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CA Foundation Dissolution of Partnership Firm — practice questions

Explore 3 free Dissolution of Partnership Firm questions in CA Foundation Accountancy. Open each question or exercise to read its content, reference answers and available explanation.

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Dissolution of Partnership Firm questions and exercises with answers

Showing questions 1–3 of 3.

Realisation A/c is prepared toRead the answer and worked solution →Profit or loss on realisation is shared among partners inRead the answer and worked solution →Under Garner v Murray rule, the deficiency of an insolvent partner is borne by solvent partners inRead the answer and worked solution →

Worked practice questions

Realisation A/c is prepared to

  1. Show new partners capital (typical) (typical) (typical)
  2. Record admission entries (typical) (typical) (typical)
  3. Record sale of assets and payment of liabilities on dissolution
  4. Compute goodwill (typical) (typical) (typical) (typical)
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Correct answer: C. Record sale of assets and payment of liabilities on dissolution

1. Realisation A/c is opened only on firm dissolution. 2. All assets (other than cash/bank) are transferred to its debit at book value; all external liabilities to its credit. 3. Cash realised from assets and paid to liabilities flows through it; balance is profit or loss on realisation. 4. Hence (B) is correct. _Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 6 "Dissolution of Partnership Firm", §6.3 ¶§6.3_

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Profit or loss on realisation is shared among partners in

  1. Sacrificing ratio
  2. Gaining ratio
  3. Capital ratio
  4. Profit-sharing ratio
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Correct answer: D. Profit-sharing ratio

1. Realisation profit/loss represents the firm's collective gain or loss on winding up. 2. It belongs to all partners in their profit-sharing ratio (PSR). 3. Sacrificing and gaining ratios arise only in reconstitution. 4. Hence (C) is correct. _Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 6 "Dissolution of Partnership Firm", §6.3 ¶§6.3_

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Under Garner v Murray rule, the deficiency of an insolvent partner is borne by solvent partners in

  1. Profit-sharing ratio (typical)
  2. Capital ratio (last agreed capitals)
  3. Equal ratio (typical) (typical)
  4. Sacrificing ratio (typical) (typical)
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Correct answer: B. Capital ratio (last agreed capitals)

1. The Garner v Murray principle (1904) addresses insolvency of a partner during dissolution. 2. Deficiency of the insolvent's capital is shared by solvent partners in proportion to their LAST AGREED capitals (not PSR). 3. The realisation loss continues to be shared in PSR; only the further deficiency follows capital ratio. 4. Hence (B) is the rule. _Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 6 "Dissolution of Partnership Firm", §6.4 ¶§6.4_

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More Accountancy topics

Partnership AccountsIntroduction to Accounting & Recording TransactionsAccounting for Partnership Firms: Retirement and Death of a PartnerCompany AccountsIndian Partnership Act 1932Analysis of Financial StatementsReconstitution AdmissionBills of Exchange