Partnership

Dissolution

Medium

common

Choose combination of statements that are true about dissolution-

(A) Dissolution of partnership can not take place without intervention of the court.

(B) Court can order a firm to be dissolved when a partner becomes insane.

(C) A firm is compulsorily dissolved when a partner decide to retire.

(D) A partnership is dissolved when there is a death of a partner.

Choose the correct answer from the options given below:

(B) and (D) only

(A), (B) and (D) only

(A) and (D) only

(B), (C) and (D) only

(B) and (D) only

(A), (B) and (D) only

(A) and (D) only

(B), (C) and (D) only

✅ Correct Option: 1

Analyzing each statement about dissolution of partnership:

(A) Dissolution of partnership cannot take place without intervention of the court - FALSE

Dissolution can occur through various ways without court intervention:

By mutual agreement among partners
By notice (in partnership at will)
On expiry of fixed term
On completion of venture

Court intervention is required only in specific circumstances like disputes or when partners cannot agree.

(B) Court can order a firm to be dissolved when a partner becomes insane - TRUE

Under the Indian Partnership Act, 1932, a court may order dissolution when a partner becomes of unsound mind. This falls under dissolution by court order due to partner's incapacity.

(C) A firm is compulsorily dissolved when a partner decides to retire - FALSE

Retirement of a partner leads to reconstitution, not compulsory dissolution. The remaining partners can continue the business with mutual consent. The partnership agreement determines whether the firm continues or dissolves.

(D) A partnership is dissolved when there is death of a partner - TRUE

As per Section 42 of the Partnership Act, death of a partner dissolves the firm (subject to contract between partners). Unless there's a prior agreement stating the firm will continue, death automatically dissolves the partnership.

Note: If the partnership deed provides that the firm will continue after a partner's death, then only reconstitution occurs, not dissolution. However, the default legal position is dissolution.

Correct statements: (B) and (D) only

Answer: Option 1

2026: 31 May Shift 1

When realisation expenses are paid by the firm on behalf of a partner, such expenses are debited to:

2025: 4 June Shift 2

In case of Fixed Capital Method, at the time of dissolution of a firm, An un-recorded asset are taken over by a partner, which Journal Entry will be recorded in the books of the Partnership Firm :-

2023: 29 May Shift 2

Identify the amount realised in cash from Sundry Debtors.

2026: 21 May Shift 1

Dissolution of a Firm means:

2025: 27 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Compulsory Dissolution	(I) A partner persistently commits breach of partnership agreement.
(B) Happening of contingencies	(II) Death of a partner
(C) Dissolution by Court	(III) According to contract between the partners.
(D) Dissolution by agreement	(IV) Business becomes illegal

Choose the correct answer from the options given below:

(A) - (IV), (B) - (I), (C) - (III), (D) - (II)
(A) - (II), (B) - (I), (C) - (IV), (D) - (III)
(A) - (IV), (B) - (II), (C) - (I), (D) - (III)
(A) - (III), (B) - (IV), (C) - (I), (D) - (II)

2025: 22 May Shift 2

Match List-I with List-II

List-I	List-II
(Transaction)	(Relevant account)
(A) Settlement of Partners Loan	(I) Credit side of Realization A/c
(B) Transfer of liabilities	(II) Partner's Capital will be credited
(C) Transfer of Assets	(III) Credit Side of Bank A/c
(D) Remuneration payable to partner	(IV) Debit Side of Realization A/c

Choose the correct answer from the options given below:

Solution

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