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

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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

Dissolution of a firm means __________.

  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
Reveal answer Fill a bubble to check yourself
D Correct answer
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.

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

Voluntary winding up comes under __________.

  1. Section $433$

  2. <span>Section</span>&nbsp;$484-521$

  3. <span>Section</span>&nbsp;$428$

  4. <span>Section</span>&nbsp;$473$
Reveal answer Fill a bubble to check yourself
B Correct answer
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.

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

  1. The dissolution of the firm

  2. Compulsory dissolution

  3. Dissolution by notice

  4. Dissolution by government
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

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

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

  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.
Reveal answer Fill a bubble to check yourself
A Correct answer
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.

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

  1. Member's voluntary winding up

  2. Creditors voluntary winding up

  3. Winding up by court

  4. Voluntary winding up
Reveal answer Fill a bubble to check yourself
B 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 beacause the company first only becomes unable to pay the 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

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

  1. $10\ days$

  2. $15\ days$

  3. $30\ days$

  4. $45\ days$
Reveal answer Fill a bubble to check yourself
A 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.

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

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

  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
Reveal answer Fill a bubble to check yourself
C Correct answer
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.

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

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

  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
Reveal answer Fill a bubble to check yourself
C Correct answer
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.

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

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

  1. Capital ratio

  2. Profit sharing ratio

  3. Sacrificing ratio

  4. Equal Ratio
Reveal answer Fill a bubble to check yourself
B Correct answer
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. 

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

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:

  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
Reveal answer Fill a bubble to check yourself
C Correct answer
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.