Tag: dissolution of firm

Questions Related to dissolution of firm

At the suit of a partner, the court may order a partnership firm to be dissolved when a partner becomes ________.

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. Insolvent

  2. Adjudicated

  3. Insane

  4. Solvent

Show answer
Correct Option: C
Explanation:

Dissolution of a partnership firm may take place without the intervention of court or by the order of a court, in any of the specified ways. It may be noted that dissolution of the firm necessarily brings in dissolution of the partnership. Dissolution of Court is one of the way which results in dissolution of a firm. At the suit of a partner, the court may order a partnership firm to be dissolved on any of the following grounds:

(a) when a partner becomes insane; 
(b) when a partner becomes permanently incapable of performing his duties as a partner; 
(c) when a partner is guilty of misconduct which is likely to adversely affect the business of the firm;
(d) when a partner persistently commits breach of partnership agreement;
(e) when a partner has transferred the whole of his interest in the firm to a a third party; 
(f) when the business of the firm cannot be carried on except at a loss; or 
(g) when, on any ground, the court regards dissolution to be just and equitable.

Dissolution of partnership changes the existing relationship between _______ but the firm may continue its business as before.

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. Directors

  2. Partners

  3. Shareholders

  4. Employees

Show answer
Correct Option: B
Explanation:

According to section 39 of the partnership act 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm. The act recognizes the difference in the breaking of relationship between all the partners of a firm and between some of the partners; and it is the breaking or discontinuance of relationship between all the partners which is termed as the dissolution of partnership firm. 

The dissolution of partnership changes the existing relationship between partners but the firm may continue its business as before. The dissolution of partnership may take place in any of the following ways:
1. Change in existing profit sharing ratio among partners
2. Admission of a new partner
3. Retirement of a partner
4. Death of a partner
5. Insolvency of a partner
6. Completion of the venture, if partnership is formed for that
7. Expiry of the period of partnership, if partnership is for a specific period of time

Dissolution of partnership firm may take place 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. Admission of a new partner

  2. Change in existing profit-sharing ratio among partners

  3. Dissolution of agreement

  4. Retirement of a partner

Show answer
Correct Option: C
Explanation:

Dissolution of a partnership firm may take place without the intervention of court or by the order of a court, in any of the ways specified. It may be noted that dissolution of the firm necessarily brings in dissolution of the partnership. Dissolution by agreement is one of the way a firm can be dissolved, A firm is dissolved:

a. With the consent of all the partners or 
b. In accordance with a contract between the partners.

Dissolution of the firm necessarily brings in dissolution of 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. Company

  2. Partnership

  3. Society

  4. LLP

Show answer
Correct Option: B
Explanation:

Dissolution of a partnership firm may take place without the intervention of court or by the order of a court, in any of the ways specified. It may be noted that dissolution of the firm necessarily brings in dissolution of the partnership. Dissolution of firm may take place in any of the following ways:

1. Dissolution by agreement
2. Compulsory disclosure
3 On the happening of certain contingencies
4. Dissolution by notice
5. Dissolution by court

Is rent paid to a partner appropriation of profits ?

book keeping and accountancy dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities meaning of dissolution of partnership firm

  1. It is appropriation of profit

  2. It is not appropriation of profit

  3. If partner's contribution as capital is maximum

  4. If partner is working partner.

Show answer
Correct Option: B
Explanation:

Rent is paid for the use of asset of partner in business. Rent paid is an expense for business not as distribution of profit to partners. It is charged to profit and loss account not from profit and loss appropriation account. Rent paid to a partner is charged to profit not appropriation of profit. 

In which of the following case the need for the valuation of goodwill in a firm may arise?
(I) Admission of new partner
(II) While changing profit sharing ratio
(III) Retirement of partner
(IV) Death of partner
Select the correct answer from the options given below-

book keeping and accountancy dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities meaning of dissolution of partnership firm

  1. (I) & (III) only

  2. (I), (III) & (IV)

  3. (I), (II) & (III) only

  4. All (I) to (IV)

Show answer
Correct Option: D
Explanation:

In all these cases one partner sacrifice and the other partner gain. Gaining partner must compensate the sacrificing partner by paying the proportionate amount of goodwill. Gaining partner should pay the sacrificing partner that share of goodwill which is equal to the share gained by him. Valuation is done to calculate that share.