Please refer to Chapter 5 Dissolution of Partnership Firm MCQ Class 12 Accountancy with answers below. These multiple-choice questions have been prepared based on the latest NCERT book for Class 12 Accountancy. Students should refer to MCQ Questions for Class 12 Accountancy with Answers to score more marks in Grade 12 Accountancy exams. Students should read the chapter Dissolution of Partnership Firm and then attempt the following objective questions.

MCQ Questions Class 12 Accountancy Chapter 5 Dissolution of Partnership Firm

Dissolution of Partnership Firm MCQ Class 12 Accountancy provided below covers all important topics given in this chapter. These MCQs will help you to properly prepare for exams.

Question. 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 Realisation Account
(d) On the Credit of Realisation Account

Question. On dissolution of a firm, realisation account is debited with
(a) Any asset taken over by one of the partners
(b) All outside liabilities of the firm
(c) Cash received on sale of assets
(d) All assets to be realised

Question. At the time of dissolution of firm, at which stage the balance of partner’s capital accounts is paid?
(a) After making payment to third party loan
(b) Before making 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

Question. Anu, Bina and Charan are partners. The firm had given a loan of Rs 20,000 to Bina. They decided to dissolve the firm. In the event of dissolution, the loan will be settled by:
(a)Transferring it to debit side of Realisation A/c
(b) Transferring it to credit side of Realisation A/c
(c) Transferring it to debit side of Bina’s capital account
(d) Bina paying Anu and Charan privately

Question. On dissolution of the firm, partner’s capital accounts are closed through
(a) Realisation a/c
(b) Drawings a/c
(c) bank a/c
(d) loan a/c

Question. On dissolution of a firm, Realisation A/c is debited with
(a) All the liabilities of the firm
(b) cash received on the sale of assets
(c ) Any asset taken over by one of the partners
(d) All assets to be realized

Question. Goodwill already appearing in the balance sheet of the firm will be transferred on the ______ side of _________ account
(a) Debit, capital
(b) debit, realization
(c) debit, bank
(d) credit , bank

Question. At the time of dissolution of partnership firm, Deferred Revenue Expenditure (Advertisement Expenditure) is transferred to
(a) Capital Accounts of Partners
(b) Realisation Account
(c) Cash Account
(d) Loan by Partner Account

Question. Court can make an order to dissolve the firm when :
(a) Firm is running legal business
(b) Partnership deed is fully followed
(c) Continued future profits are expected
(d) Some partner has become fully mad

Question. After settlement of dissolving firm, bank account may have_________ balance.
(a) Debit
(b) credit
(c) overdraft
(d) nil

Question. Sacrifice ratio is used only for
(a) Revaluation profit
(b) Distribution of Premium for goodwill
(c) Distribution of Reserve
(d) Revaluation of Assets

Question. Section ____ of the Indian Partnership Act provides that a new partner shall not be inducted into a firm without the consent of all existing partners
(a) 35
(b) 31
(c) 40
(d) 45

Question. On firm’s dissolution , when a partner voluntarily gives his personal asset to firm’s creditor as payment, the account credited will be
(a) Realization A/c
(b) Partner’s Capital A/c
(c) Cash A/c
(d) None of the A/c

Question. At the time of dissolution of firm,’ loan of partners’(loans given by partners to the firm) is paid out of the amount realized on sale of assets:
(a) After making the payment of loans given by third party
(b) After making 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

Question. Investments valued ₹ 2,00,000 were not shown in the books. One of the creditors took over these investments in full satisfaction of his debt of ₹ 2,20,000. How much amount will be deducted from creditors?
(a) ₹ 20,000
(b) ₹ 2,20,000
(c) ₹ 4,20,000
(d) ₹ 2,00,000

Question. Amount received from sale of unrecorded asset at the time of dissolution ofthe firm is credited to
(a) Partners’ Capital Accounts
(b) Profit and Loss Account
(c) Realisation Account
(d) Cash Account

Question. On dissolution of a firm, out of the proceeds received from the sale of assets ………… wiltjbe paid first of all
(a) Partner’s Capital
(b) Partner’s Loan to Firm
(c) Partner’s additional capital
(d) Outside Creditors

Question. On firm’s dissolution, on realisation of goodwill (which was shown in Balance Sheet) will be credited to :
(a) Cash A/c
(b) Realisation A/c
(c) Profit & Loss A/c
(d) None of the A/c

Question. Accumulated Profit /Loss are transferred to Partner’s Capital Account in case of dissolution in their
(a) New Ratio
(b) Gaining Ratio
(c) Profit Sharing Ratio
(d) None of the above

Question. If a partner undertakes to pay the liability of a firm on dissolution it will be recorded as :-
(a) RealisationA/c Dr., To Bank/CashA/c
(b) RealisationA/c Dr., To Partners Capital A/c
(c) Bank/Cash Dr., To Partners Capital A/c
(d) None of the above

Question. If a partner has taken some of the Sundry Asset at Rs. 7,200 ( being 10% less than book value ) its book value is :-
(a) Rs. 7,920
(b) Rs. 8,000
(c) Rs. 7,200
(d) Rs. 7,000

Question. ‘A’ one of the Partners was to bear all the Realisation Expenses for which he was given a commission of 3% of net cash realised from Dissolution. Cash realised from Assets was Rs. 25,000. Amount paid for paying off liabilities amounted to Rs. 5,000. The amount of commission will be:-
(a) Rs. 750
(b) Rs. 150
(c) Rs. 800
(d) Rs. 600

Question. There were investment worth Rs. 1,20,000, 75% of the investment were taken over by a Partner at75% of their book value. The value at which the investment are taken over is:-
(a) Rs. 90,000
(b) Rs. 67,500
(c) Rs. 80,000
(d) Rs. 65,000

Question. Dissolution of the firm means
(a) Liabilities paid
(b) Business of the firms ends
(c) Assets Sold
(d) All of the options

Question.How will you treat accumulated profit/losses at the time of dissolution of the firm
(a) Transferred to partners Income A/C
(b) Transferred to partners Capital A/C
(c) Transferred to partners Salary A/C
(d) None of the options

Question. 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

Question. At the time of dissolution of the firm , if goodwill appears in the balance sheet , it is transferred to
(a) Realisation A/c
(b) Revaluation A/c
(c) Capital A/c
(d) Current Account

Question. At the time of dissolution of the firm , the assets and liabilities appearing in the balance sheet are transferred to
(a) Realisation A/c
(b) Real Account
(c) Capital A/c
(d) None of the options

Question. at the time of dissolution of firm, loan from partner is
(a) Not transferred to realisation A/c
(b) Transferred to realisation A/C
(c) transferred to partners capital A/c
(d) None of the options

Question. Where it is agreed that a partner will be paid a lump sum amount for dissolution, if the payment is made by the firm, the payment is debited to
(a) Concerned partners capital Account
(b) Realisation Account
(c) All the partners capital Account
(d) None of the options

Question. Which is the main right of a partner?
(a) Share the Profits of the firm
(b) Stop other partners for drawings
(c) Share the old profits of the firm
(d) All of the options

Question. According to Section 30 of Partnership Act 1932:
(a) A Minor can be admitted as a partner by the consent of all partners for the time being
(b) New partner will bring capital and goodwill in cash
(c) New partner will inspect the books of accounts
(d) New partner is allowed to share old profits

Question. The incoming partner cannot acquire his share of profits :
(a) From the old partners in their new profit sharing ratio
(b) From the old partners in their old profit sharing ratio
(c) From one or more partners (not from all partners)
(d) From the old partners in some agreed ratio

Question. Liabilities to third parties in case of dissolution of partnership firm do not include : –
(a) Reserves
(b) Credit Balance of P&L Account
(c) Partners loan
(d) All of the Above.

Question. Dissolution of the Partnership firm means :-
(a) Change in existing ratio of partners
(b) Dissolution of Partnership among all partners
(c) Death of a Partner
(d) Dissolution of firm

Question. At the time of admission of a new partner, the new partner acquires his share from the old partners in the:
(a) Sacrificing ratio
(b) New Ratio
(c) New Ratio
(d) Old ratio

Question. If opening capitals of partners are A ₹ 3,00,000, B ₹2,00,000 and C ₹ 1,00,000 and their drawings during the year are A ₹ 50,000, B ₹ 40,000 and C ₹ 30,000 and creditors are ₹ 60,000, what will be the amount of assets of the firm?
(a) Rs 5,40,000
(b) Rs 4,20,000
(c) Rs 4,80,000
(d) Rs 6,60,000

Question. Nature of bank Account is :-
(a) Artificial Personal Account
(b) Natural Personal Account
(c) Representative Personal Account
(d) None

Question. At the time of dissolution of firm, Loan given by partner to the firm is paid out ofthe 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.

Question. On the basis of following data, what final payment to a partner on firm’s dissolution will be made: Debit balance of Capital Account Rs. 14,000. Share of his profit on realisation Rs. 43,000; Firm’s asset taken by him for Rs. 17,000.
(a) Rs. 31,000
(b) Rs. 29,000
(c) Rs. 12,000
(d) Rs. 60,000

Question. When a new partner is admitted he acquires his share of profits from the old partners , this will ____ the old partners shares in profits:
(a) Reduce
(b) Remain same
(c) No change
(d) Decrease

Question. Is admission of a new partner a reconstitution of partnership firm:
(a) Yes
(b) It is dissolution of firm
(c) It is called merger
(d) None of the options

Question. Revaluation Account is also known as ________
(a) Profit and Loss Adjustment Account
(b) Asset Account
(c) Profit and Loss Account
(d) None of the options

Question. At the time of increase in the value of assets which account should be debited while preparing Revaluation Account?
(a) Partners Capital A/c
(b) Asset A/c
(c) Revaluation Account
(d) None of the options

Question. Revaluation account is not prepared at the time of _________________
(a) Dissolution
(b) Admission
(c) Retirement
(d) All of the options

Question. Which of the following is calculated at the time of Retirement of a Partner?
(a) Gaining Ratio
(b) Old Ratio
(c) Profit Sharing ratio
(d) All of the options

Question. When the New ratio is deducted with Old Ratio we get:
(a) Profit Sharing ratio
(b) Sacrifice only
(c) Gaining Ratio
(d) None of the options

Question. Gaining Ratio is Applicable for:
(a) For the Calculation of profit
(b) For the distribution of Reserves and profits
(c) Retiring partners share of goodwill only
(d) For Revaluation

Question. Gaining ratio is the ratio in which continuing partners have ______ the share from the outgoing partner
(a) Acquired
(b) Sacrificed
(c) Both Acquired and Sacrificed
(d) None of the options

Question. Why there is need to calculate New profit share ratio
(a) After retirement of a partner, there is no change in the continuing partners ratio
(b) After retirement of a partner, there will be change in the continuing partners ratio
(c) To settle the loan amount due to outgoing partner
(d) All of the options

Question. How sacrificing ratio is differ from gaining ratio on the basis of mode of calculation
(a) calculated by taking difference between old and gaining ratio
(b) calculated by taking difference between new and old ratio
(c) calculated by taking difference between old and new ratio
(d) None of the options

Question. Which of the following is effect of the retirement of a partner?
(a) share of remaining partners decreases
(b) share of remaining partners remains same
(c) share of remaining partners increases
(d) All of the options

Question. Only in Balance Sheet At the time of retirement of a partner, general reserve given in the balance sheet should be credited to all the partners (including outgoing partner) in their old profit sharing ratio.
(a) Credit side of Capital account of all the partners
(b) Debit side of Capital account of all the partners
(c) Both
(d) None of the options

Question. Which of the following is prepared at the time of retirement of a partner?
(a) Revaluation Account
(b) Profit and Loss Suspense Account
(c) Both
(d) None of the options

Question. Which of the following item is not shown in the credit side of deceased partners capital account?
(a) Revaluation profit
(b) Share of profit
(c) Share of loss
(d) All of the options

Question. Bad debts recovered will be recorded in:
(a) Dr. Side of revaluation account
(b) Cr. Side of revaluation account
(c) Both
(d) None of the options

Question. On firm’s dissolution, which one of the following account should be prepared at the last?
(a) Realisation Account
(b) Partner’s Capital Accounts
(c) Partner’s Loan Account
(d) Cash Account

Question. Why new profit ratio is determined even for old partners?
(a) Change in the agreement among all partners
(b) No change in agreement
(c) Due to change in external environment
(d) All of the options

Question. Sacrificing ratio is calculated for
(a) old partners
(b) new partners
(c) all partners (including new)
(d) None of the options

Question. On dissolution of a firm, a partner paid Rs.700 for firm’s realisation expenses. Which account will be debited?
(a) Cash Account
(b) Realisation Account
(c) Capital Account of the Partner
(d) Profit & Loss A/c

Question. On taking responsibility of payment of realisation expenses by a partner, the account credited will be :
(a) Realisation Account
(b) Cash Account
(c) Capital Account of the Partner
(d) None of the Above

Question. The modes by which a firm may be dissolved are
(a) By Notice
(b) By Mutual agreement
(c) Compulsory Dissolution
(d) All of the options

Question. Why is realisation account prepared
(a) Closing the accounts
(b) Opening the account
(c) For profit sharing
(d) None of the options

Question. 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

Question. On dissolution of firm, loss calculate in realisation account is debited/credited to which account?
(a) Cash Account (Credit)
(b) Partners’ Capital Accounts (Debit)
(c) Partners’ Capital Accounts (Credit)
(d) Realisation Account (Debit)

Question. On dissolution of a firm, an unrecorded furniture of the value of Rs.5,000 was taken up by a partner for Rs.4,300. Which Account will be credited and by how much amount? :
(a) Cash Account by Rs.4,300
(b) Realisation Account by Rs.700
(c) Partner’s Capital Account by Rs.5,000
(d) Realisation Account by Rs.4,300

Question. On the basis of following data, final payment to a partner on firm’s dissolution will be made : Debit balance of Capital Account Rs. 14,000; Share of his profit on realisation Rs.43,000; Firm’s asset taken over by him for Rs. 17,000.
(a) Rs.31,000
(b) Rs.29,000
(c) Rs. 12,000
(d) Rs.60,000

Question. On payment of expenses of dissolution, account will be debited :
(a) Realisation Account
(b) Cash Account
(c) Profit & Loss Account
(d) None of the Above

Question. 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

Question. Except outgoing partner, which other partner can be credited at the time of settlement of goodwill amount?
(a) Gaining partner
(b) Sacrificing partner
(c) All the partners
(d) None of the options

Question. Retirement or death of a partner will create a situation for the continuing partners, which is known as:
(a) Reconstitution of Firm
(b) Dissolution of firm
(c) Amalgamation
(d) None of the options

Question. New Ratio Old Ratio is called
(a) Gaining Ratio
(b) Profit Sharing ratio
(c) Sacrificing ratio
(d) None of the options

Question: Unrecorded assets when realised is credit to
(a) Realisation A/c
(b) Partners capital A/c
(c) Current Account
(d) None of the options

Question. Unrecorded Liabilities when paid are debited to
(a) Current Account
(b) Partners capital A/c
(c) Realisation A/c
(d) None of the options

Question. Why a new partner is admitted in the firm?
(a) For Increase the Capital of the firm
(b) For Increase the Number of partners
(c) For Increase the Profit sharing Ratio
(d) None of the options

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