NCERT MCQ ON Dissolution of Partnership Firm:
Question1: Dissolution of the firm means
- a) All of the options
- b) Business of the firms ends
- c) Assets Sold
- d) Liabilities paid
Answer: All of the options
Question2: The modes by which a firm may be dissolved are
- a) All of the options
- b) By Mutual agreement
- c) Compulsory Dissolution
- d) By Notice
Answer: All of the options
Question3: Why is realisation account prepared
- a) Closing the accounts
- b) Opening the account
- c) For profit sharing
- d) None of the options
Answer: Closing the accounts
Question4: How will goodwill account appearing in the balance sheet be treated in case of dissolution of the firm
- a) By transferring to realisation A/c (Dr. Side)
- b) By transferring to realisation A/c (Cr. Side)
- c) Both Side
- d) None of the options
Answer: By transferring to realisation A/c (Dr. Side)
Question5: How will you treat accumulated profit/losses at the time of dissolution of the firm
- a) Transferred to partners Capital A/C
- b) Transferred to partners Capital A/C
- c) Transferred to partners Salary A/C
- d) None of the options
Answer: Transferred to partners Capital A/C
Question6: what will be the accounting treatment of balance of the realisation account
- a) Transferred to partners Capital A/C in their profit sharing ratio
- b) Transferred to partners Capital A/C in their old ratio
- c) Transferred to partners Capital A/C in their new ratio
- d) None of the options
Answer: Transferred to partners Capital A/C in their profit sharing ratio
Question7: At the time of dissolution of the firm , if goodwill appears in the balance sheet , it is transferred to
- a) Realisation A/c
- b) Revaluation A/c
- c) Capital A/c
- d) Current Account
Answer: Realisation A/c
Question8: At the time of dissolution of the firm , the assets and liabilities appearing in the balance sheet are transferred to
- a) Realisation A/c
- b) Real Account
- c) Capital A/c
- d) None of the options
Answer: Realisation A/c
Question9: at the time of dissolution of firm, loan from partner is
- a) Not transferred to realisation A/c
- b) Transferred to realisation A/transferred to partners capital A/c
- c) None of the options
Answer: Not transferred to realisation A/c
Question10: Where it is agreed that a partner will be paid a lump sum amount for dissolution, if the payment is made by the firm, the payment is debited to
- a) Concerned partners capital Account
- b) Realisation Account
- c) All the partners capital Account
- d) None of the options
Answer: Concerned partners capital Account
Question11: Unrecorded assets when realised is credit to
- a) Realisation A/c
- b) Partners capital A/c
- c) Current Account
- d) None of the options
Answer: Realisation A/c
Question12: Unrecorded Liabilities when paid are debited to
- a) Realisation A/c
- b) Partners capital A/c
- c) Current Account
- d) None of the options
Answer: Realisation A/c
Question13: Why a new partner is admitted in the firm?
- a) For Increase the Capital of the firm.
- b) For Increase the Number of partners
- c) For Increase the Profit sharing Ratio
- d) None of the options
Answer: For Increase the Capital of the firm.
Question14: Which is the main right of a partner?
- a) Share the Profits of the firm.
- b) Stop other partners for drawings
- c) Share the old profits of the firm
- d) All of the options
Answer: Share the Profits of the firm.
Question15: According to Section 30 of Partnership Act 1932:
- a) A Minor can be admitted as a partner by the consent of all partners for the time being.
- b) New partner will bring capital and goodwill in cash
- c) New partner will inspect the books of accounts
- d) New partner is allowed to share old profits
Answer: A Minor can be admitted as a partner by the consent of all partners for the time being.
Question16: The incoming partner cannot acquire his share of profits :
- a) From the old partners in their new profit sharing ratio
- b) From the old partners in their old profit sharing ratio
- c) From one or more partners (not from all partners)
- d) From the old partners in some agreed ratio
Answer: From the old partners in their new profit sharing ratio
Question17: At the time of admission of a new partner, the new partner acquires his share from the old partners in the:
- a) Sacrificing ratio
- b) New Ratio
- c) New Ratio
- d) Old ratio
Answer: Sacrificing ratio
Question18: Sacrifice ratio is used only for
- a) Distribution of Premium for goodwill
- b) Revaluation profit
- c) Distribution of Reserve
- d) Revaluation of Assets
Answer: Distribution of Premium for goodwill
Question19: Section ____ of the Indian Partnership Act provides that a new partner shall not be inducted into a firm without the consent of all existing partners
Answer: 31
Question20: When a new partner is admitted he acquires his share of profits from the old partners , this will ____ the old partners shares in profits:
- a) Reduce
- b) Remain same
- c) No change
- d) Decrease
Answer: Reduce
Question21: Is admission of a new partner a reconstitution of partnership firm:
- a) Yes
- b) It is dissolution of firm
- c) It is called merger
- d) None of the options
Answer: Yes
Question22: Why new profit ratio is determined even for old partners?
- a) Change in the agreement among all partners
- b) No change in agreement
- c) Due to change in external environment
- d) All of the options
Answer: Change in the agreement among all partners
Question23: Sacrificing ratio is calculated for
- a) old partners
- b) new partners
- c) all partners (including new)
- d) None of the options
Answer: old partners
Question24: Revaluation Account is also known as ________
- a) Profit and Loss Adjustment Account
- b) Asset Account
- c) Profit and Loss Account
- d) None of the options
Answer: Profit and Loss Adjustment Account
Question25: At the time of increase in the value of assets which account should be debited while preparing Revaluation Account?
- a) Asset A/c
- b) Partners Capital A/c
- c) Revaluation Account
- d) None of the options
Answer: Asset A/c
Question26: Revaluation account is not prepared at the time of _________________
- a) Dissolution
- b) Admission
- c) Retirement
- d) All of the options
Answer: Dissolution
Question27: Which of the following is calculated at the time of Retirement of a Partner?
- a) Gaining Ratio
- b) Old Ratio
- c) Profit Sharing ratio
- d) All of the options
Answer: Gaining Ratio
Question28: When the New ratio is deducted with Old Ratio we get:
- a) Gaining Ratio
- b) Sacrifice only
- c) Profit Sharing ratio
- d) None of the options
Answer: Gaining Ratio
Question29: Gaining Ratio is Applicable for:
- a) Retiring partners share of goodwill only
- b) For the distribution of Reserves and profits
- c) For the Calculation of profit
- d) For Revaluation
Answer: Retiring partners share of goodwill only
Question30: Gaining ratio is the ratio in which continuing partners have ______ the share from the outgoing partner
- a) Acquired
- b) Sacrificed
- c) Both Acquired and Sacrificed
- d) None of the options
Answer: Acquired
Question31: Why there is need to calculate New profit share ratio
- a) After retirement of a partner, there will be change in the continuing partners ratio.
- b) After retirement of a partner, there is no change in the continuing partners ratio.
- c) To settle the loan amount due to outgoing partner
- d) All of the options
Answer: After retirement of a partner, there will be change in the continuing partners ratio.
Question32: Except outgoing partner, which other partner can be credited at the time of settlement of goodwill amount?
- a) Sacrificing partner
- b) Gaining partner
- c) All the partners
- d) None of the options
Answer: Sacrificing partner
Question33: Retirement or death of a partner will create a situation for the continuing partners, which is known as:
- a) Reconstitution of Firm
- b) Dissolution of firm
- c) Amalgamation
- d) None of the options
Answer: Reconstitution of Firm
Question34: New Ratio Old Ratio is called
- a) Gaining Ratio
- b) Profit Sharing ratio
- c) Sacrificing ratio
- d) None of the options
Answer: Gaining Ratio
Question35: How sacrificing ratio is differ from gaining ratio on the basis of mode of calculation
- a) calculated by taking difference between old and new ratio
- b) calculated by taking difference between new and old ratio
- c) calculated by taking difference between old and gaining ratio
- d) None of the options
Answer: calculated by taking difference between old and new ratio
Question36: Which of the following is effect of the retirement of a partner?
- a) share of remaining partners increases
- b) share of remaining partners remains same
- c) share of remaining partners decreases
- d) All of the options
Answer: share of remaining partners increases
Question37: Only in Balance Sheet At the time of retirement of a partner, general reserve given in the balance sheet should be credited to all the partners (including outgoing partner) in their old profit sharing ratio.
- a) Credit side of Capital account of all the partners
- b) Debit side of Capital account of all the partners
- c) Both
- d) None of the options
Answer: Credit side of Capital account of all the partners
Question38: Which of the following is prepared at the time of retirement of a partner?
- a) Revaluation Account
- b) Profit and Loss Suspense Account
- c) Both
- d) None of the options
Answer: Revaluation Account
Question39: Which of the following item is not shown in the credit side of deceased partners capital account?
- a) Share of loss
- b) Share of profit
- c) Revaluation profit
- d) All of the options
Answer: Share of loss
Question40: Bad debts recovered will be recorded in:
- a) Cr. Side of revaluation account
- b) Dr. Side of revaluation account
- c) Both
- d) None of the options
Answer: Cr. Side of revaluation account
Question41: At the time of dissolution of firm, “Loan of partners” (Loans given by partners to the firm) is paid out of the amount realised on sale of assets :
a) After making the payment of loans given by third party
b) After making the payment of balance of Capital Accounts of partners
c) After making the payment of above a) and b)
d) Before the payment of loans given by third party
Answer: A
Question42: At the time of dissolution of firm, at which stage the balance of partner’s capital accounts is paid?
a) After making the payment to third party’s loans
b) Before making the payment of partners in respect of their loans
c) After making the payment to third party for their loans as well as partners loans
d) None of the above.
Answer: C
Question43: On firm’s dissolution, which one of the following account should be prepared at the last?
a) Realisation Account
b) Partner’s Capital Accounts
c) Cash Account
d) Partner’s Loan Account
Answer: C
Question44: On dissolution of a firm, a partner paid Rs.700 for firm’s realisation expenses. Which account will be debited?
a) Cash Account
b) Realisation Account
c) Capital Account of the Partner
d) Profit & Loss A/c
Answer: B
Question45: On taking responsibility of payment of realisation expenses by a partner, the account credited will be :
a) Realisation Account
b) Cash Account
c) Capital Account of the Partnei
d) None of the Above
Answer: C
Question46: On dissolution of firm, loss calculate in realisation account is debited/credited to which account?
a) Cash Account (Credit)
b) Partners’ Capital Accounts (Debit)
c) Partners’ Capital Accounts (Credit)
d) Realisation Account (Debit)
Answer: B
Question47: On dissolution of a firm, an unrecorded furniture of the value of Rs.5,000 was taken up by a partner for Rs.4,300. Which Account will be credited and by how much amount? :
a) Cash Account by Rs.4,300
b) Realisation Account by Rs.700
c) Partner’s Capital Account by Rs.5,000
d) Realisation Account by Rs.4,300
Answer: D
Question48: On the basis of following data, final payment to a partner on firm’s dissolution will be made :
Debit balance of Capital Account Rs. 14,000; Share of his profit on realisation Rs.43,000; Firm’s asset taken over by him for Rs. 17,000.
a) Rs.31,000
b) Rs.29,000
c) Rs. 12,000
d) Rs.60,000
Answer: C
Question49: On payment of expenses of dissolution, account will be debited :
a) Realisation Account
b) Cash Account
c) Profit & Loss Account
d) None of the Above
Answer: A
Question50: Investments valued Rs.2,00,000 were not shown in the books. One of the creditors took over these investments in full satisfaction of his debt of Rs.2,20,000. How much amount will be deducted from creditors?
a) Rs.20,000
b) Rs.2,20,000
c) Rs.4,20,000
d) Rs.2,00,000
Answer: B
Question:51 If creditors are Rs.25,000, capital is X 1,50,000 and cash balance is X 10,000, what will be the amount of sundry assets?
a) Rs. 1,75,000
b) X 1,85,000
c) X 1,65,000
d) X 1,40,000
Answer: C
Question52: If opening capitals of partners are A Rs.3,00,000, B Rs.2,00,000 and C Rs.1,00,000 and their drawings during the year are A Rs. 50,000, B Rs.40,000 and C Rs. 30,000 and creditors are Rs.60,000, what will be the amount of assets of the firm?
a) Rs.5,40,000
b) Rs.4,20,000
c) Rs.4,80,000
d) Rs.6,60,000
Answer: A
Question53: On dissolution of a firm, firm’s Balance Sheet total is Rs.77,000. On the assets side of the Balance Sheet items were shown preliminary expenses Rs.2,000; Profit & Loss Account (Debit) Balance Rs.4,000 and Cash Balance Rs. 1,800. Loss on realisation was Rs.6,300. Total assets (including cash balance) realised will be :
a) Rs.69,200
b) Rs.71,000
c) Rs.64,700
d) Rs.62,900
Answer: C
Question54: On dissolution of a firm, partners’ capital accounts balance was Rs.63,000; creditors balance was Rs. 12,000 and profit & loss account debit balance was Rs.6,000. Profit on realisation of assets was Rs.7,800. Total amount realised from assets was:
a) Rs.81,000
b) Rs.76,800
c) Rs.70,800
d) None
Answer: B
Question55: On dissolution of a firm, a partner took-over the investments of Rs. 15,000 at Rs. 19,000. By how much amount the Realisation Account will be credited?
a) Rs.4,000
b) Rs. 19,000
c) Nil
d) Rs.23,000
Answer: B
Question56: Anu, Bina and Charan are partners. The firm had given a loan of Rs. 20,000 to Bina. They decided to dissolve the firm. In the event of dissolution, the loan will be settled by
a) transferring it to debit side of Realisation Account.
b) transferring it to credit side of Realisation Account.
c) transferring it to debit side of Bina’s Capital Account.
d) Bina paying Anu and Charan privately.
Answer: C
Question57: Rohit, a partner is to carry out dissolution and he gets Rs. 50,000 as remuneration. Realisation Expenses were Rs. 25,000. Realisation Account will be debited with
a) Rs. 50,000.
b) Rs. 75,000.
c) Rs. 25,000.
d) Rs. 1,00,000.
Answer: B
Question58: The firm paid realisation expenses of Rs. 10,000 on behalf of Nihar,a partner with whom it was agreed at Rs. 25,000. Realisation Expenses came to Rs. 35,000. Realisation Account will be debited by
a) Rs. 10,000.
b) Rs. 35,000.
c) Rs. 25,000.
d) Rs. 70,000.
Answer: C
Question59: Amount received from sale of unrecorded asset at the time of dissolution ofthe firm is credited to
a) Partners’ Capital Accounts.
b) Profit and Loss Account.
c) Realisation Account.
d) Cash Account.
Answer: C
Question60: On dissolution, Goodwill Account is transferred to
a) In the Capital Accounts of Partners.
b) On the Credit of Cash Account.
c) On the Debit of Realisation Account
d) On the Credit of Realisation Account.
Answer: C
Question61: At the time of dissolution of partnership firm, Deferred Revenue Expenditure (Advertisement Expenditure) is transferred to
a) Capital Accounts of Partners.
b) Realisation Account.
c) Cash Account.
d) Loan by Partner Account.
Answer: A
Question62: Court can make an order to dissolve the firm when :
a) Some partner has become fully mad
b) Partnership deed is fully followed
c) Continued future profits are expected
d) Firm is running legal business
Answer: A
Question63: On dissolution of a firm, realisation account is debited with
a) All assets to be realised
b) All outside liabilities of the firm
c) Cash received on sale of assets
d) Any asset taken over by one of the partners
Answer: A
Question64: On dissolution of a firm, out of the proceeds received from the sale of assets ………… wiltjbe paid first of all
a) Partner’s Capital
b) Partner’s Loan to Firm
c) Partner’s additional capital
d) Outside Creditors
Answer: D
Question65: On firm’s dissolution, on realisation of goodwill (which was shown in Balance Sheet) will be credited to :
a) Cash A/c
b) Realisation A/c
c) Profit & Loss A/c
d) None of the A/c
Answer: B
