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Test: Accounting for Partnership Firm - 2 - B Com MCQ


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10 Questions MCQ Test - Test: Accounting for Partnership Firm - 2

Test: Accounting for Partnership Firm - 2 for B Com 2024 is part of B Com preparation. The Test: Accounting for Partnership Firm - 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Accounting for Partnership Firm - 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Accounting for Partnership Firm - 2 below.
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Test: Accounting for Partnership Firm - 2 - Question 1

What does dissolution of a firm mean?

Detailed Solution for Test: Accounting for Partnership Firm - 2 - Question 1
Dissolution of a firm refers to the complete closure of the business, where all assets are disposed of, liabilities are settled, and the firm ceases to exist.
Test: Accounting for Partnership Firm - 2 - Question 2

Under which circumstance can a competent court order the dissolution of a firm?

Detailed Solution for Test: Accounting for Partnership Firm - 2 - Question 2
A competent court can order the dissolution of a firm when a partner becomes of unsound mind, as continuing the partnership would be impractical.
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Test: Accounting for Partnership Firm - 2 - Question 3

Which section of the Partnership Act, 1932 deals with the dissolution by agreement?

Detailed Solution for Test: Accounting for Partnership Firm - 2 - Question 3
Section 40 of the Partnership Act, 1932 states that a firm may be dissolved with the consent of all partners or according to a contract between them.
Test: Accounting for Partnership Firm - 2 - Question 4
In what order are the firm's assets applied to settle accounts after dissolution, according to Section 48 of the Partnership Act?
Detailed Solution for Test: Accounting for Partnership Firm - 2 - Question 4
Section 48 states that the firm's assets are applied first to pay third-party debts, then partners' advances, and finally partners' capital.
Test: Accounting for Partnership Firm - 2 - Question 5
What is the purpose of the Realisation Account during the dissolution of a firm?
Detailed Solution for Test: Accounting for Partnership Firm - 2 - Question 5
The Realisation Account is used to account for the sale of assets and the payment of liabilities during the dissolution process, ultimately determining the profit or loss on realization.
Test: Accounting for Partnership Firm - 2 - Question 6
Which case established the rule that solvent partners must bear the deficiency of an insolvent partner in the ratio of their capitals?
Detailed Solution for Test: Accounting for Partnership Firm - 2 - Question 6
Garner v. Murray established that the deficiency of an insolvent partner should be borne by the solvent partners in the ratio of their capitals at the date of dissolution.
Test: Accounting for Partnership Firm - 2 - Question 7
When is a firm compulsorily dissolved under Section 41 of the Partnership Act, 1932?
Detailed Solution for Test: Accounting for Partnership Firm - 2 - Question 7
A firm is compulsorily dissolved under Section 41 when all partners but one are adjudicated insolvent, as a partnership cannot exist without at least two partners.
Test: Accounting for Partnership Firm - 2 - Question 8
How are the private debts of partners and firm’s debts settled after dissolution?
Detailed Solution for Test: Accounting for Partnership Firm - 2 - Question 8
The firm's debts are settled first using the firm’s assets. Any surplus can be used to pay private debts of the partners, and private debts are settled from private assets.
Test: Accounting for Partnership Firm - 2 - Question 9
What happens to the balance in the capital account of an insolvent partner after dissolution?
Detailed Solution for Test: Accounting for Partnership Firm - 2 - Question 9
The balance in the capital account of an insolvent partner, known as the deficiency, is covered by the solvent partners in the ratio of their capitals, ensuring an equitable settlement of losses.
Test: Accounting for Partnership Firm - 2 - Question 10
What happens to the assets and liabilities during the dissolution of a firm?
Detailed Solution for Test: Accounting for Partnership Firm - 2 - Question 10
During the dissolution of a firm, all assets are sold off to realize cash, which is then used to pay off the liabilities. Any remaining balance is distributed among the partners.
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