Which ONE of the following statements regarding the dissolution of a partnership is CORRECT?a.Upon dissolution of the partnership the partners are individually liable for the partnership’s obligations.b.Admitting a new member to an existing partnership does not create a new partnership.c.Upon dissolution of the partnership any surplus money after payment of creditors is divided amongst the partners.d.The dissolution of the partnership terminates the fiduciary duties partners owe to one another

Dissolution of partnership means a process by which the relationship between the partners is terminated and comes to an end and all the assets, shares, accounts and liabilities are disposed of and settled.Dissolution of partnership firm is a process in which relationship between partners of firm is dissolved or terminated. If a relationship between all the partners of firm is dissolved then it is known as dissolution of firm. In case of dissolution of partnership of firm, the firm ceases to exist. This process includes the discarding and disposing of all the assets of firm or and settlements of accounts, assets, and liabilities.Following are the ways in which dissolution of a partnership firm takes place:1. Dissolution by Agreement2. Compulsory Dissolution3. When certain contingencies happen4. Dissolution by Notice5. Dissolution by CourtSettlement of AccountsIn a case where the partners do not have an agreement regarding the dissolution of the firm, the following provisions of the Indian Partnership Act 1932 will apply:The firm will pay the losses including the deficiency of capital firstly out of the profits, secondly out of the partner’s capital and lastly by the partners individually in their profit-sharing ratio. The firm shall apply its assets including any contribution to make up the deficiency firstly, for paying the third-party debts, secondly for paying any loan or advance by any partner and lastly for paying back their capitals. Any surplus left after all the above payments is shared by partners in profit sharing ratio.On dissolution, the books of the firm are to be closed. Dissolution process starts by opening the following accounts in the firm’s books:1.      Realisation Account,2.      Partner’s Loan Account,3.      Partners’ Capital Accounts,4.    Bank or Cash Account.1.Specify the cases under which the dissolution of a            firm takes place compulsorily*1 pointInsolvency of partnerswhen the business of the firm becomes illegal.When due to some event it becomes unlawfulAll the above2.On dissolution of firm, there was an unrecorded investment of 1,50,000. These were takenover by a creditor of 2,00,000 in complete payment of his liability. What amount will be deducted from the due amount of sundry creditors?*1 point750,0001,50,0002,00,0003,50,0003.The balance sheet at the time of dissolution of firm depicts debtors of Rs 80,000 and provision for doubtful debts of Rs 10,000. If debtors became bad of Rs 5,000 and rest of debtors arerealised at a discount of 6%, then amount realised from debtors will be:*1 pointRs 73,900Rs 74,500Rs 75,200Rs 70,5004.On dissolution of firm, the loan provided by partner's        wife is transferred to:*1 pointLoan A/c of partnerCapital A/c of partnerRealisation AccountPartner’s wife Account

Which ONE of the following statements is CORRECT?a.In the absence of any provision in the contract that regulates how partners will share in the profit, a division of assets upon dissolution is made in proportion to the partners’ respective contributions to the enterprise.b.The assets of the partnership do not belong to the partners, but to the partnership.c.In the absence of any provision in a contract that regulates how partners share in the net profit or loss of the partnership, the net profit or loss is shared equally by all the partners.d.The natural consequences of a contract are those consequences which apply to a particular type of contract by choice of the parties to that contract.

Which of the following is INCORRECT? Select one: a. Partners must render true accounts and full information. b. Once the partners agree to dissolve the partnership (that is, bring the partnership to an end), the partner’s fiduciary obligations also cease at that point. c. Partners must not make secret profits and they have a duty to account for benefits received in connection with the partnership. d. Partners have a fiduciary and a statutory duty not to compete with the partnership.

The dissolution of a partnership is the same as the liquidation of a partnership. Group of answer choicesTrueFalse

Dissolution discharges existing liability of any partner.Group of answer choicesTrueFalse