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TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 7
TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 7 – Detailed Topics
Dissolution of a firm: As per the Indian Partnership Act 1932, a Dissolution firm means termination of partnership among all the partners of the firm. When a firm is dissolved, the business of the firm terminates. All the assets of the firm are disposed of and all outsiders, Liabilities, loans, are paid.
This chapter consists of these topics in detail:-
- Dissolution of Partnership Firm: it takes place on Change in Profit Sharing Ratio among the existing partners, Admission of a Partner, Retirement of Death of a partner
- Types of Dissolution of firms: without the intervention of the court, dissolution by order of the court.
- Accounting treatment of Dissolution: Realisation Account, Partner’s loan account, partner’s capital account, cash or bank account.
- Realization account: preparation of realization account, provision, closing Liabilities account, provident fund, the realization of assets, realization expenses
- Preparation of memorandum of the balance sheet: If a balance sheet on the date of dissolution is not given in the question there is always advisable to prepare a Memorandum of Balance Sheet on the date of Dissolution to ascertain the amount of balancing figure.
TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 7 -Sample Questions
In this section, the students will get TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 7 Sample Questions Along with the answers
Q1. What is meant by Dissolution, also explain what is the dissolution of the firm?
A. Dissolution of partnership firm means a change in relationship among the partners but the firm continues. On the other hand, Dissolution of the firm means the business of the firm is discontinued i.e. closed and the firm is wound up i.e. dissolved. Dissolution of a firm means the Dissolution of partnership among all the partners of the firm and the firm’s business is closed.
Q2. What is a Realisation Account? Give any two objects of preparing a Realisation Account in the Dissolution of a firm.
A. Realisation Account is opened on the Dissolution of a firm. The object of preparing this account is to close the books of accounts of the dissolved firm and to determine gain or loss in the realization of assets and payment of Liabilities.
The two objects of preparing the Realisation Account in the dissolution of a firm are:-
- Transferring assets expect cash or Bank Account to the debit side of the account
- Transferring all Liabilities except Partner’s loan Account and Partner’s Capital Accounts to the credit of the account.
Q3. If a loan from a partner appears in the Liabilities side of the Balance Sheet of the firm and the Capital Account of Such partner shows a debit balance, how is the loan dealt with? Does the loan from outside have priority over the loan from a partner as to repayment?
A. Debit Balance in Partner’s Capital Account is less than the loan given by him. Hence, the amount of Capital is transferred from his loan account to his capital account. Yes, the loan from outside has Priority over the loan from a partner as to repayment.
We have included complete information regarding CBSE TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 7 – Dissolution of partnership firm. If you have any questions feel free to ask in the comment section.
FAQ: TS Grewal Class 12 Accountancy Solutions Vol 1 Chapter 7 – Dissolution of partnership firm
What is meant by the dissolution of a firm?
Dissolution of a firm refers to the dissolution of an existing partnership that owns and controls a firm or an organization.
What is a compulsory dissolution of partnership?
All partners or all partners except one partner are declared insolvent.
What is compulsory dissolution?
A firm is dissolved- by the adjudication of all the partners or of all the partners but one as insolvent, or. by the happening of any event which makes it unlawful for the business of the firm to be.
What happens to partnership assets on dissolution?
When a partnership dissolves, the individuals involved are no longer partners in a legal sense, but the partnership continues until the business’s debts are settled, the legal existence of the business is terminated and the remaining assets of the company have been distributed.