Tag: partnership 1 - meaning, definition, characteristics and kinds

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Questions Related to partnership 1 - meaning, definition, characteristics and kinds

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

Upon dissolution, the firm's assets shall be first applied in paying the debts of the firm to third parties, shall thereafter be applied in payment of partners loan, shall then be applied in payment of partners capital and still surplus remains it should used for _________.

  1. In paying the debts of the firm to third parties

  2. Payment of partners loan

  3. Payment of partners capital

  4. Distribution of surplus to partners in profit sharing ratip
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

After paying third-party debts and repaying partners' loans and capital, any remaining surplus is distributed among the partners according to their agreed profit-sharing ratio.

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

In which of the following situations the firm will NOT be compulsorily dissolved?

  1. All partners or any one of the partners is declared insolvent

  2. The business of the firm become unlawful

  3. The partnership has various adventures & one such adventure becomes illegal

  4. The decision is taken by all the partners to dissolve the firm
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Compulsory dissolution under Section 44 occurs when the entire business becomes unlawful. If a firm has multiple adventures (ventures) and only one becomes illegal, the firm itself is not dissolved - only that particular adventure must be discontinued. The partnership continues with remaining lawful businesses. Options A, B, and D all describe situations triggering compulsory dissolution.

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

__________ rule is applicable at the time of any partner becoming insolvent.

  1. Garner Vs Murray

  2. Derry Vs Peek

  3. Salmon Vs A. Salomon & Co. Ltd

  4. Mohiri Bibi Vs Dhamodas Ghose
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Garner vs Murray rule is the standard accounting principle used to determine how to distribute the loss arising from the insolvency of a partner in a partnership firm.

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

Upon dissolution, the firm's assets shall be first applied in paying the debts of the firm to third parties, shall thereafter he applied in __________.

  1. In paying the debts of the firm to third parties

  2. Payment of partners loan

  3. Payment of partners capital

  4. Distribution of surplus to partners in profit sharing ratio
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The statutory order for settling accounts is: first, pay third-party debts; second, pay partners' loans; third, pay partners' capital; and finally, distribute any remaining surplus.

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

Firm is automatically and compulsory dissolve, if _________.

  1. All partners, or all but one partner, of firm are declared insolvent

  2. Some event happens which makes it unlawful for business of the firm to be carried on or for the partners to carry it on in partnership

  3. (A) or (B)

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

Compulsory dissolution occurs if all or all but one partner are insolvent, or if an event makes the business unlawful. Both (A) and (B) are correct triggers.

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

Which of the following is prepared only at the time of dissolution of the firm?

  1. Revaluation Account

  2. Realization Account

  3. Profit & Loss Adjustment Account

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

A Realization Account is specifically prepared at the time of dissolution to determine the profit or loss on the sale of assets and settlement of liabilities.

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

In settling the accounts of a firm after dissolution, losses, including deficiencies of capital, shall be paid _________________.

  1. Out of profits

  2. Out of capital

  3. By the partners individually in the proportions in which they were entitled to share profits

  4. First out of profits, next out of capital, and, lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The order for paying losses is: first from profits, then from capital, and finally by the partners individually in their profit-sharing ratio.

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

Which of the following is/are disabilities of unregistered firm?

  1. No suit between partners and firm

  2. No suit by firm on a third party

  3. No claim of set-off

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

Unregistered firms face several disabilities, including the inability to sue third parties, the inability of partners to sue the firm, and the inability to claim set-off.

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

In which of the following case there is no bar on the right of unregistered firm or any partner of its partner?

  1. A suit for the dissolution of a firm

  2. A suit for rendering of accounts of a dissolved firm

  3. A suit for realization of the property of a dissolved firm

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

Even if a firm is unregistered, the law allows partners to file suits for the dissolution of the firm, for rendering accounts of a dissolved firm, or for realizing the property of a dissolved firm.

Multiple choice elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

In which of the following case Garner Vs Murray rule is NOT applicable?
$1$. Only one partner is solvent.
$2$. All partners are insolvent.
$3$. When partnership deed provides a specific method to be followed in case of insolvency of a partner
Select the correct answer from the options given.

  1. $1$ only
  2. $1$ & $2$ only
  3. $3$
  4. $1, 2$ & $3$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Garner vs Murray rule is not applicable if there is only one solvent partner, if all are insolvent, or if the partnership deed explicitly provides an alternative method for handling insolvency.