These Multiple Choice Questions have been prepared based on the latest CBSE  syllabus and examination guidelines for Class 12 Accountancy. The following Class 12 MCQ Questions of Dissolution of a Partnership Firm with Answers can help you to practice and get better marks in the upcoming class 12 accountancy examination. Students of class 12 Accountancy should refer to MCQ Questions Class 12 Accountancy Dissolution of Partnership Firm with answers provided here which is an important chapter in Class 12 Accountancy

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1. In which condition a partnership firm is deemed to be dissolved?

(A) On a partner’s admission
(B) On retirement of a partner
(C) On expiry of the period of partnership
(D) On loss in partnership

2. Court can make an order to dissolve the firm when :

(A) Some partner has become fully mad
(B) Partnership deed is fully followed
(C) Continued future profits are expected
(D) Firm is running legal business

3. On dissolution of a firm, realisation account is debited with

(A) All assets to be realised
(B) All outside liabilities of the firm
(C) Cash received on sale of assets
(D) Any asset taken over by one of the partners

4. On dissolution of a firm, out of the proceeds received from the sale of assets will be paid first of all

(A) Partner’s Capital
(B) Partner’s Loan to Firm
(C) Partner’s additional capital
(D) Outside Creditors

5. At the time of dissolution of firm, “Loan of partners” (Loans given by partners to the firm) is paid out of the amount realised on sale of assets :

(A) After making the payment of loans given by third party
(B) After making the payment of balance of Capital Accounts of partners
(C) After making the payment of above (A) and (B)
(D) Before the payment of loans given by third party

6. At the time of dissolution of firm, at which stage the balance of partner’s capital accounts is paid?

(A) After making the payment to third party’s loans
(B) Before making the payment of partners in respect of their loans
(C) After making the payment to third party for their loans as well as partners loans
(D) None of the above.

7. Which of the following is not the mode of dissolution of the firm?

a) By Mutual Agreement
b) On happening of an event
c) Dissolution by court
d) Retirement of a partner

8. At the time of dissolution of firm, Loan given by partner to the firm is paid out of the amount realised on sale of assets

a) after payment of outside liabilities but before repayment of capital.
b) after payment of capital of partners
c) after payment of outside liabilities or capital
d) before payment of outside liabilities

9. At the time of dissolution of firm, at what stage the balances of partner’s Capital Accounts are paid?

a) After payment of Outsider’s liabilities
b) Before payment of loan by partner
c) After payment of outsiders liabilities and Partners loan
d) Before payment of outside liabilities

10. On dissolution, if a partner pays firm’s liability which of the following account is debited?

a) Profit and Loss Account
b) Realisation Account
c) Partner’s Capital Account
d) Cash Account

11. Amount received from sale of unrecorded asset at the time of dissolution of the firm is credited to

a) Partner’s Capital Account
b) Profit and Loss Account
c) Realisation Account
d) Cash Account

12. On Dissolution, Goodwill Account is transferred to

a) In the capital Accounts of Partners
b) On the credit of Cash Account
c) On the debit of Realisaiton Account
d) On the credit of Reasliation Account

13. The modes by which a firm may be dissolved are

a) All of the options
b) By Mutual agreement
c) Compulsory Dissolution
d) By Notice

14. The Account which is prepared on dissolution of a Partnership firm :

(a) Revaluation Account
(b) Realisation Account
(c) P&L Appropriation Account
(d) None of these

15. New ratio is not to be calculated on:

a. Admission of a partner
b. retirement of a partner
c. death of a partner
d. dissolution of a partnership

16. At the time of dissolution of the firm , if goodwill appears in the balance sheet , it is transferred to

a) Capital A/c
b) Revaluation A/c
c) Realisation A/c
d) Current Account

17. Unrecorded assets when realised is credit to

a) Partners capital A/c
b) Realisation A/c
c) Current Account
d) None of the options

18.  At the time of dissolution of partnership an unrecorded asset taken by X a partner is debited to:

a. X capital account
b. realisation account
c. cash account
d. none of the above

19. Unrecorded liability when paid on dissolution of a firm is defined to :

(a) Realisation Account
(b) Partners’ Capital Accounts
(c) Liability Account
(d) None of these. 

20. Dissolution of the firm means

a) All of the options

b) Business of the firms ends

c) Assets Sold

d) Liabilities paid

21. The modes by which a firm may be dissolved are

a) All of the options

b) By Mutual agreement

c) Compulsory Dissolution

d) By Notice

22. Why is realisation account prepared

a) Closing the accounts

b) Opening the account

c) For profit sharing

d) None of the options

23. How will goodwill account appearing in the balance sheet be treated in case of dissolution of the firm

a) By transferring to realisation A/c (Dr. Side)

b) By transferring to realisation A/c (Cr. Side)

c) Both Side

d) None of the options

24. How will you treat accumulated profit/losses at the time of dissolution of the firm

a) Transferred to partners Capital A/C

b) Transferred to partners Capital A/C

c) Transferred to partners Salary A/C

d) None of the options

25. what will be the accounting treatment of balance of the realisation account

a) Transferred to partners Capital A/C in their profit sharing ratio

b) Transferred to partners Capital A/C in their old ratio

c) Transferred to partners Capital A/C in their new ratio

d) None of the options

Answer:

1. Answer (C) On expiry of the period of partnership

2. Answer (A) Some partner has become fully mad

3. Answer  (A) All assets to be realised

4. Answer (D) Outside Creditors

5. Answer (A) After making the payment of loans given by third party

6. Answer (C) After making the payment to third party for their loans as well as partners loans

7. Answer (d) Retirement of a partner

8. Answer (a) after payment of outside liabilities but before repayment of capital.

9. Answer (c) After payment of outsiders liabilities and Partners loan

10. Answer (b) Realisation Account

11. Answer (c) Realisation Account

12. Answer (c) On the debit of Realisaiton Account

13. Answer (a) All of the options

14. Answer (b) Realisation Account.

15. Answer  (d) dissolution of a partnership

16. Answer (c) Realisation A/c

17. Answer (c) Realisation A/c

18. Answer (a) X capital account

19. Answer (a) Realisation Account.

20. Answer (a) All of the options

21. Answer (a) All of the options

22. Answer (a) Closing the accounts

23. Answer (a) By transferring to realisation A/c (Dr. Side)

24. Answer (a) Transferred to partners Capital A/C

25. Answer (a) Transferred to partners Capital A/C in their profit sharing ratio