Online Test — Dissolution of a Partnership Firm
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
Dissolution of the FIRM means the business is:
Continued
Closed down completely
Admitted
Reconstituted
Explanation: The firm ceases to exist.
Question 2 of 15
Admission and retirement are examples of dissolution of:
The firm
Partnership (relationship)
The court
Cash
Explanation: They change the relationship; the business continues.
Question 3 of 15
In a partnership at will, a firm may be dissolved by:
Notice by a partner
Only a court
Only death
Never
Explanation: A partner's notice dissolves a partnership at will.
Question 4 of 15
The account opened on dissolution of the firm is the:
Revaluation A/c
Realisation A/c
Appropriation A/c
Current A/c
Explanation: The Realisation Account records winding up.
Question 5 of 15
Which is NOT transferred to the Realisation Account?
Machinery
Debtors
Cash/Bank
Creditors
Explanation: Cash/bank is the medium of payment, not transferred.
Question 6 of 15
Assets are transferred to the Realisation Account at:
Market value
Book value
Realised value
Zero
Explanation: Assets go in at book value (except cash).
Question 7 of 15
Outside liabilities are transferred to the ____ of the Realisation Account.
Debit side
Credit side
Both sides
Neither
Explanation: Liabilities are credited to Realisation.
Question 8 of 15
Machinery (book 50,000) sold for 60,000 is recorded by:
Cash A/c Dr 60,000; To Realisation A/c 60,000
Realisation A/c Dr 60,000
Cash A/c Dr 50,000
No entry
Explanation: Actual cash realised is debited to cash, credited to Realisation.
Question 9 of 15
If a partner takes over an asset, his capital is ____ and Realisation credited.
Credited
Debited
Ignored
Doubled
Explanation: His capital is debited with the agreed value.
Question 10 of 15
Profit or loss on realisation is shared in the:
Capital ratio
Profit-sharing ratio
Gaining ratio
Equal ratio
Explanation: It is shared in the PSR.
Question 11 of 15
Under Section 48, payment is made FIRST to:
Partners' capital
Outside liabilities
Surplus to partners
Partner's loan
Explanation: Outside liabilities and expenses come first.
Question 12 of 15
A partner's loan is paid:
Before outside creditors
After outside creditors but before capital
After capital
Last of all
Explanation: Partner's loan ranks after creditors, before capital.
Question 13 of 15
Realisation expenses are recorded by debiting:
Cash A/c
Realisation A/c
Capital A/c
Reserve
Explanation: Realisation A/c Dr; To Cash for expenses.
Question 14 of 15
Accumulated reserves on dissolution are transferred to:
Realisation A/c
Partners' capitals directly (in PSR)
Cash A/c
Creditors
Explanation: Reserves go directly to capitals, not through Realisation.
Question 15 of 15
When fully wound up, the Realisation, Cash and Capital accounts all close to:
A profit
Nil
A loss
A loan
Explanation: All accounts close to nil when the firm is wound up.