Dissolution of a Partnership Firm

Which of the following modes of dissolution occurs automatically when all partners, or all partners except one, become insolvent?

1. Dissolution by agreement
2. Compulsory dissolution
3. Dissolution on the happening of certain contingencies
4. Dissolution by notice

In the event of dissolution of a firm, after all assets are realized and all external liabilities and loans are paid off, the final balance remaining in the Cash/Bank Account must equal:

1. Total initial profits of the firm
2. Total net capital balances payable to partners
3. Value of unrecorded assets
4. Zero before paying partner capitals

At the time of dissolution, if a partner takes over a recorded asset at an agreed valuation, which account is debited?

1. Realisation Account
2. Partner's Capital Account
3. Asset Account
4. Cash Account

When a firm is dissolved, deferred revenue expenditure (like advertising suspense) appearing on the asset side of the Balance Sheet is transferred to:

1. Debit side of Realisation Account
2. Credit side of Realisation Account
3. Debit side of Partners' Capital Accounts in profit-sharing ratio
4. Profit and Loss Account

According to Section 48 of the Indian Partnership Act, 1932, losses including deficiencies of capital shall be paid first out of:

1. Capital of partners
2. Profits of the firm
3. Partners individually in their profit-sharing ratio
4. Proceeds of realization of assets

If the total assets of a firm (excluding cash) are ₹3,00,000 and total external liabilities are ₹1,00,000. Assets realized 110% of book value and liabilities were settled at a 5% discount. Realisation expenses were ₹5,000. What is the net profit or loss on realization?

1. Profit of ₹20,000
2. Profit of ₹30,000
3. Profit of ₹25,000
4. Loss of ₹5,000

In the Balance Sheet of a dissolved firm, Investment Fluctuation Reserve stands at ₹6,000 and Investments at ₹50,000. How is Investment Fluctuation Reserve treated upon dissolution?

1. Credited to Partners' Capital Accounts in profit-sharing ratio
2. Transferred to the credit side of Realisation Account
3. Deducted from Investment Account on the debit side of Realisation Account
4. Transferred to the debit side of Realisation Account

Partner B is appointed to look after the dissolution process for an agreed remuneration of ₹15,000. Actual realization expenses amounted to ₹18,000, which were paid by B out of his personal pocket. How much amount will be debited to Realisation Account for remuneration and expenses?

1. ₹33,000
2. ₹18,000
3. ₹15,000
4. ₹3,000

Realisation expenses of ₹8,000 were paid by Partner A on behalf of the firm. What is the correct journal entry in the firm's books?

1. Debit Realisation Account and Credit A's Capital Account by ₹8,000
2. Debit A's Capital Account and Credit Cash Account by ₹8,000
3. Debit Realisation Account and Credit Cash Account by ₹8,000
4. Debit Realisation Expenses Account and Credit A's Capital Account by ₹8,000

If a creditor worth ₹50,000 accepts an unrecorded asset valued at ₹40,000 in full settlement of his claim, what entry is passed in the Realisation Account?

1. Debit Realisation Account by ₹10,000
2. Credit Realisation Account by ₹40,000
3. Debit Realisation Account by ₹50,000
4. No journal entry is passed for the settlement

At the time of dissolution, Goodwill appearing in the Balance Sheet is transferred to:

1. Credit side of Cash Account
2. Debit side of Realisation Account
3. Debit side of Partners' Capital Accounts in profit-sharing ratio
4. Credit side of Realisation Account

A partner's loan to the firm at the time of dissolution is paid:

1. Before paying external third-party liabilities
2. After paying external third-party liabilities but before returning capital balances
3. Simultaneously along with capital balances
4. After all partner capital balances are completely refunded

If an unrecorded asset is realized in cash at the time of dissolution of a firm, which account is credited?

1. Cash/Bank Account
2. Realisation Account
3. Unrecorded Asset Account
4. Partners' Capital Accounts

Upon the dissolution of a partnership firm, which account is opened to dispose of assets and settle external liabilities?

1. Revaluation Account
2. Realisation Account
3. Profit and Loss Adjustment Account
4. Memorandum Revaluation Account

What is the fundamental difference between the "Dissolution of Partnership" and the "Dissolution of Partnership Firm"?

1. Dissolution of partnership involves closing the business, while dissolution of firm continues operations.
2. Dissolution of partnership breaks the relationship among partners without ending the firm, whereas dissolution of firm completely closes the business.
3. Both terms are legally identical under the Indian Partnership Act, 1932.
4. Dissolution of firm requires court intervention in every situation.