Tag: payment of firm's debts and separate debts, realisation of assets and liabilities

Questions Related to payment of firm's debts and separate debts, realisation of assets and liabilities

Where it is agreed that a partner will be paid a lump sum amount for dissolution of the payment is made by the firm, the payment is debited to ____________ .

business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

  1. Realisation Account

  2. Concerned Partner's Capital Account

  3. All Partners' Capital Accounts

  4. None of these

Show answer
Correct Option: A
Explanation:

The lump sum amount paid by the partner is an expense for the firm since it has to be returned to the partner later on. All expenses need to be debited to the realisation account at the time of dissolution, hence, the payment is debited to the Realisation account at the time of dissolution of the firm.

At the time of dissolution of the firm; if goodwill appears in the Balance Sheet, it is transferred to ______________ .

business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

  1. Realisation Account.

  2. Partners' Capital Accounts

  3. Revaluation Account

  4. None of these

Show answer
Correct Option: A
Explanation:

Treatment of goodwill is very easy in case of dissolution of a firm. In case, if goodwill is already appearing in the balance sheet, it is treated like any other asset, and is transferred to the realisation account at the value given in balance sheet. Following entry is passed for it.

         Realisation A/c       Dr.
                  To Goodwill A/c

At the time of dissolution of the firm, loan from partner is _________ .

business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

  1. Transferred to Realisation Account

  2. Not transferred to Realisation Account

  3. Transferred to the Partner's Capital Account

  4. None of these

Show answer
Correct Option: B
Explanation:

not transferred to Realisation Account.

Realisation account is opened on the dissolution of a firm. It is prepared by -
1. Transferring all assets except cash or bank account to the debit side of the account.
2. Transferring all liabilities except partner's loan account and partner's capital account to the credit side of the account.
3. Amount realised on sale of assets is credited to the account.
4. Liabilities paid are debited to the account.
5. Expenses incurred on the firm on dissolution are debited.

Unrecorded liabilities when paid are debited to _________ .

business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

  1. Realistaion Accounts

  2. Partner's Capital Accounts

  3. None of the above

  4. Only option (A)

Show answer
Correct Option: A
Explanation:

Unrecorded liabilities are those liabilities that are not shown in the Balance Sheet but they still exist in the business. Although these liabilities are not shown in the books, they still need to the discharged off at the time of dissolution and hence are debited to the Realisation account. 

Unrecorded asset when realised is credited to  ____________ .

business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

  1. Realisation Account

  2. partners' Capital Accounts

  3. None of the above

  4. Only option (A)

Show answer
Correct Option: A
Explanation:

Unrecorded assets are those assets that have been completely written off but are still physically present in the business. There is no requirement to show these assets in the books before they are sold off. Hence, these assets are directly credited to the Realisation account at the time of dissolution of the firm. 

At the time of dissolution of the firm, The assets and liabilities appearing in the Balance sheet transferred to ____________ .

business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

  1. Revaluation Account

  2. Realisation Account


  3. Partner's Capital Accounts

  4. None of these

Show answer
Correct Option: B
Explanation:

At the time of dissolution of the firm, the assets and liabilities appearing on the Balance Sheet are transferred to the Realisation Account. When a firm decides to discontinue its operations, all assets need to be disposed off and all liabilities need to be discharged. For this purpose, a Realisation account is opened where all the assets, excluding cash at hand and bank, are shown on the debit side at their book values and all the external liabilities are shown on the credit side at their book value. Any sale of assets or discharge of liabilities is also shown in this account.

Which of the following is the assumption of the MM model on dividend policy?

business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

  1. The firm is an all-equity firm

  2. The investments of the firm are financed solely by retained earnings

  3. The firm has an infinite life

  4. None of the above

Show answer
Correct Option: C

Garner Vs. Murray rule applies in case of _________________.

business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

  1. Admission of a partner

  2. Dissolution of a firm

  3. Retirement of a partner

  4. Death of a partner

Show answer
Correct Option: B

There are _________ kinds of voluntary winding up.

business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

  1. $2$

  2. $3$

  3. $4$

  4. $5$

Show answer
Correct Option: A
Explanation:

Voluntary winding up is the process in which a company is unable to carry out it operations or the period for carrying the operations expires or if it is unable to meet its financial obligations. It can carry this process either by passing special resolution or by ordinary resolution. There are two kinds of voluntary winding up. They are;

  1. Member's voluntary winding up.
  2. Creditors voluntary winding up.

Winding up by the court comes under _________.

business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

  1. section $484-521$

  2. section $433$

  3. section $434$

  4. section $475$

Show answer
Correct Option: B
Explanation:

According to the Indian Companies Act, 2013, if a company do not follow certain rules and regulations as given by the act then it has to wind up its operations. Winding up is done by the court. It comes under section 433.