners.
3. Settlement Among Partners:
- After recording in the Realisation Account, the total amount will be distributed among the partners based on the agreed ratios.
- Typically, this follows their profit-sharing ratio unless otherwise agreed.
Conclusion
In summary, the correct treatment of goodwill during the dissolution of a partnership firm involves recording it in the Realisation Account. This ensures that all partners share in the value created by the partnership equitably, reflecting goodwill's significance in the overall financial picture of the firm.
When a partnership firm is dissolved, the treatment of goodwill is an important accounting consideration. Goodwill, which represents the intangible value of a business, must be properly accounted for during the dissolution process.
Why Option B is Correct
- Goodwill is recorded in the Realisation Account.
- This account is used to document the assets and liabilities of the partnership as they are settled during dissolution.
- By recording goodwill, partners acknowledge its value and ensure it is considered in the overall settlement of accounts.
Procedure of Recording Goodwill
1. Valuation of Goodwill:
- Before recording, goodwill must be accurately valued. This can be based on various methods, such as average profits or capitalisation of earnings.
2. Realisation Account:
- Goodwill is transferred to the Realisation Account alongside other assets.
- This account helps in determining the net assets to be distributed among partners.
3. Settlement Among Partners:
- After recording in the Realisation Account, the total amount will be distributed among the partners based on the agreed ratios.
- Typically, this follows their profit-sharing ratio unless otherwise agreed.
Conclusion
In summary, the correct treatment of goodwill during the dissolution of a partnership firm involves recording it in the Realisation Account. This ensures that all partners share in the value created by the partnership equitably, reflecting goodwill's significance in the overall financial picture of the firm.
A partnership deed must be drafted properly and stamped according to provisions of:- a)Indian Stamp Act
- b)Indian Tax Act
- c)The companies Act
- d)The Indian Partnership Act
Correct answer is option 'A'. Can you explain this answer?
A partnership deed must be drafted properly and stamped according to provisions of:
a)
Indian Stamp Act
b)
Indian Tax Act
c)
The companies Act
d)
The Indian Partnership Act
|
|
Jyoti Nair answered |
Explanation:
A partnership deed is a legal document that outlines the terms and conditions of a partnership between two or more individuals. It is an important document as it governs the rights, responsibilities, and obligations of each partner and helps in resolving any disputes that may arise in the future.
The partnership deed must be drafted properly and stamped according to the provisions of the Indian Stamp Act. This act governs the payment of stamp duty on various legal documents, including partnership deeds. Here is an explanation of why option 'A' (Indian Stamp Act) is the correct answer:
Indian Stamp Act:
- The Indian Stamp Act, 1899 is a legislation that governs the payment of stamp duty on various legal documents in India. Stamp duty is a type of tax that is levied on certain documents to make them legally valid and enforceable.
- Partnership deeds are considered to be an instrument of partnership and are subject to stamp duty as per the provisions of the Indian Stamp Act.
- The stamp duty payable on a partnership deed varies from state to state as it is a state subject. Each state has its own stamp duty rates and rules, which need to be followed while drafting and stamping the partnership deed.
Other Acts:
- The Indian Tax Act (option 'B') is a generic term and does not specifically apply to partnership deeds. The taxation of partnership firms is governed by the Income Tax Act, 1961, which is a separate legislation altogether.
- The Companies Act (option 'C') applies to companies and not partnership firms. Partnership firms are governed by the Indian Partnership Act, 1932, which is a separate legislation specifically designed for partnerships.
- The Indian Partnership Act, 1932 (option 'D') governs the formation, operation, and dissolution of partnership firms in India. While it is an important act for partnership firms, it does not specifically deal with the stamping of partnership deeds.
Therefore, the correct answer is option 'A' - the partnership deed must be drafted properly and stamped according to the provisions of the Indian Stamp Act. This ensures that the partnership deed is legally valid and enforceable.
A partnership deed is a legal document that outlines the terms and conditions of a partnership between two or more individuals. It is an important document as it governs the rights, responsibilities, and obligations of each partner and helps in resolving any disputes that may arise in the future.
The partnership deed must be drafted properly and stamped according to the provisions of the Indian Stamp Act. This act governs the payment of stamp duty on various legal documents, including partnership deeds. Here is an explanation of why option 'A' (Indian Stamp Act) is the correct answer:
Indian Stamp Act:
- The Indian Stamp Act, 1899 is a legislation that governs the payment of stamp duty on various legal documents in India. Stamp duty is a type of tax that is levied on certain documents to make them legally valid and enforceable.
- Partnership deeds are considered to be an instrument of partnership and are subject to stamp duty as per the provisions of the Indian Stamp Act.
- The stamp duty payable on a partnership deed varies from state to state as it is a state subject. Each state has its own stamp duty rates and rules, which need to be followed while drafting and stamping the partnership deed.
Other Acts:
- The Indian Tax Act (option 'B') is a generic term and does not specifically apply to partnership deeds. The taxation of partnership firms is governed by the Income Tax Act, 1961, which is a separate legislation altogether.
- The Companies Act (option 'C') applies to companies and not partnership firms. Partnership firms are governed by the Indian Partnership Act, 1932, which is a separate legislation specifically designed for partnerships.
- The Indian Partnership Act, 1932 (option 'D') governs the formation, operation, and dissolution of partnership firms in India. While it is an important act for partnership firms, it does not specifically deal with the stamping of partnership deeds.
Therefore, the correct answer is option 'A' - the partnership deed must be drafted properly and stamped according to the provisions of the Indian Stamp Act. This ensures that the partnership deed is legally valid and enforceable.
Realisation Account is differ from Revaluation Account as- a)prepared at a number of times during the life of a firm
- b)prepared at three times during the life of a firm
- c)Prepared only twice during the life of a firm
- d)Prepared only once during the life of a firm
Correct answer is option 'D'. Can you explain this answer?
Realisation Account is differ from Revaluation Account as
a)
prepared at a number of times during the life of a firm
b)
prepared at three times during the life of a firm
c)
Prepared only twice during the life of a firm
d)
Prepared only once during the life of a firm
|
Navya Sengupta answered |
Realisation Account vs Revaluation Account
Realisation Account and Revaluation Account are both important accounts used in accounting, but they serve different purposes and are prepared at different times during the life of a firm. Let's understand the key differences between the two:
Realisation Account
- Realisation Account is prepared only once during the life of a firm.
- It is used to record the sale of assets and liabilities when a firm is being dissolved or when there is a change in the constitution of the firm.
- The main purpose of the Realisation Account is to determine the profit or loss on the realisation of assets and settlement of liabilities.
- It helps in distributing the final profits or losses among the partners of the firm.
Revaluation Account
- Revaluation Account is prepared at different times during the life of a firm, typically when there is a change in the partnership or when the firm wants to revalue its assets and liabilities.
- It is used to record any increase or decrease in the value of assets and liabilities of the firm.
- The main purpose of the Revaluation Account is to adjust the capital accounts of the partners based on the revalued amounts of assets and liabilities.
- It helps in maintaining the accuracy of the capital accounts and reflecting the true financial position of the firm.
In conclusion, while Realisation Account is prepared only once during the life of a firm to determine the final profit or loss, Revaluation Account is prepared at different times to adjust the values of assets and liabilities and to maintain the accuracy of the capital accounts.
Realisation Account and Revaluation Account are both important accounts used in accounting, but they serve different purposes and are prepared at different times during the life of a firm. Let's understand the key differences between the two:
Realisation Account
- Realisation Account is prepared only once during the life of a firm.
- It is used to record the sale of assets and liabilities when a firm is being dissolved or when there is a change in the constitution of the firm.
- The main purpose of the Realisation Account is to determine the profit or loss on the realisation of assets and settlement of liabilities.
- It helps in distributing the final profits or losses among the partners of the firm.
Revaluation Account
- Revaluation Account is prepared at different times during the life of a firm, typically when there is a change in the partnership or when the firm wants to revalue its assets and liabilities.
- It is used to record any increase or decrease in the value of assets and liabilities of the firm.
- The main purpose of the Revaluation Account is to adjust the capital accounts of the partners based on the revalued amounts of assets and liabilities.
- It helps in maintaining the accuracy of the capital accounts and reflecting the true financial position of the firm.
In conclusion, while Realisation Account is prepared only once during the life of a firm to determine the final profit or loss, Revaluation Account is prepared at different times to adjust the values of assets and liabilities and to maintain the accuracy of the capital accounts.
How would you treat investment fluctuation reserve given in the balance sheet at the time of dissolution?- a)Debit side of Realisation Account
- b)Cash Account credit side
- c)Debit side of partners’ capital account
- d)Credit side of Realisation Account
Correct answer is option 'D'. Can you explain this answer?
How would you treat investment fluctuation reserve given in the balance sheet at the time of dissolution?
a)
Debit side of Realisation Account
b)
Cash Account credit side
c)
Debit side of partners’ capital account
d)
Credit side of Realisation Account
|
|
Sai Mishra answered |
At the time of dissolution, investment fluctuation reserve should be transferred to the credit side of revaluation account. It should not be distributed as free reserve.
In the absence of any contract to the contrary, capital profit on the dissolution of a Partnership Firm is shared among partners in:- a)Equal ratio
- b)Capital ratio
- c)Profit-sharing ratio
- d)More than one of the above
Correct answer is option 'C'. Can you explain this answer?
a)
Equal ratio
b)
Capital ratio
c)
Profit-sharing ratio
d)
More than one of the above
|
|
Nipun Tuteja answered |
→ At the time of dissolution of a partnership firm, capital profit (surplus) is shared among partners according to their profit-sharing ratio unless specified otherwise in a contract.
→ As per Section 48 of the Indian Partnership Act, 1932:
Losses, including capital deficiencies, are settled first out of profits, then capital, and lastly by partners in their profit-sharing ratio.
Surplus or capital profit (if any) remaining after paying all liabilities, advances, and capital contributions is divided among partners in their profit-sharing ratio.
Identify which account is prepared at last in the process of firm’s dissolution:
Option A: Realization Account
Option B: Partner’s Capital Accounts
Option C: Cash Account
Option D: More than one of the above
Answer: Option C: Cash Account
→ As per Section 48 of the Indian Partnership Act, 1932:
Losses, including capital deficiencies, are settled first out of profits, then capital, and lastly by partners in their profit-sharing ratio.
Surplus or capital profit (if any) remaining after paying all liabilities, advances, and capital contributions is divided among partners in their profit-sharing ratio.
Identify which account is prepared at last in the process of firm’s dissolution:
Option A: Realization Account
Option B: Partner’s Capital Accounts
Option C: Cash Account
Option D: More than one of the above
Answer: Option C: Cash Account
When a partner takes over an unrecorded asset during dissolution, the following is credited:- a)Capital Account of the Partner
- b)Cash Account
- c)Asset Account
- d)Realization Account
Correct answer is option 'D'. Can you explain this answer?
a)
Capital Account of the Partner
b)
Cash Account
c)
Asset Account
d)
Realization Account
|
Nipuns Institute answered |
At the time of dissolution, if a partner takes over an unrecorded asset, the Realization Account is credited with the value of the asset. The Realization Account is a nominal account used to close the firm's books, record the sale of assets, payment of liabilities, and transfer of unrecorded assets. The partner’s capital account is then adjusted accordingly.
The conclusive evidence of registration of firm is: - a)The certified copy of register of firm
- b)The register of Central Government.
- c)The certificate of registration of firm
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
The conclusive evidence of registration of firm is:
a)
The certified copy of register of firm
b)
The register of Central Government.
c)
The certificate of registration of firm
d)
None of these
|
Rajesh Thankapan answered |
Partnership registration isnt compulsory. When the partners tries to register their partnership with the registrars , after the registrar is satisfied with appropriate details. The registrar would issue a certificate or registration. This can be considered as a relatable documentary evidence that the partnership is registered
Which of the following are not affected by the non-registration of the firm?- a)The right of a third party to sue the firm
- b)The right of a partner to file a suit for the dissolution of the firm
- c)The power of ‘official assignee’ to release the property of an insolvent partner
- d)All of the above
Correct answer is option 'D'. Can you explain this answer?
Which of the following are not affected by the non-registration of the firm?
a)
The right of a third party to sue the firm
b)
The right of a partner to file a suit for the dissolution of the firm
c)
The power of ‘official assignee’ to release the property of an insolvent partner
d)
All of the above
|
|
Muskaan Tiwari answered |
Understanding Non-Registration of a Firm
The non-registration of a firm has specific implications on the rights and powers of various stakeholders involved in the partnership. Here, we analyze why all the options listed are not affected by the non-registration.
1. Right of a Third Party to Sue the Firm
- A third party is generally not affected by the non-registration of a firm.
- They retain the right to file a suit against the firm for any contractual obligations.
- Non-registration primarily affects the rights of the partners among themselves, not their interactions with external parties.
2. Right of a Partner to File a Suit for the Dissolution of the Firm
- Partners can still file a suit for the dissolution of the firm regardless of its registration status.
- The internal rights of partners are protected, allowing them to seek legal remedies even in the absence of registration.
3. Power of ‘Official Assignee’ to Release the Property of an Insolvent Partner
- The official assignee's authority to handle the assets of an insolvent partner remains intact.
- Non-registration does not hinder the official assignee's ability to manage and release property, thereby protecting creditors’ interests.
Conclusion
- All the above rights and powers are unaffected by the non-registration of the firm.
- Therefore, the correct answer is option 'D', indicating that none of these aspects are impacted by the firm’s non-registration.
Understanding these nuances is crucial for partners, creditors, and third parties engaged with the firm, ensuring they comprehend their rights and remedies under the law.
The non-registration of a firm has specific implications on the rights and powers of various stakeholders involved in the partnership. Here, we analyze why all the options listed are not affected by the non-registration.
1. Right of a Third Party to Sue the Firm
- A third party is generally not affected by the non-registration of a firm.
- They retain the right to file a suit against the firm for any contractual obligations.
- Non-registration primarily affects the rights of the partners among themselves, not their interactions with external parties.
2. Right of a Partner to File a Suit for the Dissolution of the Firm
- Partners can still file a suit for the dissolution of the firm regardless of its registration status.
- The internal rights of partners are protected, allowing them to seek legal remedies even in the absence of registration.
3. Power of ‘Official Assignee’ to Release the Property of an Insolvent Partner
- The official assignee's authority to handle the assets of an insolvent partner remains intact.
- Non-registration does not hinder the official assignee's ability to manage and release property, thereby protecting creditors’ interests.
Conclusion
- All the above rights and powers are unaffected by the non-registration of the firm.
- Therefore, the correct answer is option 'D', indicating that none of these aspects are impacted by the firm’s non-registration.
Understanding these nuances is crucial for partners, creditors, and third parties engaged with the firm, ensuring they comprehend their rights and remedies under the law.
The assets of the Partnership firm, including any sums contributed by the partners to make up deficiencies of capital at the time of dissolution, shall be applied in the following manner and order:
(A) In paying each partner rateably what is due to him for advances as distinguished from capital.
(B) In paying to each partner rateably what is due to him on account of capital.
(C) In paying the debts of the firm to third parties.
(D) Dividing among the partners in the proportion in which they were entitled to share profits.
Choose the correct answer from the options given below:- a)(C), (A), (B), (D)
- b)(C), (B), (A), (D)
- c)(A), (B), (C), (D)
- d)(B), (C), (A), (D)
Correct answer is option 'A'. Can you explain this answer?
(A) In paying each partner rateably what is due to him for advances as distinguished from capital.
(B) In paying to each partner rateably what is due to him on account of capital.
(C) In paying the debts of the firm to third parties.
(D) Dividing among the partners in the proportion in which they were entitled to share profits.
Choose the correct answer from the options given below:
a)
(C), (A), (B), (D)
b)
(C), (B), (A), (D)
c)
(A), (B), (C), (D)
d)
(B), (C), (A), (D)
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Nipuns Institute answered |
At the time of dissolution of a partnership firm, the assets are applied in the following order:
- In paying the debts of the firm to third parties (C).
- In paying each partner rateably for their advances as distinguished from capital (A).
- In paying each partner rateably what is due to them on account of capital (B).
- The remaining surplus, if any, is divided among the partners in their profit-sharing ratio (D).
- In paying the debts of the firm to third parties (C).
- In paying each partner rateably for their advances as distinguished from capital (A).
- In paying each partner rateably what is due to them on account of capital (B).
- The remaining surplus, if any, is divided among the partners in their profit-sharing ratio (D).
When a partnership dissolves, the balance of a partner's capital account on the assets side of a balance sheet is transferred to:- a)On the Debit of Realization Account
- b)On the Credit of Realization Account
- c)On the Debit of Partner’s Capital Account
- d)On the Credit of Cash Account
Correct answer is option 'C'. Can you explain this answer?
When a partnership dissolves, the balance of a partner's capital account on the assets side of a balance sheet is transferred to:
a)
On the Debit of Realization Account
b)
On the Credit of Realization Account
c)
On the Debit of Partner’s Capital Account
d)
On the Credit of Cash Account
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Nipun Tuteja answered |
At the time of dissolution, if a partner's capital account balance appears on the assets side of the balance sheet, it indicates that the partner owes the firm. This balance is transferred to the debit side of the Partner's Capital Account to adjust for the outstanding amount.
The Realization Account is used to close the books of accounts by transferring assets and liabilities, but the balance owed by a partner is adjusted through the Partner’s Capital Account. Hence, the correct treatment is to transfer it to the debit of the Partner's Capital Account.
The Realization Account is used to close the books of accounts by transferring assets and liabilities, but the balance owed by a partner is adjusted through the Partner’s Capital Account. Hence, the correct treatment is to transfer it to the debit of the Partner's Capital Account.
There is compulsory dissolution of the firm:- a)On the death of majority of partners
- b)On the insolvency of all the partners
- c)In the case of continuous losses
- d)In the case of deadlock in the management.
Correct answer is option 'B'. Can you explain this answer?
There is compulsory dissolution of the firm:
a)
On the death of majority of partners
b)
On the insolvency of all the partners
c)
In the case of continuous losses
d)
In the case of deadlock in the management.
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Arun Khanna answered |
A firm is compulsorily dissolved:
(i) By the adjudication as insolvent of all the partners or of all partners except one.
(ii) By the happening of any event which makes it unlawful for the business of the firm to be carried on or for the partners to carry it on in partnership.
Chapter doubts & questions for Dissolution of a partnership firm - Crash Course of Accountancy - Class 12 2025 is part of Commerce exam preparation. The chapters have been prepared according to the Commerce exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for Commerce 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
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Crash Course of Accountancy - Class 12
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