CBSE Class 12 Accountancy Dissolution of Partnership Firms VBQs

VERY SHORT ANSWER QUESTIONS

Question. Which o the following will be Transferred to Realisation Account?
A. Goodwill appearing in the books at the time of Dissolution of Firm
B. Investment Fluctuation Reserve
C. Provision for Doubtful Debts
D. General Reserve
Choose the Correct Option:
1.D Only
2. A, B, C Only
3.Band C Only
4.Aand C Only
Answer. B

Question. In the event of dissolution of a partnership firm, the provision for doubtful debts is transferred to:
a) Realization account
b) Partner’s Capital Accounts
c) Cash account
d) Partner’s loan account
Answer. A

Question. On dissolution of a partnership firm, profit or loss on realization is distributed among the partners:
a) In capital ratio
b) In profit sharing ratio
c) Equally
d) None of the above
Answer. B

Question. Unrecorded liability, when paid on dissolution of a firm is debited to:
a) Profit & Loss account
b) Realizationaccount
c) Liabilities account
d) No need to record
Answer. B

Question. On dissolution of a firm, a partner paid Rs 700 for firm’s realization expenses. Which account will be debited?
a) Cash account
b) Realisation account
c) Capital account of the partner
d) Profit & Loss account.
Answer. B

Question. On dissolution of a firm, It’s Balance Sheet revealed total creditors Rs 50,000, total capital Rs 48,000, Cash balance Rs 3000, It’s assets were realized at 12% less. Loss on realization will be:
a) Rs 6000
b) Rs 11760
c) Rs 11400
d) Rs 3600
Answer. C

Question. An unrecorded asset was valued ar Rs 100000.On Firm’s dissolution, it was sold for 52%.Realisation Account will be credited with
a) Rs 48000
b) Rs 100000
c) Rs 52000
Answer. C

Question. A Partner took over the Investments of Rs 15000 at Rs 19000 on dissolution of a Firm. What amount will be credited in Realisation Account?
a) Rs 15000
b) Rs 19000
c) Rs 4000
d) Rs 23000
Answer. B

Question. Identify the sequence of application of assets at the time of Dissolution of a Firm:
A. Partner’s Loans and Advances
B. Partner’s Capital
C. Profit among the Partners at their profit sharing Ratio
D. Third Parties such as Creditors and Bank Loan
Choose the correct option:
1. D, C, B and A
2. A, B, C and D
3. D, B, C and A
4. D, A, B and C 
Answer. D

Question. On Firm’s Dissolution, what entry will be Passed on realization of Goodwill which was shown in Balance sheet?
a) Goodwill A/C----Dr b) Cash A/C-----Dr c) Goodwill A/C---Dr
To Realisation To Realisation To Cash
Answer. Cash A/C----Dr
To Realisation

Question. Name the Asset that is not transferred to the Realisation account, but bring certain amount of cash against its disposal at the time of dissolution of the Firm?
Answer. Unrecorded Asset

1. Following is the Balance Sheet of X and Y, who share profits and losses in the ratio of 4:1, as at 31st March, 2011:

The firm was dissolved on the above date and the following arrangements were decided upon:
(i) Y is authorized to sell the assets of the firm and will get a fixed amount of Rs.2,000 for his work.
(ii) X agreed to pay off his wife’s loan.
(iii) Debtors of Rs. 5,000 proved bad.
(iv) Y decided to sell the building for Rs. 9,000 to his brother. Market value of the building was Rs.80,000.
(v) Others assets realized _ Investments 20% less; and Goodwill at 60%.
(vi) One of the creditors for ,000 was paid only ,000.
(vii) Y took over part of Stock at ,000 being 20% less than the book value). Balance stock realized 50%.
(viii) Reali ation expenses amounted to ,000. State which value are being violated in the above question and also prepare Realization A/c.
1. Realisation A/c
• Values:
• Transparency
• Trust
• Mutual Understanding

Company Account – Issue of Shares

2. Shiksha India Ltd. Issues 1,00,000 shares of Rs.10 each payable Rs.5 on application, Rs.3 on allotment and Rs.2 on first and final call. Public applied for 1,40,000 shares and the company made the allotment to all the applicants on pro-rata basis.
Identify the value involved in the decision of company regarding allotment of shares.

Values involved
• Equality
• Responsibility towards investors

3. Rehan Ltd. Issue 50,000 shares of Rs.10 each payable Rs.4 on application and Rs.6 on allotment. According to the SEBI guidelines, a minimum of the net offer should be reserved for small investors. Therefore, out of these 50,000 shares, 50% portion is reserved for retail (small) investors. Issue has been fully subscribed . Identify the value involved.
3. Rehan Ltd Values Involved: Protecting the interest of small investors, Adherence to law

4. XYZ limited is offering 3,00,000 equity shares @ an issue price of Rs.50 when market price is Rs.100, to its employees as part of incentives. Nominal value of the share is Rs.10. What value/principle do you think that XYZ ltd is adopting towards its employees?
4. Values involved
• Employee Recognition
• Motivation
• Profit Sharing
• Satisfaction of esteem needs

5.Ramkay ltd. has a nominal capital of Rs.12 crores . Securities premium account shows a balance of `3 crores. The company does not want to carry the balance in securities premium account.
i. What are ways can the company make use of of the amount available in securities premium account?
ii. Suggest one best way of using securities premium account that will maximise the wealth of the share holders.
iii. Identify the value createdby the company by doing so?
5. Values involved
• Wealth maximization
• Responsibility towards shareholders
• Value addition

6.What do you mean by rights issue? What value do you think the company is trying to achieve by this type of issue?
6. Values involved
• Wealth maximization
• Continued patronage to the Company

7. Autumn ltd. is registered with capital of Rs.70 lakhs divided into equity share of Rs.100 each. The companyoffered for public subscription 1,00,000 shares of Rs.100 each. Issue was oversubscribed by 50,000 shares.The Company allotted the shares on pro-rata basis to all applicants.
a)What value/principle the company is trying to achieve by this method of allotment?
Just and Equitable
Motivation to existing shareholders

8.Vasanth& Co is a public ltd. company. It does not have its own articles of association. The company offered for public subscription of 10,000 shares of Rs.10 each. All money was duly received except for the call money of Rs.3 per share from Arun, holder of 100 shares, money. Though the company is deemed to have adopted TABLE A the company does not want to charge interest on calls in arrears.
Why in your view that the company does not want to collect interest on calls in arrears. What justification can the company give?
8. Sympathy
Generosity