Accountancy

Dissolution of Partnership Firm

Questions Bank

  • Section 39, states the dissolution of the firm which means dissolution of partnership among all the patners in the firm.
    2018-02-12 16:11:04
  • Section 44 Modes of Dissolution are, (i) Dissolution without order of court (Section 4. to 43), (ii) Dissolution by Court order
    2018-02-12 16:10:50
  • Section 48, states the settlement of accounts in dissolution of firm. Section 48(a) states treatment of losses including deficicency of capital by
    (a) First out of Profit,
    (b)
    Next out of Capital,
    (c)
    By Patner in Profit Sharing Ratio.

    2018-02-12 16:10:37
  • Section 48(b) states the application of assets, including any sum contributed by partner to make deficiency shall be applied as (i) Debts to Third Parties, (ii) Then to pay loans from partner, (iii) Then to pay capital of partner, (iv) Surplus to be distributed among partners.
    2018-02-12 16:09:58
  • Item having One Side Impact on Realisation Account are (i) Provision for Depreciation, (ii) Provision for Bad Debts, (iii) Provision for Discount on Debtors, (v) Investment Flutuation Fund.
    2018-02-12 16:09:30
  • Cash or Bank Balance is not to be transferred because it does not require realisation as it is already in liquid form.
    2018-02-12 16:08:50
  • Loan from a partner is not an external liability and it is to be paid after the payment of outside liabilities but before payment of capital.
    2018-02-12 16:08:36
  • Asset Against which a provision or reserve has been created should be transferred at its gross figure and not at net figure. Fictitious Assets and Accumulated Losses are transferred to the partner on the debit side of partner's capital account.

    2018-02-12 16:08:22

  • 2018-02-12 16:07:46

Questions Bank -

Ans. Dissolution of partnership means change in the relation of partners. Dissolution of partnership does tot necessarily involve dissolution of firm.

Ans. Dissolution of firm is the dissolution of partnership between all the partners of the firm along with re termination of partnership business.

Ans. Yes, the dissolution necessarily means the dissolution of partnership.

Ans. The circumstances under which a firm is dissolved are:
(i) Insolvency of a partner.
(ii) Business becoming unlawful.

Ans. In dissolution of a firm, the business of the firm is closed while in reconstitution of a firm, the business of firm continues.

Ans. The account prepared to close the assets and liabilities is Realisation Account

Ans. The account is prepared to calculate the profit or loss on realisation of assets and liabilities of the firm at the time of dissolution of the partnership firm.

Ans. Realisation Account is prepared to determine profit or loss on disposal of assets and liabilities while Revaluation Account is prepared to determine profit or loss on revaluation of assets and liabilities..

Ans. The objective is to ascertain the profit or loss on realisation of assets and settlement of liabilities.

Ans. The value at which the various assets are transferred to Realisation Account is Book Value



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