Dissolution of Partnership Test

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Dissolution of Partnership Test - 2

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Weekly Quiz Competition

Question 1
1 / -0

Compulsory dissolution will take place when _______

A
Business of the firm becomes unlawful

B
A partner retires

C
There is change in profit sharing ratio

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 2
1 / -0

A and B share profits and losses in the ratio of 5:2. They have decided to dissolve the firm. Assets and external liabilities have been transferred to Realisation A/c. It is found that an unrecorded Computer was realized ₹7,000. How would you record it?

A
Bank A/c Dr. 7000
To Computer A/c 7000

B
Computer A/c Dr.7000
To Realisation A/c 7000

C
Bank A/c Dr. 700
To Capital A/c 700

D
Bank A/c Dr. 7000
To Realisation A/c 7000

Solution

Unrecorded assets are directly realized i e sold off so it is recorded on credit side of realization account
Question 3
1 / -0

According to Indian Partnership Act 1932 Dissolution of firm means:

A
Change in the ratio of partners

B
End of the personal relationship among the partners

C
Dissolution of partnership between the main partners

D
Dissolution of Partnership between all the 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 4
1 / -0

When realized value of goodwill is given in adjustment, it indicates that ________

A
Goodwill is written off by the old partners

B
Goodwill is taken over by creditors.

C
Goodwill is purchased

D
Goodwill is sold

Solution

At the time of dissolution of a partnership firm, if any realized value of goodwill is given in the question, it shows that goodwill is sold with other assets of the firm.Goodwill can be sold only at the time of dissolution.
Question 5
1 / -0

Which of the following Reserve or fund is not transferred to the Realisation Account?

A
Contingency Reserve

B
Reserve for doubtful debts

C
Employee Provident Fund

D
Investment Fluctuation Reserve

Solution

Contingency Reserves is a free reserve which is not transferred to the Realisation account at the time of dissolution of a partnership firm. Other reserves or funds (given in the above question) will be transferred to the Realisation account.
Question 6
1 / -0

Total creditors of the firm (already transferred to Realisation Account) were ₹30,000. Out of this, creditors waived their claim of ₹5,000 while the rest agreed to allow discount @ 10% of their respective claim.

A
Bank A/c Dr. 22,500
To Realization A/c 22,500

B
Realization A/c Dr. 22,500
To Bank A/c 22,500

C
Bank A/c Dr. 25,000
To Realization A/c 25000

D
Realization A/c Dr. 25,000
To Bank A/c 25,000

Solution

Calculation of the amount paid to the creditors in full settlement:

Total amount due to the creditors = 30,000

Amount waived by the creditors = 5,000

Amount due after deducting the amount waived by creditors = 30,000 – 5,000 = 25,000

Final Payment = 25,000 – 10% Discount = 22,500
Question 7
1 / -0

Asset taken over by partner will be shown in:

A
Credit side of Cash A/c

B
Credit side of Realization A/c

C
Debit side of Cash A/c

D
Debit side of Realization A/c

Solution

Any asset taken by a partner will be shown in the credit side of realization account and in partner’s capital account.
Question 8
1 / -0

All the assets of the firm are _____ and all outsiders’ liabilities and partners’ loan and partners capitals are ___ at the time of dissolution of firm.

A
Realised , Paid

B
Acquired , Paid

C
Paid , Disposed Off

D
Disposed Off , Acquired

Solution

At the time of dissolution of a partnership firm, all assets available in the business will be realized (sold) and all liabilities will be paid off.
Question 9
1 / -0

Realisation Account is differ from Revaluation Account as

A
Prepared only once during the life of a firm

B
prepared at three times during the life of a firm

C
prepared at a number of times during the life of a firm

D
Prepared only twice during the life of a firm

Solution

Realization Account is prepared only once in the life time of the firm i.e. at the time of dissolution. Revaluation account is prepared at the time of reconstitution of partnership firm i.e. change in existing profit sharing ratio, admission of a partner, retirement of a partner, death of a partner etc.
Question 10
1 / -0

One Creditor worth ₹4,500 took over stock valued at Rs.5,200 in full satisfaction of his claim.

A
Creditors A/c Dr. 4,500
To Realization A/c 4,500

B
No Entry is required

C
Creditors A/c Dr. 5,400
To Assets A/c 5,400

D
Creditors A/c Dr. 4,500
To Bank A/c 4,500

Solution

If any asset is taken over by the external liabilities for the full settlement of their due amount, in such a case no need to record any journal entry.

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Re-Attempt Weekly Quiz Competition

Dissolution of Partnership Test - 2

Result

Dissolution of Partnership Test - 2

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Rank

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SHARING IS CARING

Question 1

Business of the firm becomes unlawful

A partner retires

There is change in profit sharing ratio

A partner dies

Solution

Question 2

Bank A/c Dr. 7000 To Computer A/c 7000

Computer A/c Dr.7000 To Realisation A/c 7000

Bank A/c Dr. 700 To Capital A/c 700

Bank A/c Dr. 7000 To Realisation A/c 7000

Solution

Question 3

Change in the ratio of partners

End of the personal relationship among the partners

Dissolution of partnership between the main partners

Dissolution of Partnership between all the partners

Solution

Question 4

Goodwill is written off by the old partners

Goodwill is taken over by creditors.

Goodwill is purchased

Goodwill is sold

Solution

Question 5

Contingency Reserve

Reserve for doubtful debts

Employee Provident Fund

Investment Fluctuation Reserve

Solution

Question 6

Bank A/c Dr. 22,500 To Realization A/c 22,500

Realization A/c Dr. 22,500 To Bank A/c 22,500

Bank A/c Dr. 25,000 To Realization A/c 25000

Realization A/c Dr. 25,000 To Bank A/c 25,000

Solution

Question 7

Credit side of Cash A/c

Credit side of Realization A/c

Debit side of Cash A/c

Debit side of Realization A/c

Solution

Question 8

Realised , Paid

Acquired , Paid

Paid , Disposed Off

Disposed Off , Acquired

Solution

Question 9

Prepared only once during the life of a firm

prepared at three times during the life of a firm

prepared at a number of times during the life of a firm

Prepared only twice during the life of a firm

Solution

Question 10

Creditors A/c Dr. 4,500 To Realization A/c 4,500

No Entry is required

Creditors A/c Dr. 5,400 To Assets A/c 5,400

Creditors A/c Dr. 4,500 To Bank A/c 4,500

Solution

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Bank A/c Dr. 7000
To Computer A/c 7000

Computer A/c Dr.7000
To Realisation A/c 7000

Bank A/c Dr. 700
To Capital A/c 700

Bank A/c Dr. 7000
To Realisation A/c 7000

Bank A/c Dr. 22,500
To Realization A/c 22,500

Realization A/c Dr. 22,500
To Bank A/c 22,500

Bank A/c Dr. 25,000
To Realization A/c 25000

Realization A/c Dr. 25,000
To Bank A/c 25,000

Creditors A/c Dr. 4,500
To Realization A/c 4,500

Creditors A/c Dr. 5,400
To Assets A/c 5,400

Creditors A/c Dr. 4,500
To Bank A/c 4,500