Chapter 5 ACCOUNTANCY : Dissolution of Partnership — Online MCQ Test
ACCOUNTANCY · CLASS 12 INTER II YEAR · Andhra State Board
Practice Chapter 5 ACCOUNTANCY : Dissolution of Partnership with a free chapter-wise online MCQ test.
This chapter covers: This chapter covers realization account preparation settlement of assets and liabilities realization expenses and closing partner capital and bank accounts during firm dissolution..
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Chapter 5 ACCOUNTANCY : Dissolution of Partnership — Important Questions & Answers
What is the primary purpose of preparing a Realization Account during the dissolution of a partnership firm?
- A. To calculate the net profit or loss of the firm
- B. To determine the gain or loss on sale of assets and settlement of liabilities
- C. To calculate the goodwill of the firm
- D. To revalue assets for the continuing partners
Answer: B. To determine the gain or loss on sale of assets and settlement of liabilities
Realization account is prepared to record the sale of assets and payment of liabilities to ascertain the profit or loss on realization.
Realization account is prepared to record the sale of assets and payment of liabilities to ascertain the profit or loss on realization.
On dissolution of a firm, which of the following accounts is closed first?
- A. Partner's Capital Account
- B. Cash or Bank Account
- C. Realization Account
- D. Partner's Loan Account
Answer: C. Realization Account
The Realization Account is prepared and closed first to find the profit or loss to be transferred to the partners' capital accounts.
The Realization Account is prepared and closed first to find the profit or loss to be transferred to the partners' capital accounts.
When an unrecorded asset is taken over by a partner upon dissolution, the account to be credited is:
- A. Realization Account
- B. Partner's Capital Account
- C. Cash Account
- D. Asset Account
Answer: A. Realization Account
The Realization account is credited because the value of the asset taken over increases the realization proceeds.
The Realization account is credited because the value of the asset taken over increases the realization proceeds.
If the total of the debit side of the Realization Account exceeds the credit side, the result is:
- A. Profit on Realization
- B. Loss on Realization
- C. Capital profit
- D. Revenue profit
Answer: B. Loss on Realization
Excess of debits (expenses/liabilities paid) over credits (assets sold) represents a loss to the firm.
Excess of debits (expenses/liabilities paid) over credits (assets sold) represents a loss to the firm.
If a partner is insolvent and his capital account shows a debit balance, how is the deficiency treated under Garner v/s Murray rule?
- A. Borne by the firm in their profit-sharing ratio
- B. Borne by solvent partners in their capital ratio
- C. Borne by solvent partners in their profit-sharing ratio
- D. Written off against the reserve fund
Answer: B. Borne by solvent partners in their capital ratio
Under the Garner vs. Murray rule, solvent partners must bear the deficiency of an insolvent partner in their fixed capital ratio.
Under the Garner vs. Murray rule, solvent partners must bear the deficiency of an insolvent partner in their fixed capital ratio.