Tag: difference between realisation account and revaluation account

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Multiple choice 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

Under following conditions the court may declare for the dissolution of firm:

  1. A partner is guilty of misconduct.

  2. It is just and equitable to dissolve the firm.

  3. Business can only be carried on loss.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a partner is guilty of misconduct, the other partners can move to the court for dissolution because the misconduct of one partner brings bad name to the firm. When court has just and equitable reason to dissolve then court may order for dissolution. If the firm is suffering from continuous loss, then the court may order for dissolution if there is no capital available for further growth.  

Multiple choice 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

Under ________ company sells all its assets.

  1. Liquidation

  2. Bankruptcy

  3. Turnaround

  4. Disinvestment
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Liquidation is the process in which company stops operating and sell its assets so that cash can be arranged to pay its debts. It is an event that occurs when a company is insolvent and can not pay its obligations when due. The business is no longer in existence once the liquidation process is complete.

Multiple choice 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

__________ are not legally required to get their financial statements audited.

  1. Companies

  2. Banks

  3. Partnership firms

  4. Insurance companies
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

No compulsory audit is provided by the Indian Partnership Act, 1932. But as per the Indian Taxation Act, 1961 Tax audit of partnership firm is mandatory if the turnover exceeds Rs. one crore in case of business and Rs. Twenty Five lakhs in case of profession. 

Multiple choice 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

The main account for dealing with partnership dissolution would be:

  1. Realization

  2. Dissolution

  3. Appropriation

  4. Revaluation
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Dissolution of partnership firm means that the firm closes down its business and comes to an end. A realization account is opened for disposing off all the assets of the firm and making payment of all the liabilities. It is a nominal account. The object of such an account is to find out the profit or loss on realization of assets and payment of liabilities. 

Multiple choice 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

Choose the correct answer from the alternatives given.
A minor together with two major persons:

  1. Can form a partnership

  2. Can form a partnership subject to provision that minor shall not share the losses

  3. Can not form a partnership at all

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Indian Contract Act clearly states that no person less than the age of 18 years can be a party to contract and a partnership is a contract between the partners. Hence a minor together with two major persons can not form a partnership. A minor can only be admitted to the benefits of partnership. 

Multiple choice 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

A director may be removed before the expiry of his term by passing a/an :

  1. Ordinary resolution

  2. Special resolution

  3. Resolution requiring special notice

  4. Any of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to Section 115 of the Companies Act, A special notice with the intention of removing a director by the specified number of members of the company has to be passed.  A special notice required to be given to the company shall be signed by members holding not less than 1 percent of the  total voting power. Opportunity can be given to the director to submit his statement in writing against his removal from company. 

Multiple choice 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

Upon the dissolution of a firm, in piecemeal distribution of cash, cash is distributed among partners in the :

  1. Sacrificing ratio

  2. Ratio of capitals

  3. Profit sharing ratio

  4. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In piecemeal distribution of cash, there are two methods:
1. Proportionate Capital Method: The partners whose capitals are more than the proportionate to other partner's capital should first be refunded so much as to bring down their capitals to proportionate levels. 
2. Maximum Loss Method: An alternative method of piecemeal distribution is to calculate the maximum possible loss on every realisation after the outside liabilities and the partner's loan has been paid.  

Multiple choice 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

Unrecorded liability when paid on dissolution of a firm is debited to ____________ .

  1. realisation A/c

  2. partner's A/c

  3. partner's Capital A/cs

  4. balance sheet
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

When an unrecorded liability is paid during the dissolution of a firm, it is treated as a realization expense and debited to the Realisation Account.

Multiple choice 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

In case of creditor's voluntary winding up, the liquidators are appointed by __________.

  1. Members

  2. Creditors

  3. Both (A) and (B)

  4. Court
Reveal answer Fill a bubble to check yourself
C Correct answer
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. The liquidators are appointed by the members as well as the members of the company.

Multiple choice 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

A court can order the dissolution of the partnership firm in the following cases except ___________.

  1. when a partner transfer his share to a third party without the consent of other partners

  2. on the death of partner

  3. when the number of partner exceeds $20$

  4. on the expiry of the period for which it was formed
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to the provisions of the Indian Partnership Act, 1932, a court can order the dissolution of the partnership firm in the following cases:

  1. On the death of the partner.
  2. When the number of partner exceeds 20.
  3. On the expiry of the period for which it was formed.
When a partner transfer his share to a third party without the consent of others only the partner is dissolved from the firm and not the whole firm.