Question

If at the time of dissolution nothing is said about liabilities, then:

• A. Never paid
• B. Fully paid
• C. Partly paid
• D. None of these

Hint:

Golden rule: If liabilities are not mentioned in dissolution problems, assume they are fully paid off.

Answer 1

The Correct Option is B

Step 1: Assumption in dissolution problems.
In accounting, if nothing specific is mentioned about a liability during dissolution, the standard assumption is that it has been properly settled.
Step 2: Nature of settlement.
The settlement means liabilities are fully discharged by the firm, either in cash or otherwise.
Step 3: Eliminate incorrect options.
- Option (A) Never paid: Wrong, firm cannot ignore liabilities.
- Option (C) Partly paid: Wrong, no such assumption is made.
- Option (D) None of these: Wrong, as correct rule exists.
Step 4: Conclude.
Thus, liabilities are assumed to be fully paid if no information is given.
Final Answer: \[ \boxed{\text{Fully paid}} \]