What does dissolution of a firm mean?

Change in the profit-sharing ratio of partners

Complete closure of the business of the firm

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

On the admission of a new partner

When a partner becomes of unsound mind

When the profit-sharing ratio changes

On the completion of the venture for which it was formed

In what order are the firm's assets applied to settle accounts after dissolution, according to Section 48 of the Partnership Act?

Partners' capital, third-party debts, partners' advances

Third-party debts, partners' advances, partners' capital

Partners' advances, third-party debts, partners' capital

Partners' capital, partners' advances, third-party debts

What is the purpose of the Realisation Account during the dissolution of a firm?

To record daily transactions of the firm

To track personal expenses of partners

To account for the sale of assets and payment of liabilities

To prepare financial statements

Which case established the rule that solvent partners must bear the deficiency of an insolvent partner in the ratio of their capitals?

Ashbury Railway Carriage & Iron Co. Ltd v. Riche

When is a firm compulsorily dissolved under Section 41 of the Partnership Act, 1932?

When all partners but one are adjudicated insolvent

On the admission of a new partner

When partners change the profit-sharing ratio

How are the private debts of partners and firm’s debts settled after dissolution?

Private debts are settled before firm’s debts

Firm’s debts are settled out of the firm’s assets first

Private debts and firm’s debts are settled proportionately

Private debts are settled using firm’s assets

What happens to the balance in the capital account of an insolvent partner after dissolution?

It is ignored in the final settlement

It is paid by the solvent partners in their profit-sharing ratio

It is covered by the solvent partners in the ratio of their capitals

It is transferred to a new partner

What happens to the assets and liabilities during the dissolution of a firm?

Assets are distributed among partners, and liabilities are ignored

Assets are sold, and liabilities are paid off

Assets are transferred to a new firm, and liabilities are carried over

Assets are donated, and liabilities are settled by a court

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