Fill in the blanks: A firm can be dissolved by __________ if all partners consent or according to their agreement.

Agreement

True or False: The Realisation Account is used to record all transactions during the normal operation of a partnership.

False. The Realisation Account is specifically used during the dissolution process to record the assets and liabilities of the partnership.

What is the order of applying the assets during the winding up of a partnership?

Order of asset application is important.

• First, pay non-partner debts.

• Then, settle partner advances.

• Lastly, divide any surplus.

Fill in the blank: The Realisation Account is balanced, and any profit or loss is transferred to the __________ of partners in their profit-sharing ratio.

Capital accounts

What happens to undisclosed assets during the dissolution of a partnership?

Undisclosed assets are not recorded.

• Assets are liquidated directly.

• Partners may take assets over.

• Creditors can claim undisclosed items.

How are liabilities treated in the event of all partners becoming insolvent?

Liabilities are settled first.

• Creditors claim available assets.

• Deficiency recorded in accounts.

• Partnership assets liquidated first.

True or False: A partnership firm can be absorbed by a limited company without dissolving the partnership.

False. The partnership must be dissolved as part of the absorption process.

What is meant by 'fixed and fluctuating capitals' in the context of handling partner insolvency?

Fixed and fluctuating capitals define partner contributions.

• Fixed capitals are initial investments.

• Fluctuating capitals adjust for profits.

• Losses are shared based on these capitals.

Explain the purpose of the Realisation Account in the context of partnership dissolution.

Realisation Account summarizes assets and liabilities.

• Records sales during dissolution.

• Accounts for expenses incurred.

• Determines profit or loss allocation.

What steps are taken when a partnership firm is sold to a limited company?

Partnership firm sale involves key steps.

• Assets and liabilities transfer.

• Record purchase consideration accurately.

• Handle remaining items per agreement.

What are the conditions under which a partnership can be dissolved compulsorily according to the Indian Partnership Act?

Partnership can dissolve under specific conditions.

• All but one partner insolvent.

• Unlawful event occurs in business.

• Court order can mandate dissolution.