Identify the correct sequence for application of assets at the time of dissolution of firm:
A. Partner’s Loans or Advances
B. Partner’s Capital
C. Profit among the partners in their profit-sharing ratio
D. Third parties such as creditors and Bank Loans
Choose the correct option:
A. Partner’s Loans or Advances
B. Partner’s Capital
C. Profit among the partners in their profit-sharing ratio
D. Third parties such as creditors and Bank Loans
Choose the correct option:
Show Hint
- D, C, B and A
- A, B, C and D
- D, B, C and A
- D, A, B and C
The Correct Option is D
Solution and Explanation
1. Third-party liabilities (D): External creditors paid first to settle debts.
2. Partner’s loans or advances (A): Loans made by partners to the firm repaid next.
3. Partner’s capital (B): Return of capital invested by partners.
4. Profit distribution (C): Remaining profits distributed as per agreement.
Top Questions on Dissolution of Partnership Firm
Rishika and Shivika were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as at 31st March, 2024 stood as follows:
Balance Sheet of Rishika and Shivika as at 31st March, 2024Liabilities Amount (₹) Assets Amount (₹) Capitals: Equipment 45,00,000 Rishika – ₹30,00,000
Shivika – ₹20,00,00050,00,000 Investments 5,00,000 Shivika’s Husband’s Loan 5,00,000 Debtors 35,00,000 Creditors 40,00,000 Stock 8,00,000 Cash at Bank 2,00,000 Total 95,00,000 Total 95,00,000 The firm was dissolved on the above date and the following transactions took place:
(i) Equipements were given to creditors in full settlement of their account.
(ii) Investments were sold at a profit of 20% on its book value.
(iii) Full amount was collected from debtors.
(iv) Stock was taken over by Rishika at 50% discount.
(v) Actual expenses of realisation amounted to ₹ 2,00,000 which were paid by the firm. Prepare Realisation Account.- CBSE CLASS XII - 2025
- Accountancy
- Dissolution of Partnership Firm
Manav and Namit were partners in a firm sharing profits and losses in the ratio of 3 : 2. Their Balance Sheet as at 31st March 2024 was as follows:
Liabilities Assets Capitals: Machinery ₹8,00,000 Manav ₹4,00,000 Investments ₹5,00,000 Namit ₹6,00,000 Debtors ₹12,00,000 Bank Overdraft ₹9,00,000 Stock ₹3,00,000 Creditors ₹10,00,000 Cash in Hand ₹1,00,000 Total ₹29,00,000 Total ₹29,00,000 The firm was dissolved on the above date and the following transactions took place:
[(i)] Stock was given to creditors in full settlement of their account.
[(ii)] Investments were taken over by Manav at 120% of book value.
[(iii)] Bad debts amounted to ₹ 2,00,000.
[(iv)] Machinery was realised at 50% discount.
[(v)] Realisation expenses amounted to ₹ 1,00,000 which were paid by Namit.
Prepare Realisation Account.- CBSE CLASS XII - 2025
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- Dissolution of Partnership Firm
- Stock at the time of dissolution was appearing in books at Rs 50,000. Half of the stock was sold at a discount of 20% and the remaining was taken over by one of the partners at a 10% discount. What amount was received in cash at the time of realization of stock?
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Match List-I with List-II:\[\begin{array}{|c|c|} \hline \text{List-I} & \text{List-II} \\ \hline \text{(A) Payment of loans due to partners} & \text{(I) Realisation A/c Dr To Bank A/c} \\ \hline \text{(B) Settlement of partners' accounts (debit balance)} & \text{(II) Bank A/c Dr To Loan to Partners A/c} \\ \hline \text{(C) Settlement of loan by firm to a partner} & \text{(III) Bank A/c Dr To Partner's Capital A/c} \\ \hline \text{(D) Settlement of unrecorded liability} & \text{(IV) Partner's Loan A/c Dr To Bank A/c} \\ \hline \end{array}\]Choose the correct answer:
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- According to which section of the Partnership Act 1932, the dissolution of a partnership between all the partners of a firm is called the dissolution of the firm?
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