Give any one difference between reconstitution of firm and dissolution of a firm.

1

(a)

Reconstitution of partnership means to change in the existing agreement between the partners, whereas dissolution of firm means the dissolution of partnership between all the partners of the firm.

In case of dissolution of a firm which liabilities are to be paid first.

1

(a)

Firm's debts to the third parties are to be paid first.

Give any one point of distinction between dissolution of partnership and dissolution of partnership firm.

1

(a)

In case of dissolution of partnership, the business of the firm is continued, whereas in case of dissolution of partnership firm, the business of the firm is closed down.

A and B are partners in a firm sharing profits in the ration of 3 : 2, Mrs A has given a loan of Rs. 20,000 to the firm and the firm also obtained a loan of Rs. 10,000 from B.  The firm was dissolved and its assets were realised for Rs. 25,000.  State the order of payment of Mrs A's  Loan and B's Loan with reason, if there are no creditors of the firm.

1

(a)

Mrs A's Loan of Rs. 20,000 being third party will be paid first and after that B's Loan will be paid from the available cash Rs. 5,000

In case of dissolution of a firm, which item on the liabilities side are to be paid last?

1

(a)

Final payment of the partners on their capital accounts.

State the liability of partners in case of dissolution of firm.

1

(a)

The private property of the partners can be used for paying business debts.

The firm of Ravi and Mohan was dissolved on 01.03.2013.  According to the agreement, Ravi had to undertake the dissolution work for an agreed remuneration of Rs, 20,000 and bear all realisation expenses.  Dissolution expenses were Rs. 1,500 and the same were paid by the firm.  Pass necessary journal entries for the payment of dissolution expenses.

1

(a)

(i) Dr. Realisation A/c Cr.Ravi's Capital A/c by Rs. 2,000.

(ii) Dr. Ravi's Capital A/c, Cr. Bank A/c by Rs.1,500.

Mohan and Kanwar are partners in a firm.  The firm was dissolved on 01.01.2013.  Mohan was assigned the work of dissolution.  For this work, Mohan was to be paid Rs. 500.  Mohan paid dissolution expenses of Rs. 400 from his own pocket.  Will any journal entry be passed for Rs. 400 paid by Mohan? If yes, pass the entry, if no, give reason.

1

(a)

Yes, entry will be passed, i.e., Dr. Realisation A/c, Cr. Mohan's Capital A/c by Rs. 400.

Note: Mohan was not liable to bear the dissolution expenses.

Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm' on the basis of Court's intervention.

1

(a)

Dissolution of partnership does not require closure of books since the business is not terminated whereas dissolution of partnership firm requires closure of all books of accounts since the business is terminated.

Distinguish between 'Dissolution of Partnership' and 'Dissolution of Partnership Firm' on the basis of Court's of intervention.

1

(a)

In case of dissolution of partnership, there is no intervention by court since the partnership is dissolved by mutual agreement whereas in case of dissolution of firm, a firm can be dissolved either without the intervention of court or by court's order.