Test: Dissolution Of Partnership - 1


10 Questions MCQ Test Accountancy Class 12 | Test: Dissolution Of Partnership - 1


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QUESTION: 1

This a MCQ (Multiple Choice Question) based practice test of Chapter 5 - Dissolution of Partnership of Accountancy of Class XII (12) for the quick revision/preparation of School Board examinations

Q  According to Indian Partnership Act 1932 Dissolution of firm means:

Solution:

Section 39 of the Indian Partnership Act, 1932 defines dissolution of partnership firm. It defines the dissolution of partnership between all the partners of a firm is called the dissolution of the firm.

QUESTION: 2

Compulsory dissolution takes place when:

Solution:

When all partners of the firm become insolvent, in such a case it is compulsory to dissolve the firm. It means, this is the end of the partnership firm and end of the partnership among the partners.

QUESTION: 3

Dissolution by court will take place only when ____________

Solution:

Dissolution by Court: At the suit of a partner, the court may order a partnership firm to be dissolved when a partner becomes insane.

QUESTION: 4

Compulsory dissolution will take place when _______

Solution:

Compulsory dissolution will take place when some event has taken place which makes it unlawful for the partnersto carry on the business of the firm in partnership, e.g., when a partner who is a citizen of a country becomes an alien enemy because of thedeclaration of war with his country and India.

QUESTION: 5

When the realisation expenses are to be borne by a partner, it is credited to 

Solution:
QUESTION: 6

Which of the following account is not prepared at the time of dissolution?

Solution:

Revaluation Account is not prepared at the time of dissolution of partnership firm. The main reason is that revaluation account is prepared at the time of change in existing partnership and not at the time of dissolution of partnership firm.

QUESTION: 7

In which circumstances partners’ can dissolve the firm without interference of the court?

Solution:

Partners may dissolved firm with mutual agreement without interference of the court. A court can dissolve a partnership firm in the following circumstances:
•When a partner has become of unsound mind
•When a partner is found guilty of breath of contract frequently 
•When business of the firm cannot be carried on except at a loss

QUESTION: 8

Choose the current order of priority in settlement of liabilities and capital upon dissolution from items given below:
(a) Expense incurred on realization of assets such as commission, cartage, brokerage etc.
(b) All outside creditors
(c) Balances in Capital Accounts of partners
(d) Partner’s Loan accounts
Correct sequence is

Solution:

The correct order of the payment should be:
(a) Expense incurred on realization of assets such as commission, cartage, brokerage etc.
(b) All outside creditors
(c) Partner’s Loan accounts 
(d) Balances in Capital Accounts of partners

QUESTION: 9

At the time of dissolution a partner cannot take over _______

Solution:

At the time of dissolution, a partner may take asset, liability or unrecorded assets/liability at the agreed price but cannot take capital of any other partner.

QUESTION: 10

Name the Account which is prepared for finding the profit or loss on getting amount from selling of all assets and paying amount of liabilities.

Solution:

All provisions given against the assets will be transferred to the credit side of realization account. Provision for doubtful debts will take place in the credit side of realization account only, after that there is no use of this provision.

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