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Q1 State the difference between dissolution of partnership and dissolution of partnership firm. Ans: The difference between the Dissolution’ of Partnership and Dissolution of Partnership Firm is as follows.
Q2 State the accounting treatment at the time of dissolution of a firm for: i. Unrecorded assets ii. Unrecorded liabilities Ans: (i) Accounting Treatment for Unrecorded Assets Unrecorded asset is an asset, which have not been shown in the books of account or which has been written off in the books of accounts, but the asset is still available in physical condition. Sometimes it is sold outside for cash and sometimes it is taken away by the partner. The accounting treatment for unrecorded asset will be there according
to the situation.(a) When the unrecorded asset is sold for cash the following Journal Entry will be there:
Cash A/c. Dr.
To Realisation A/c(Being unrecorded assets sold for cash)
(b) When the unrecorded asset is taken over by any partner the following Journal Entry will be there:
Partners Capital A/c Dr.
To Realisation A/c(Being unrecorded assets taken over by the partner)
(ii) Accounting Treatment for Unrecorded Liabilities Unrecorded liabilities are
those liabilities, which have not been shown in the books of account. But at the time of dissolution they are required to be paid off. The following Journal Entry will be there as per situation.(a) When the unrecorded liability is paid off the following Journal Entry will be there:
Realisation A/c. Dr.
To Cash A/c
(Being unrecorded liability paid in cash)
(b) When the unrecorded liability is taken over by a partner. The following
Journal Entry will be there:Realisation A/c. Dr.
To Partners Capital A/c(Being unrecorded liability taken over by the partner)
Q3 On dissolution, how will you deal with partner’s loan if it appears on the (a) assets side of the balance sheet, (b) liabilities side of balance sheet. Ans: (a) When loan amount is shown in the assets side of the balance sheet, it
indicate that the loan has been granted by the firm to the partner. In that case, at the time of dissolution the amount of loan will be transferred to the concerned
partner’s capital account. The following Journal Entry will be passed:Partners Capital A/c. Dr.
To Partners Loan A/c(Being partners loan amount is transferred to partners capital account)
(b) When the amount of loan appears in the liabilities side of the balance sheet, it indicate that the respective partner or partners have given loan to the firm. In this case, partner’s loan will be paid off after paying all the external liabilities first.
Here, it is worth mentioning that the partner’s loan will not be transferred to the
realisation account, in fact, it will be paid in cash. The following accounting entry will be passed in this regard:Partners Loan A/c. Dr.
To Cash/Bank A/c
(Being loan taken from partner is paid in cash)
Q4 Distinguish between firm’s debts and partner’s private debts. Ans: OUR EXPERTS WILL GIVE THE ANSWER SOON
Q5 State the order of settlement of accounts on dissolution. Ans: OUR EXPERTS WILL GIVE THE ANSWER SOON
Q6 On what account realisation account differs from revaluation account. Ans: OUR EXPERTS WILL GIVE THE ANSWER SOON