Dissolution of Partnership Test

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Dissolution of Partnership Test - 21

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Weekly Quiz Competition

Question 1
1 / -0

Accumulated losses are transfer to ______ in ________ ratio

A
Capital account , Gaining ratio

B
Realization account, Gaining sharing ratio

C
Realization account , Profit sharing ratio

D
Partner's Capital account , Profit sharing ratio

Solution

At the time of dissolution all accumulated profits and losses should be transferred to the partners capital account in their profit sharing ratio as they are treated as free reserves. so free reserves are distributed among partners.
Question 2
1 / -0

A and B share profits and losses in the ration of 5:2. They have decided to dissolve the firm. Assets and external liabilities have been transferred to Realisation A/c. An unrecorded Stock worth₹ 1,600 was taken over by B at₹ 1,200. What should be journal entry?

A

B's Capital A/c Dr. 400
To Realization A/c 400

B

B's Capital A/c Dr. 200
To Realization A/c 200

C

B's Capital A/c Dr. 1200
To Realization A/c 1200

D

B's Capital A/c Dr. 1600
To Realization A/c 1600

Solution

If any unrecorded asset is taken over by the partner (any partner), it should be not be recorded at its actual value, instead, it should be recorded at the price at which asset is taken over. In this case B’s Capital Account should be debited and realization account should be credited by ₹1,200 and not by ₹1,600.
Question 3
1 / -0

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,c,b,d

B
a,b,c,d

C
a,c,d, b

D
a, b, d,c

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 4
1 / -0

Choose the correct option from below

A
a(iii), b(ii), c(i)

B
a(ii), b(iii), c(i)

C
a(i), b(iii), c(ii)

D
a(i), b(iii), c(ii)

Solution

Situation 1 : When assets are sold for cash (Bank A/c Dr. and Realisation A/c Cr.)

Situation 2 : When asset is taken over by a partner (Partner’s Capital A/c Dr. and Realisation A/c Cr.)

Situation 3 : When the assets are given to any of the creditors towards the payment of his dues (No Entry in such case).
Question 5
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 Realisation Account

B
Realisation Account

C
Dr. side of Revaluation Account

D
Cr.Side of Revaluation 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.
Question 6
1 / -0

If a liability is assumed (to be paid) by a partner in such a case partner capital account is ___

A
Credited

B
No effect on capital account

C
Debited

D
Both Credited and Debited

Solution

If a partner is agreed to pay off any liability at the time of dissolution of a partnership firm, in such a case following entry should be recorded in the books: Journal Entry:

Realization A/c Dr.

To Partner’s Capital A/c
Question 7
1 / -0

How goodwill account appear in the Balance sheet be treated in case of dissolution of firm

A
Transferred to capital account at book value

B
Transferred to realization account at market value

C
Transferred to realization account at book value

D
Transferred to capital account at market value

Solution

At the time of dissolution of partnership firm, goodwill given in the balance sheet should be transferred to the debit side of realization account at its book value and not at the market value as it is a part of fixed assets of the business.
Question 8
1 / -0

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

A
Realisation Account

B
Partners Capital Account

C
Cash Account

D
Revaluation 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 9
1 / -0

When Realised value of an asset is not given, It should be taken at ______

A
Nil

B
Both Book Value and Market Value

C
Market Value

D
Book Value

Solution

If realized value of any asset is not given in the question, in such a case, realized value should be assumed as nil or Zero realized value
Question 10
1 / -0

A Loan of ₹10,000 advanced by a partner to the firm was refunded. What journal entry should be recorded for the same?

A

Bank A/c Dr, 10000
To Partner’s Loan A/c 10000

B

Partner’s Loan A/c Dr. 1000
To Bank A/c 10000

C

Realization A/c Dr. 10000
To Bank A/c 10000

D
Bank A/c Dr 10000. To Realization Account 10000

Solution

since liability is decreasing it is debited. Asset is also decreasing(bank) so it is credited.

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Re-Attempt Weekly Quiz Competition

Dissolution of Partnership Test - 21

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Dissolution of Partnership Test - 21

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SHARING IS CARING

Question 1

Capital account , Gaining ratio

Realization account, Gaining sharing ratio

Realization account , Profit sharing ratio

Partner's Capital account , Profit sharing ratio

Solution

Question 2

B's Capital A/c Dr. 400 To Realization A/c 400

B's Capital A/c Dr. 200 To Realization A/c 200

B's Capital A/c Dr. 1200 To Realization A/c 1200

B's Capital A/c Dr. 1600 To Realization A/c 1600

Solution

Question 3

a,c,b,d

a,b,c,d

a,c,d, b

a, b, d,c

Solution

Question 4

a(iii), b(ii), c(i)

a(ii), b(iii), c(i)

a(i), b(iii), c(ii)

a(i), b(iii), c(ii)

Solution

Question 5

Dr. side of Realisation Account

Realisation Account

Dr. side of Revaluation Account

Cr.Side of Revaluation Account

Solution

Question 6

Credited

No effect on capital account

Debited

Both Credited and Debited

Solution

Question 7

Transferred to capital account at book value

Transferred to realization account at market value

Transferred to realization account at book value

Transferred to capital account at market value

Solution

Question 8

Realisation Account

Partners Capital Account

Cash Account

Revaluation Account

Solution

Question 9

Nil

Both Book Value and Market Value

Market Value

Book Value

Solution

Question 10

Bank A/c Dr, 10000 To Partner’s Loan A/c 10000

Partner’s Loan A/c Dr. 1000 To Bank A/c 10000

Realization A/c Dr. 10000 To Bank A/c 10000

Bank A/c Dr 10000. To Realization Account 10000

Solution

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B's Capital A/c Dr. 400
To Realization A/c 400

B's Capital A/c Dr. 200
To Realization A/c 200

B's Capital A/c Dr. 1200
To Realization A/c 1200

B's Capital A/c Dr. 1600
To Realization A/c 1600

Bank A/c Dr, 10000
To Partner’s Loan A/c 10000

Partner’s Loan A/c Dr. 1000
To Bank A/c 10000

Realization A/c Dr. 10000
To Bank A/c 10000