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Punjab (PTB) · Chapter test · Free

2nd Year Principles of Accounting Chapter 9 TestPartnership Accounts Dissolution of the Firm

30 marks · 40 minutes · 21 questions. Covers: CHAP 9: Partnership Accounts Dissolution of the Firm.

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2nd Year Principles of Accounting Chapter 9 Test

2nd Year · Principles of Accounting · Punjab (PTB)

Name: ____________Roll No: ________Class/Section: ________Date: ________Total marks: 30Time: 40 minutes

Q1. Multiple choice questions (Attempt all · 10 × 1 = 10)

  1. The journal entry, for assets taken over by a partner, in case of dissolution will be:

    1. Partner’s capital a/c …Dr To realization a/c

    2. Realization a/c …Dr To liabilities a/c

    3. Cash a/c ..Dr To realization a/c

    4. Realization a/c…Dr To assets a/c

  2. The journal entry, for sale of various assets for cash, in case of dissolution will be:

    1. Liabilities a/c  …Dr To cash a/c

    2. Cash a/c  ..Dr To realization a/c

    3. Cash a/c …Dr To asset a/c

    4. Asset a/c …Dr To realization a/c

  3. Dissolution due to completion of venture, death of partner, insolvency of partner or expiry of the terms fixed is called:

    1. Dissolution by agreement

    2. Dissolution of notice

    3. Dissolution on the happening of certain contingencies

    4. Dissolution by court

  4. In case of dissolution, the payment of liabilities should be credited to:

    1. Realization

    2. Cash account

    3. Profit and loss account

    4. Liabilities account

  5. In case of dissolution, assets sold for cash are debited to:

    1. Realization account

    2. Assets account

    3. Profit and loss account

    4. Cash account

  6. It is prepared to find out the result of dissolution, i.e profit or loss:

    1. Realization account

    2. Revaluation account

    3. Profit and loss account

    4. Profit and loss appropriation account

  7. The journal entry, for the payment of unrecorded liability, in case of dissolution will be:

    1. Liabilities a/c…Dr To cash a/c

    2. Realization a/c….Dr To cash a/c

    3. Cash a/c …Dr To realization a/c

    4. Realization a/c …Dr To liabilities a/c

  8. The journal entry, for expense on realization will be:

    1. Realization a/c …Dr To cash a/c

    2. Expenses a/c…Dr To cash a/c

    3. Expenses a/c…Dr To profit & loss a/c

    4. Profit & loss a/c..Dr To expenses a/c

  9. The end or termination of partnership is called:

    1. Admission

    2. Retirement

    3. Death

    4. Dissolution

  10. According to the decision of Garner Vs Murray rule, the loss of insolvent partner is to be shared by solvent partners in the:

    1. New profit sharing ratio

    2. Old profit sharing ratio

    3. Capital ratio

    4. Gaining ratio

Q2. Short questions (Attempt any 6 of 8 · 6 × 2 = 12)

  1. Pass journal entry, for sale of unrecorded asset in case of dissolution of firm.

  2. Pass journal entry, for transfer of undivided profit in case of dissolution of firm.

  3. Pass journal entry, for closing various liabilities account in case of dissolution of firm.

  4. Pass journal entry, for transferring loss on realization in case of dissolution of firm.

  5. What is realization account?

  6. Pass the journal entry, for repayment of partner’s loan in case of dissolution of firm.

  7. What is the difference between dissolution of partnership and dissolution of the firm?

  8. What is compulsory dissolution or dissolution by the operation of law of a firm?

Q3. Long questions (Attempt any 2 of 3 · 2 × 4 = 8)

  1. The balance sheet of O, P, Q and R showed the following position on dissolution:

    Dr.   Cr.  
    Assets Rs. Liabilities Rs.
    Cash at bank 34,000 Creditors 10,000
    Q’s Capital a/c 10,000 O’s capital 15,000
    R’s Capital a/c 3000 P’s Capital 10,000
        Realisation profit 12,000
      47,000   47,000

    Show the final adjustment among the partners assuming that R is insolvent.

  2. A, B and C are partners sharing profits and losses in the proportion of one – half, one – third and one – sixth respectively. The firm balance sheet as on 31st December 2022 was as follows:

    Assets Rs. Liabilities Rs.
    Cash at bank 14,000 Creditors 31,500
    Debtors 32,600 Loan on mortgage 4,500
    Stock 22,400 A’s Capital 30,000
    Fixed assets 15,000 B’s Capital 20,000
    C’s Capital overdrawn 2,000    
      86,000   86,000

    It was resolved the partnership as on this date. The fixed assets and stock realised Rs. 35,000. Bad debts and discounts allowed amounted Rs. 1,600. The mortgage loan was paid off. The creditors paid less discounts of 5%.
    There was a claim for damages pending against the firm which was settled Rs. 5,600. The expenses of realisation was amounted to Rs. 375.
    After realisation of assets C was adjudicated an as insolvent and a dividend of 25 paise in rupee was received in respect of the firm’s claim against his estate.
    You are required to close the books of the firm in accordance with the decision in Garner vs. Murray.

  3. The balance sheet of the firm showed the following position on 31st December 2022.

    Assets Rs. Liabilities Rs.
    Buildings 80,000 Partner capital  
    Investments 20,000 Accounts:  
    Debtors 10,000 D                  65,000  
    Cash balance 30,000 E                   55,000 120,000
      140,000   140,000

    The partnership was dissolved on 31st December 2022. Creditors were paid at 5% discount. D agreed to take over the building at Rs. 90,000, E took over the investments at Rs, 52,000 and debtors at Rs. 6000.
    Prepare realizing account and close the books of the firm.