Dissolution of Partnership Test

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Dissolution of Partnership Test - 2

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Weekly Quiz Competition

Question 1
1 / -0

According to Indian Partnership Act 1932 Dissolution of firm means:

A
End of the personal relationship among the partners

B
Dissolution of Partnership between all the partners

C
Dissolution of partnership between the main partners

D
Change in the ratio of partners

Solution

According to the Indian Partnership Act, 1932 dissolution of firm means dissolution of partnership between all the partners and end of the business. All accounts will be closed and all assets will be realized and liabilities will be paid off.
Question 2
1 / -0

Compulsory dissolution takes place when:

A
Death of a partner takes place

B
When there is loss in the current year

C
Retirement of an Active partner

D
When all partners become insolvent

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
1 / -0

Dissolution by court will take place only when ____________

A
Death of a partner

B
Partnership term is expired

C
On completion of venture

D
A partner becomes a person of unsound mind

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
1 / -0

Compulsory dissolution will take place when _______

A
A partner retires

B
There is change in profit sharing ratio

C
Business of the firm becomes unlawful

D
A partner dies

Solution

Compulsory dissolution is when some event has taken place which makes it unlawful for the partners to 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 the declaration of war with his country and India.
Question 5
1 / -0

In what circumstances a partnership firm can be dissolve?

A
When all partners become insolvent

B
When business of the firm become unlawful

C
Both When all partners become insolvent and When business of the firm become unlawful

D
When Capital account of a partner shows negative balance

Solution

A firm is dissolved compulsorily in the following cases:
(a) when all the partners or all but one partner, become insolvent, rendering them incompetent to sign a contract;
(b) When the business of the firm becomes illegal.
Question 6
1 / -0

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

A
Revaluation Account

B
Partners Capital Account

C
Realisation Account

D
Cash Account

Solution

The main reason is that revaluation account is prepared at the time of reconstitution of partnership when the values of assets and liabilities change. in case of dissolution of business assets are sold off and liabilities are paid off so revaluation account cannot be made.
Question 7
1 / -0

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

A
Mutual Agreement

B
When business of the firm cannot be carried on except at a loss

C
When a partner has become of unsound mind

D
When a partner is found guilty of breath of contract frequently

Solution

when all the partners agree to close down the business, partners can dissolve the firm without interference of the court that is mutual agreement.
Question 8
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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

A
a,b,c,d

B
a,c,d, b

C
a, b, d,c

D
a,c,b,d

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

First the outside liabilities are paid off then the amount due to partner are paid off.
Question 9
1 / -0

At the time of dissolution a partner cannot take over _______

A
Capital of another partner

B
Unrecorded Assets or liabilities

C
Liability

D
Asset

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
1 / -0

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.

A
Dr. side of Revaluation Account

B
Cr.Side of Revaluation Account

C
Dr. side of Realisation Account

D
Realisation Account

Solution

realisation account is nominal account. assets sold are recorded on the credit side and liabilities paid off are recorded on the debit side. if credit side is more it is profit and if the debit side is more it is loss.

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Re-Attempt Weekly Quiz Competition

Dissolution of Partnership Test - 2

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Dissolution of Partnership Test - 2

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SHARING IS CARING

Question 1

End of the personal relationship among the partners

Dissolution of Partnership between all the partners

Dissolution of partnership between the main partners

Change in the ratio of partners

Solution

Question 2

Death of a partner takes place

When there is loss in the current year

Retirement of an Active partner

When all partners become insolvent

Solution

Question 3

Death of a partner

Partnership term is expired

On completion of venture

A partner becomes a person of unsound mind

Solution

Question 4

A partner retires

There is change in profit sharing ratio

Business of the firm becomes unlawful

A partner dies

Solution

Question 5

When all partners become insolvent

When business of the firm become unlawful

Both When all partners become insolvent and When business of the firm become unlawful

When Capital account of a partner shows negative balance

Solution

Question 6

Revaluation Account

Partners Capital Account

Realisation Account

Cash Account

Solution

Question 7

Mutual Agreement

When business of the firm cannot be carried on except at a loss

When a partner has become of unsound mind

When a partner is found guilty of breath of contract frequently

Solution

Question 8

a,b,c,d

a,c,d, b

a, b, d,c

a,c,b,d

Solution

Question 9

Capital of another partner

Unrecorded Assets or liabilities

Liability

Asset

Solution

Question 10

Dr. side of Revaluation Account

Cr.Side of Revaluation Account

Dr. side of Realisation Account

Realisation Account

Solution

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