Class 12 Accountancy - Chapter Dissolution of a Partnership Firm NCERT Solutions | Explain the process dissolution of partn
Explain the process dissolution of partnership firm?
Dissolution means breaking of relationship among the partners. As per Section 39 of the Indian Partnership Act 1932 the dissolution of firm implies that not only partnership is dissolved but the firm losses its existence i.e. after dissolution the firm does not remain in business. Dissolution of partnership firm implies discontinuation of the business of the partnership firm. Dissolution involves winding up of business disposal of assets and paying off the liabilities and distribution of any surplus or borne of loss by the partners of the firm. As per thePartnership Act 1932 a partnership firm may be dissolved in the following manners.
i) Dissolution by Agreement: As a firm is formed with the consent of all partners with a mutual agreement. Dissolution can also be there with the help of agreement. It happens in following two ways. A firm may be dissolved a When all the partners 10 agree to dissolve the firm. b When there is any term related to dissolution of firm in the partnership agreement.
ii) Compulsory Dissolution: A firm may be dissolved compulsorily in the following condition a In case all the partners or all except one partner become insolvent or insane. b If the business becomes illegal. c Where all the partners except one decide to retire from the firm. d Where all the partners except one die.
iii) Dissolution by Notice: When partnership is at will then the partnership firm
may be dissolved if any partner give notice in writing to all the other partners expressing his/her intention to dissolve the firm.
iv) Dissolution by Court: A court may order for dissolution if a suit is filed by a
partner as per Section 44 of Indian Partnership Act 1932. The court may order to
dissolve a partnership in following conditions:
a) A partner becomes insane.
b) A partner commits breach of agreement wilfully.
c) When a partner’s conduct affects the business.
d) When a partner transfers his interest to a third party.
e) If business cannot be continued.
f) If a partner becomes incapable of doing business.
g) If court thinks dissolution to be just and equitable on any ground. Besides these above mentioned circumstances a partnership firm may be dissolved if the court at any stage finds dissolution of the firm to be justified and inevitable.
More Questions From Class 12 Accountancy - Chapter Dissolution of a Partnership Firm
- Q:-
State the difference between dissolution of partnership and dissolution of partnership firm.
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On dissolution, how will you deal with partner’s loan if it appears on the
(a) assets side of the balance sheet, (b) liabilities side of balance sheet. - Q:-
State the accounting treatment at the time of dissolution of a firm for:
i. Unrecorded assets ii. Unrecorded liabilities - Q:-
How deficiency of crditors is paid off at the time of dissolution of firm.
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What is a Realisation Account?
- Q:-
Reproduce the format of Realisation Account.
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State the order of settlement of accounts on dissolution.
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On what account realisation account differs from revaluation account.
- Q:-
Distinguish between firm’s debts and partner’s private debts.
Popular Questions of Class 12 Accountancy
- Q:-
Mohan and Shyam are partners in a firm. State whether the claim is valid if the partnership agreement is silent in the following matters:
(i) Mohan is an active partner. He wants a salary of Rs. 10,000 per year;
(ii) Shyam had advanced a loan to the firm. He claims interest @ 10% per annum;
(iii) Mohan has contributed Rs. 20,000 and Shyam Rs. 50,000 as capital. Mohan wants equal share in profits.
(iv) Shyam wants interest on capital to be credited @ 6% per annum. - Q:-
Identify various matters that need adjustments at the time of admission of a new partner.
- Q:-
What are the different ways in which a partner can retire from the firm?
- Q:-
State whether the following statements are true or false:
(i) Valid partnership can be formulated even without a written agreement between the partners;
(ii) Each partner carrying on the business is the principal as well as the agent for all the other partners;
(iii) Maximum number of partners can be 50;
(iv) Methods of settlement of dispute among the partners can’t be part of the partnership deed;
(v) If the deed is silent, interest at the rate of 6% p.a. would be charged on the drawings made by the partner;
(vi) Interest on partner’s loan is to be given @ 12% p.a. if the deed is silent about the rate. - Q:-
Why it is necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?
- Q:-
Write the various matters that need adjustments at the time of retirement of partner/partners.
- Q:-
What is sacrificing ratio? Why is it calculated?
- Q:-
On what occasions sacrificing ratio is used?
- Q:-
If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?
- Q:-
Why there is need for the revaluation of assets and liabilities on the admission of a partner?
Recently Viewed Questions of Class 12 Accountancy
- Q:-
List the items which may be debited or credited in capital accounts of the partners when:
(i) Capitals are fixed.
(ii) Capital are fluctuating. - Q:-
What is subscription? How is it calculated?
- Q:-
Give two circumstances under which the fixed capitals of partners may change.
- Q:-
What is sacrificing ratio? Why is it calculated?
- Q:-
Why it is necessary to ascertain new profit sharing ratio even for old partners when a new partner is admitted?
- Q:-
If some goodwill already exists in the books and the new partner brings in his share of goodwill in cash, how will you deal with existing amount of goodwill?
- Q:-
On what occasions sacrificing ratio is used?
- Q:-
Why is Profit and Loss Adjustment Account prepared? Explain.
- Q:-
State the meaning of ‘Not- for- Profit’ Organisations.
- Q:-
Define Partnership Deed.
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