Chapter dissolution-of-partnership-firm: Dissolution of Partnership Firm Assertion-Reason Questions | accountancy Class 12 CBSE

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 1

Logic Check

Assertion (A): On dissolution of a firm, cash and bank balances are not transferred to the Realisation Account. Reason (R): Cash and bank are already in liquid form and do not need to be realised; only non-cash assets need to go through the realisation process.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 2

Logic Check

Assertion (A): On dissolution, General Reserve is transferred directly to Partners' Capital Accounts in profit sharing ratio. Reason (R): General Reserve represents accumulated profits of the firm and not an external liability, so it belongs to partners.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 3

Logic Check

Assertion (A): Dissolution of a firm necessarily involves dissolution of partnership. Reason (R): When a firm is dissolved, all partners cease to have any economic relationship, which means the partnership between them also ends.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 4

Logic Check

Assertion (A): Dissolution of partnership does not necessarily involve dissolution of the firm. Reason (R): When a new partner is admitted or a partner retires, the firm may continue under a new agreement, only the previous partnership arrangement changes.

Reasoning Options

ByteNotes

Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 5

Logic Check

Assertion (A): Fictitious assets like Preliminary Expenses or Discount on Issue of Debentures are transferred to the Realisation Account on dissolution. Reason (R): Fictitious assets have no realisable value and should be written off against Partners' Capital Accounts.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 6

Logic Check

Assertion (A): When a creditor accepts an asset at a value higher than the amount due to him, he pays the excess to the firm. Reason (R): The firm gives the asset in settlement of the liability; if asset value exceeds liability, the creditor must pay the difference.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 7

Logic Check

Assertion (A): At the time of dissolution, a partner's loan appearing on the liability side is paid before the partner's capital. Reason (R): As per Section 48, application of assets follows a priority order where partner loans (advances) are paid before partner capitals.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 8

Logic Check

Assertion (A): Provision for Depreciation Account is transferred to the Credit side of the Realisation Account on dissolution. Reason (R): Provisions are similar to liabilities and reduce the book value of assets; hence they are credited to Realisation Account.

Reasoning Options

ByteNotes

Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 9

Logic Check

Assertion (A): No journal entry is required when a creditor accepts a firm's asset in full and final settlement of his dues. Reason (R): The asset has already been transferred to the Realisation Account, and the creditor liability has been credited to Realisation Account; both sides are already accounted for.

Reasoning Options

ByteNotes

Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 10

Logic Check

Assertion (A): In Garner vs. Murray case, the capital loss due to an insolvent partner is shared by solvent partners in their profit sharing ratio. Reason (R): All losses including capital losses are normally distributed in profit sharing ratio among partners.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 11

Logic Check

Assertion (A): Realisation Account is prepared to find out profit or loss arising from realisation of assets and payment of liabilities on dissolution. Reason (R): Realisation Account serves the same purpose as the Revaluation Account prepared during reconstitution of a firm.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 12

Logic Check

Assertion (A): When a partner agrees to bear the realisation expenses and pays them personally, no entry is recorded in the firm's books. Reason (R): Since neither the firm's cash is used nor the Realisation Account is affected, there is no need for any entry in the firm's books.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 13

Logic Check

Assertion (A): A firm can be compulsorily dissolved when the business becomes illegal. Reason (R): Compulsory dissolution occurs when a firm cannot legally continue its business operations, such as when its activities violate the law.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 14

Logic Check

Assertion (A): On dissolution, sundry debtors are transferred to the Realisation Account at their gross value (before deducting provision). Reason (R): The provision for doubtful debts is transferred separately to the Credit side of the Realisation Account.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 15

Logic Check

Assertion (A): Private property of a partner includes the personal property of his wife. Reason (R): A partner's private property is separate from the firm's property and is first used to pay private debts.

Reasoning Options

ByteNotes

Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 16

Logic Check

Assertion (A): Partner's loan appearing on the liabilities side of the Balance Sheet is transferred to the Realisation Account on dissolution. Reason (R): Partner's loan is paid out of the proceeds before returning capital to partners.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 17

Logic Check

Assertion (A): When a firm is dissolved by notice, a written notice must be given by at least one partner to all other partners. Reason (R): Dissolution by notice is applicable only in case of a partnership at will.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 18

Logic Check

Assertion (A): On dissolution, remuneration allowed to a partner for dissolution work is debited to Realisation Account. Reason (R): Remuneration to a partner is a cost of realisation and increases the total cost of dissolution, thereby reducing profit on realisation.

Reasoning Options

ByteNotes

Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 19

Logic Check

Assertion (A): When an unrecorded asset is taken over by a partner, the entry is: Partner's Capital A/c Dr., To Realisation A/c. Reason (R): Unrecorded assets are not part of the original Realisation Account, so when discovered they are treated as fresh income to the firm.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 20

Logic Check

Assertion (A): After dissolution, the books of account of the firm are closed permanently. Reason (R): On dissolution, all accounts are settled, assets are sold, liabilities are paid, and the firm ceases to exist, making further accounting unnecessary.

Reasoning Options

ByteNotes

Chapter sections

Chapter dissolution-of-partnership-firm: Dissolution of Partnership Firm | Assertion-Reason

Assertion (A): On dissolution of a firm, cash and bank balances are not transferred to the Realisation Account. Reason (R): Cash and bank are already in liquid form and do not need to be realised; only non-cash assets need to go through the realisation process.

Assertion (A): On dissolution, General Reserve is transferred directly to Partners' Capital Accounts in profit sharing ratio. Reason (R): General Reserve represents accumulated profits of the firm and not an external liability, so it belongs to partners.

Assertion (A): Dissolution of a firm necessarily involves dissolution of partnership. Reason (R): When a firm is dissolved, all partners cease to have any economic relationship, which means the partnership between them also ends.

Assertion (A): Dissolution of partnership does not necessarily involve dissolution of the firm. Reason (R): When a new partner is admitted or a partner retires, the firm may continue under a new agreement, only the previous partnership arrangement changes.

Assertion (A): Fictitious assets like Preliminary Expenses or Discount on Issue of Debentures are transferred to the Realisation Account on dissolution. Reason (R): Fictitious assets have no realisable value and should be written off against Partners' Capital Accounts.

Assertion (A): When a creditor accepts an asset at a value higher than the amount due to him, he pays the excess to the firm. Reason (R): The firm gives the asset in settlement of the liability; if asset value exceeds liability, the creditor must pay the difference.

Assertion (A): At the time of dissolution, a partner's loan appearing on the liability side is paid before the partner's capital. Reason (R): As per Section 48, application of assets follows a priority order where partner loans (advances) are paid before partner capitals.

Assertion (A): Provision for Depreciation Account is transferred to the Credit side of the Realisation Account on dissolution. Reason (R): Provisions are similar to liabilities and reduce the book value of assets; hence they are credited to Realisation Account.

Assertion (A): In Garner vs. Murray case, the capital loss due to an insolvent partner is shared by solvent partners in their profit sharing ratio. Reason (R): All losses including capital losses are normally distributed in profit sharing ratio among partners.

Assertion (A): Realisation Account is prepared to find out profit or loss arising from realisation of assets and payment of liabilities on dissolution. Reason (R): Realisation Account serves the same purpose as the Revaluation Account prepared during reconstitution of a firm.

Assertion (A): When a partner agrees to bear the realisation expenses and pays them personally, no entry is recorded in the firm's books. Reason (R): Since neither the firm's cash is used nor the Realisation Account is affected, there is no need for any entry in the firm's books.

Assertion (A): A firm can be compulsorily dissolved when the business becomes illegal. Reason (R): Compulsory dissolution occurs when a firm cannot legally continue its business operations, such as when its activities violate the law.

Assertion (A): On dissolution, sundry debtors are transferred to the Realisation Account at their gross value (before deducting provision). Reason (R): The provision for doubtful debts is transferred separately to the Credit side of the Realisation Account.

Assertion (A): Private property of a partner includes the personal property of his wife. Reason (R): A partner's private property is separate from the firm's property and is first used to pay private debts.

Assertion (A): Partner's loan appearing on the liabilities side of the Balance Sheet is transferred to the Realisation Account on dissolution. Reason (R): Partner's loan is paid out of the proceeds before returning capital to partners.

Assertion (A): When a firm is dissolved by notice, a written notice must be given by at least one partner to all other partners. Reason (R): Dissolution by notice is applicable only in case of a partnership at will.

Assertion (A): On dissolution, remuneration allowed to a partner for dissolution work is debited to Realisation Account. Reason (R): Remuneration to a partner is a cost of realisation and increases the total cost of dissolution, thereby reducing profit on realisation.

Assertion (A): When an unrecorded asset is taken over by a partner, the entry is: Partner's Capital A/c Dr., To Realisation A/c. Reason (R): Unrecorded assets are not part of the original Realisation Account, so when discovered they are treated as fresh income to the firm.

Assertion (A): After dissolution, the books of account of the firm are closed permanently. Reason (R): On dissolution, all accounts are settled, assets are sold, liabilities are paid, and the firm ceases to exist, making further accounting unnecessary.

Unlock all Assertion-Reason Questions

Practice in Quiz Mode