Partnership

Dissolution

Medium

Case study

A and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm. The position of Assets and Liabilities on the date of dissolution was:

Balance Sheet

Liabilities	Rs.	Assets	Rs.
Loan by B	20,000	Goodwill	30,000
Capitals		Furniture	40,000
A. 1,00,000		Building	90,000
B. 1,40,000	2,40,000	Debtors	50,000
		Cash	50,000
	2,60,000		2,60,000

It was agreed that following transactions will take place :

A. A wanted to start the business in sole proprietorship So he took Building and Furniture at 10% less than book value.

B. All the debtors proved good except a person C who did not pay Rs. 10,000.

Due to the ill health of B, they decided to dissolve the firm. It comes under ____ form of dissolution.

Dissolution by Notice

On the happening of certain contingencies

Dissolution by court

Dissolution by Agreement

✅ Correct Option: 4

When partners mutually decide to dissolve the firm (here, due to ill health of B, both agreed to dissolve), it is called Dissolution by Agreement under Section 40 of the Partnership Act. It is not by notice, court order, or specific contingency.

Question 42

The amount recovered from the debtors is:

Question 43

Following items appear on the Debit side of Realisation A/C except :

A. Transfer of Assets

B. Payment of liabilities

C. Provisions

D. Realisation expenses

E. Asset taken over by partner

Choose the correct answer from the options given below:

Question 44

The treatment of Goodwill appearing in the balance sheet will be:

Question 45

The accumulated profits and reserve are transferred to:

Due to the ill health of B, they decided to dissolve the firm. It comes under ____ form of dissolution.

Solution

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CUET Accountancy Past Year Questions (Topic-Wise)