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CBSE · Class 12 · Accountancy

Dissolution of Partnership Firm

Standard difficulty · 20 questions · 40 marks · Time: 43 minutes

Name: Date: Score: ____ / 40

Show your working for Sections B and C. Answers are on the last page — try every question first!

Section A — Choose the correct answer8 × 1 = 8 marks
1.
On dissolution, assets and outside liabilities are transferred to the:
  1. Profit and Loss Appropriation Account
  2. Capital Reserve
  3. Revaluation Account
  4. Realisation Account
2.
A firm is dissolved because a partner of a partnership at will gives notice to dissolve it. This is:
  1. dissolution by notice
  2. dissolution of partnership only
  3. dissolution on the happening of a contingency
  4. dissolution by the court
3.
On dissolution, a partner pays the realisation expenses. The journal entry is:
  1. Bank A/c Dr. To Realisation A/c
  2. Partners’ Capital A/cs Dr. To Realisation A/c
  3. Partner’s Capital A/c Dr. To Realisation A/c
  4. Realisation A/c Dr. To Partner’s Capital A/c
4.
On dissolution, which of these is transferred to the DEBIT of the Realisation Account?
  1. buildings
  2. bank loan
  3. outstanding expenses
  4. creditors
5.
Assets other than cash of ₹3,24,000 were sold for ₹3,15,000. Creditors of ₹60,000 were paid ₹60,000, and realisation expenses were ₹1,500. What is the result of realisation?
  1. loss of ₹12,000
  2. profit of ₹10,500
  3. loss of ₹10,500
  4. loss of ₹9,000
6.
Arjun and Vikram share profits 5 : 2. On dissolution, the loss on realisation is ₹14,000. How much is debited to Arjun’s capital account?
  1. ₹10,000
  2. ₹4,000
  3. ₹14,000
  4. ₹7,000
7.
On dissolution, creditors of ₹20,000 accepted payment at a discount of 20%. How much cash is paid to them?
  1. ₹16,000
  2. ₹4,000
  3. ₹20,000
  4. ₹18,000
8.
On dissolution, a firm had cash of ₹14,000. It realised ₹2,66,000 from its other assets, paid creditors ₹36,000 and realisation expenses of ₹1,000. How much cash is left to pay the partners?
  1. ₹2,39,000
  2. ₹2,44,000
  3. ₹2,29,000
  4. ₹2,43,000
Section B — Short answer8 × 2 = 16 marks
9.
Distinguish between dissolution of partnership and dissolution of the firm.
10.
Give an example of each: (a) dissolution by the court (b) compulsory dissolution
11.
On dissolution: assets (other than cash) of ₹3,69,000 realised ₹3,65,000; creditors of ₹80,000 were paid ₹76,000; realisation expenses were ₹1,200. Find the profit or loss on realisation.
12.
On dissolution of the firm, partner Isha takes over a computer at an agreed value of ₹40,000. Pass the journal entry.
13.
Partner Isha is to carry out the dissolution for a remuneration of ₹10,000 and bear the realisation expenses. The actual expenses of ₹8,500 are paid by the firm on Isha’s behalf. Pass the journal entries for the remuneration and the expenses paid.
14.
Vikram, Zoya and Isha share profits 4 : 3 : 2. On dissolution, the loss on realisation is ₹45,000. How much does each partner bear? (a) Vikram (b) Zoya (c) Isha
15.
Priya and Asha share profits 3 : 2. At dissolution Priya’s capital is ₹60,000, the general reserve is ₹25,000 and the realisation shows a loss of ₹6,000. How much is finally paid to Priya?
16.
On dissolution, creditors of ₹64,000 accept furniture valued at ₹34,000 in part payment, and the rest in cash. How much cash is paid to them?
Section C — Word problems4 × 4 = 16 marks
17.
Explain the different modes of dissolution of a partnership firm.
18.
Ananya and Vikram share profits 5 : 2 and dissolve their firm. Balance sheet: Capitals: Ananya ₹1,20,000, Vikram ₹1,40,000; General reserve ₹7,000; Creditors ₹60,000. Assets: Cash ₹7,000, Stock ₹24,000, Debtors ₹39,000, Machinery ₹2,57,000. Stock realised ₹28,000, debtors ₹32,000 and machinery ₹2,56,000. Creditors were paid at a discount of 10%. Realisation expenses were ₹1,300. Prepare the Realisation Account.
19.
Rahul and Ananya share profits 5 : 3 and dissolve their firm. Balance sheet: Capitals: Rahul ₹1,10,000, Ananya ₹60,000; General reserve ₹32,000; Creditors ₹80,000. Assets: Cash ₹3,000, Stock ₹30,000, Debtors ₹18,000, Machinery ₹2,31,000. Stock realised ₹29,000, debtors ₹15,000 and machinery ₹2,24,000. Creditors were paid in full. Realisation expenses were ₹1,000. Find the amount finally paid to (a) Rahul (b) Ananya, and check it against the cash available.
20.
Rahul and Zoya share profits 1 : 1 and dissolve their firm. Balance sheet: Capitals: Rahul ₹1,10,000, Zoya ₹40,000; General reserve ₹2,000; Creditors ₹20,000. Assets: Cash ₹9,000, Stock ₹28,000, Debtors ₹27,000, Machinery ₹1,08,000. Stock realised ₹33,000, debtors ₹20,000 and machinery ₹1,09,000. Creditors were paid in full. Realisation expenses were ₹1,000. Pass the journal entries for (i) transfer of the assets (ii) transfer of the creditors (iii) the assets realised (iv) the creditors paid and expenses (v) the result of realisation.
AmbifulWorksheets
Practice that never repeats
CBSE · Class 12 · Accountancy

Answer key

Dissolution of Partnership Firm · AW-12AC-DSL-2026-V1 · For parents — fold back or tear off before handing the sheet to your child.

QAnswerWorking
1(d) Realisation Account—
2(a) dissolution by notice—
3(d) Realisation A/c Dr. To Partner’s Capital A/c—
4(a) buildings—
5(c) loss of ₹10,500₹3,15,000 − ₹3,24,000 + ₹60,000 − ₹60,000 − ₹1,500
6(a) ₹10,000₹14,000 × 5/7
7(a) ₹16,000₹20,000 × 80/100
8(d) ₹2,43,000₹14,000 + ₹2,66,000 − ₹36,000 − ₹1,000
9Dissolution of partnership changes the relation among partners while the firm continues; dissolution of the firm ends the business and the relation of all partners.—
10(a) a partner becomes of unsound mind and another partner applies to the court (b) all the partners, or all but one, become insolvent—
11loss of ₹1,200₹3,65,000 + ₹80,000 − ₹3,69,000 − ₹76,000 − ₹1,200
12Isha’s Capital A/c Dr. ₹40,000
To Realisation A/c ₹40,000		the asset is already in the Realisation Account at book value
13(i) Realisation A/c Dr. ₹10,000
To Isha’s Capital A/c ₹10,000
(ii) Isha’s Capital A/c Dr. ₹8,500
To Bank A/c ₹8,500		the remuneration is a realisation expense; expenses paid for the partner are charged to the partner
14(a) ₹20,000; (b) ₹15,000; (c) ₹10,000₹45,000 shared 4 : 3 : 2
15₹71,400₹60,000 + reserve ₹15,000 − ₹3,600
16₹30,000₹64,000 − ₹34,000; only the cash paid is entered in the Realisation Account
17By agreement; compulsory dissolution (insolvency, illegal business); on a contingency (end of term, completion of venture, death or insolvency of a partner); by notice in a partnership at will; by order of the court.—
18Dr. side: Stock ₹24,000, Debtors ₹39,000, Machinery ₹2,57,000; Bank (creditors) ₹54,000; Bank (expenses) ₹1,300; Profit — Ananya ₹500, Vikram ₹200; total ₹3,76,000
Cr. side: Creditors ₹60,000; Bank (assets realised) ₹3,16,000; total ₹3,76,000		result profit of ₹700, shared 5 : 2
19(a) ₹1,22,500; (b) ₹67,500realisation loss of ₹12,000; Rahul: ₹1,10,000 + ₹20,000 − ₹7,500; Ananya: ₹60,000 + ₹12,000 − ₹4,500; cash ₹3,000 + ₹2,68,000 − ₹80,000 − ₹1,000 = ₹1,90,000
20(i) Realisation A/c Dr. ₹1,63,000
To Stock A/c ₹28,000
To Debtors A/c ₹27,000
To Machinery A/c ₹1,08,000
(ii) Creditors A/c Dr. ₹20,000
To Realisation A/c ₹20,000
(iii) Bank A/c Dr. ₹1,62,000
To Realisation A/c ₹1,62,000
(iv) Realisation A/c Dr. ₹21,000
To Bank A/c ₹21,000
(v) Rahul’s Capital A/c Dr. ₹1,000
Zoya’s Capital A/c Dr. ₹1,000
To Realisation A/c ₹2,000		creditors paid ₹20,000 + expenses ₹1,000; loss of ₹2,000 shared 1 : 1