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

Dissolution of a firm means __________.

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. Closing down the undertaking

  2. Suspending permanently the activities of a partnership business

  3. Complete breakdown of a partnership

  4. All of the Above

Show answer
Correct Option: D
Explanation:

According to the provisions of the Indian Partnership Act, 1932, dissolution of a firm means closing down the undertaking, suspending permanently the activities of a partnership business or a complete breakdown of a partnership.

Voluntary winding up 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 $433$

  2. Section $484-521$

  3. Section $428$

  4. Section $473$

Show answer
Correct Option: B
Explanation:

Voluntary winding up is the process in which a company is unable to carry out its 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. It comes under section 484-521 of the Indian Companies Act, 2013.

The dissolution of partnership between all partners of a firm is called _________.

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 dissolution of the firm

  2. Compulsory dissolution

  3. Dissolution by notice

  4. Dissolution by government

Show answer
Correct Option: A
Explanation:

According to the provisions of the Indian Partnership Act, 1932, dissolution of a firm means closing down the undertaking, suspending permanently the activities of a partnership business or a complete breakdown of a partnership. Hence, the dissolution of partnership between all partners of a firm is called the dissolution of the firm.

Which of the following are true or false?
(a) Dissolution of a firm is a wider concept
(b) It includes dissolution of the partnership also

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. Both (a) and (b) are true.

  2. Both (a) and (b) are false.

  3. (a) is true, but (b) is false.

  4. (a) is false, but (b) is true.

Show answer
Correct Option: A
Explanation:

According to the provisions of the Indian Partnership Act, 1932, dissolution of a firm means closing down the undertaking, suspending permanently the activities of a partnership business or a complete breakdown of a partnership. The dissolution of partnership between all partners of a firm is called the dissolution of the firm. Hence, it is wider concept.

A voluntary winding up of a company in the case of which no 'Declaration of solvency' is required, is called ___________.

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. Member's voluntary winding up

  2. Creditors voluntary winding up

  3. Winding up by court

  4. Voluntary winding up

Show answer
Correct Option: B
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.
Under creditors voluntary winding up declaration of solvency is not required beacause the company first only becomes unable to pay the liabilities.

Under creditors' voluntary winding up, the copy of the resolution is sent to the registrar within _______.

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. $10\ days$

  2. $15\ days$

  3. $30\ days$

  4. $45\ days$

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.
Under creditors voluntary winding up declaration of solvency is not required because the company first only becomes unable to pay the liabilities. Under this, the copy of the resolution is sent to the registrar within 10 days.

On the dissolution of a firm, if a partner has a debit balance in his capital account then:

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. He shall not share in the profit/loss on dissolution

  2. He need not bring cash

  3. He is required to bring in enough cash to clear off his debit balance

  4. None of the above

Show answer
Correct Option: C
Explanation:

At the time of dissolution, the accounts of partners are settled. Accounts are settled by paying them the amount of capital due to them. So, if a partner has debit balance in his capital he has to bring the amount to clear off his debit balance. Suppose. there are three partners, A, B and C. Capital of partners at the time of dissolution are A Rs.30000(CR.), B Rs.10000(CR.), and C Rs. 5000(DR.). In this , Partner C will bring Rs. 5000 to clear off his balance due to him.

L, M, N and O are equal partners. L, M and O die together. This accident results in:

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. Dissolution of partnership

  2. Dissolution of firm

  3. Dissolution of firm as well as dissolution of partnership

  4. Neither dissolution of firm nor dissolution of partnership

Show answer
Correct Option: C
Explanation:

Dissolution of partnership means termination of old partnership agreement and a reconstruction of the firm due to admission ,retirement and death. Dissolution of partnership firm means that the firm closes down its business  and comes to an end. In this case because of death partnership dissolved. 

For partnership two or more than two partners needed but in this only one partner is alive. so it resulted in dissolution of partnership firm also.

When a firm is dissolved, the piecemeal distribution of cash should be done in such a manner that final unpaid amount are in the:

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. Capital ratio

  2. Profit sharing ratio

  3. Sacrificing ratio

  4. Equal Ratio

Show answer
Correct Option: B
Explanation:

The rule to follow in piecemeal distribution is that the partners whose capitals are more than proportionate to other partner's capital should first be refunded so much as to bring down their capitals to proportionate levels. After this, the cash available should be distributed in the profit -sharing ratio. Each partner's position has to be compared with position of other partners. 

X, Y and Z are partners in the ratio of 2: 1 : 1. After distribution of realisation loss, Z's capital has a debit balance of Rs. 6,000. If Z is personally insolvent, his capital balance will cancelled by:

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. X and Y contributing equally

  2. X and Y contributing in the ratio of 2:1

  3. X and Y contributing in the ratio of their capitals

  4. Writing off to Profit and Loss account

Show answer
Correct Option: C
Explanation:

When a partner is unable to contribute towards deficiency of his capital account,he/she is said to be insolvent,and the sum not recoverable is treated as capital loss. In the absence of any agreement, such capital loss is to be borne by the solvent partners in accordance with the principle laid down in Garner vs. Murray case, which states that the solvent partners have to bear such loss in the ratio of their capitals on the date of dissolution.