Partnership Accounts : Dissolution of Firm — Flashcards

Answer

Dissolution of a firm means the business closes down completely. Assets are disposed off, liabilities are paid off, and the accounts of all partners are settled. Section 39 of the Indian Partnership A…

Answer

Dissolution of partnership means the relationship of some partners with the firm ends, while the remaining partners continue the business. Dissolution of firm means the business ends completely and al…

Answer

A Realisation Account is a new nominal account opened on dissolution of a firm to find out profit or loss on realisation of assets and payment of third-party liabilities. Its balance is transferred to…

Answer

It is prepared to calculate profit or loss from selling assets and paying outside liabilities during dissolution. It helps close the books of the firm after all assets and liabilities are settled.

Answer

All assets except cash, bank, debit balance of partners’ capital/current accounts, loan to partner, and fictitious assets are transferred to the debit side of Realisation Account at book value. If the…

Answer

All liabilities except undistributed profits, partners’ capital/current accounts, and loan from partners are transferred to the credit side of Realisation Account at book value. If the question is sil…

Answer

Balance of partner’s loan account, partners’ capital accounts, and cash/bank account are not transferred to Realisation Account. Undistributed profits are also not transferred to Realisation Account; …

Answer

Goodwill is treated like any other asset on dissolution. If nothing is mentioned about its realisation, it is assumed to be valueless and nothing is received for it.