CBSE Class 12 Accountancy Dissolution Of Partnership Firm MCQs Set 08

Answer: (c) Nominal Account

Explanation:
1. Realisation Account records profit or loss on sale of assets and payment of liabilities, so it is a Nominal Account.

Teacher's Note:
1. Remember: an account that ends in profit or loss (like Revaluation or Realisation A/c) is always nominal.

Answer: (c) Book value

Explanation:
1. Assets are transferred to the debit of Realisation Account at their book values; the amounts realised are credited later.

Teacher's Note:
1. Book value goes on the debit side and realised value on the credit side; the difference is the profit or loss on realisation.

Answer: (b) Realisation Account

Explanation:
1. The amount realised from an unrecorded asset is credited to Realisation Account (Cash/Bank A/c Dr., To Realisation A/c).

Teacher's Note:
1. An unrecorded asset never appears on the debit side of Realisation Account; only its realised value is credited.

Answer: (c) Realisation Account

Explanation:
1. Debtors go to the debit of Realisation Account at gross value and the provision is transferred separately to its credit side.

Teacher's Note:
1. Do not net the provision against debtors; transfer debtors at gross value and the provision to the credit of Realisation A/c.

Answer: (b) Partners’ Capital Account

Explanation:
1. Accumulated losses (debit balance of P&L, deferred revenue expenditure) are debited to partners’ capital accounts in their profit-sharing ratio.

Teacher's Note:
1. Accumulated profits and losses belong to partners, so they never pass through Realisation Account.

Answer: (c) not transferred to Realisation Account

Explanation:
1. A partner’s loan is not an outside liability; it is not transferred to Realisation Account and is paid separately after outside liabilities.

Teacher's Note:
1. Loan from a partner’s relative (e.g. wife) is an outside liability and does go to Realisation A/c.

Answer: (b) Realisation Account

Explanation:
1. Goodwill appearing in books is an asset and is transferred to the debit side of Realisation Account like other assets.

Teacher's Note:
1. On dissolution goodwill is treated as an asset, unlike admission or retirement where it is written off among old partners.

Answer: (d) Profit-sharing ratio.

Explanation:
1. Profit or loss on realisation is transferred to partners’ capital accounts in their profit-sharing ratio.

Teacher's Note:
1. Use the capital ratio only if the question or the partnership deed specifically says so.

Answer: (b) Capital Accounts

Explanation:
1. Under the fluctuating method on dissolution, partners’ current account balances are closed by transfer to their capital accounts.

Teacher's Note:
1. A credit balance of a current account is credited to capital; a debit balance is debited to capital.

Answer: (b) Realisation Account

Explanation:
1. Realisation expenses borne and paid by the firm are debited to Realisation Account (Realisation A/c Dr., To Cash/Bank A/c).

Teacher's Note:
1. Ask two questions: who bears the expense and who pays it; the entry depends on both.

Answer: (d) Assets when realised

Explanation:
1. Amounts realised from assets are credited (not debited) to Realisation Account.

Teacher's Note:
1. Debit side: assets at book value, liabilities paid, expenses; credit side: liabilities at book value and assets realised.

Answer: (a) Cash and Bank Accounts

Explanation:
1. Cash and Bank balances are usually shown as one Cash/Bank Account at the time of dissolution as both are used for receipts and payments.

Teacher's Note:
1. When the question gives both cash and bank balances, a combined Cash/Bank Account saves time unless a separate account is asked.

Answer: (a) Partners’ Capital Accounts

Explanation:
1. General reserve, credit/debit balance of P&L and similar items are transferred to partners’ capital accounts in profit-sharing ratio.

Teacher's Note:
1. Workmen compensation reserve is the exception: only the excess over the actual claim goes to partners.

Answer: (c) Partner’s loan

Explanation:
1. Under Section 48, after outside liabilities, partners’ loans are paid before partners’ capitals.

Teacher's Note:
1. Order of payment: outside liabilities, then partners’ loans, then partners’ capitals.

Answer: (a) Cash and Bank Account

Explanation:
1. Realisation Account is closed first, then partners’ capital accounts are settled through cash/bank, which therefore closes last.

Teacher's Note:
1. If your Cash/Bank Account does not close at nil after paying partners, recheck the capital accounts.

Answer: (c) Vikas’s Capital A/c Dr. ₹15,000
    To Cash/Bank A/c ₹15,000

Explanation:
1. The expense is Vikas’s own liability paid by the firm, so his capital account is debited and cash/bank credited.

Teacher's Note:
1. Expenses paid by the firm on behalf of a partner never touch Realisation Account.

Answer: (d) Nil

Explanation:
1. The creditor accepted the investments in full settlement, so nothing further is payable to him and no entry is needed for it.

Teacher's Note:
1. The words ‘in full settlement’ mean the creditor gets nothing extra in cash.

Answer: (c) ₹50,000

Explanation:
1. Rahul was to bear the expenses for an agreed remuneration of ₹50,000, so Realisation A/c is debited with ₹50,000 and the ₹20,000 paid by the firm is debited to Rahul’s capital.

Teacher's Note:
1. When a partner gets a fixed remuneration for dissolution work, Realisation A/c is debited only with that remuneration, whatever the actual expenses.

Answer: (b) Personal liabilities

Explanation:
1. Under Section 49, a partner’s private assets are first applied to pay his private debts and only the surplus goes towards the firm’s debts.

Teacher's Note:
1. Mirror rule: firm’s property goes first to firm’s debts, private property first to private debts.

Answer: (c) ₹6,000

Explanation:
1. Final payment = −7,000 + 21,500 − 8,500 = ₹6,000.

Teacher's Note:
1. A debit opening balance and an asset taken over both reduce what the partner finally receives.