Question:
On disSolutions of a partnership firm, profit or loss on realization is distributed among the partners:
On disSolutions of a partnership firm, profit or loss on realization is distributed among the partners:
Show Hint
During disSolutions, always distribute realization profits or losses in the profit sharing ratio unless specified otherwise in the partnership agreement.
Updated On: Nov 5, 2025
- In capital ratio
- In profit sharing ratio
- Equally
- None of these
Hide Solution
Verified By Collegedunia
The Correct Option is B
Solution and Explanation
Step 1: Understanding the distribution of profit or loss on realization.
On disSolutions, any profit or loss arising from the realization of assets is distributed among the partners in their agreed profit sharing ratio. This ensures that all partners bear the results of disSolutions equitably as per their contributions and entitlements.
Step 2: Identifying the correct ratio.
The profit sharing ratio is used because it reflects the partners' original agreement regarding the distribution of profits and losses during the partnership.
Was this answer helpful?
0
0
Top Questions on Dissolution of Partnership Firms
- Pass the necessary journal entries for the following transactions on the dissolution of a partnership firm of Vibha and Ajit after various assets (other than cash) and external liabilities have been transferred to Realisation Account:}
Creditors worth ₹ 46,000 accepted ₹ 9,000 cash and furniture of ₹ 32,000 in full settlement of their claim.
The firm had stock of ₹ 20,000. Ajit took over 40% of the stock at a discount of 10% while the remaining stock was sold for ₹ 18,000.
Vibha was appointed to look after dissolution work for which she was allowed a remuneration of ₹ 16,000. Vibha agreed to bear the dissolution expenses. Actual dissolution expenses ₹ 15,000 were paid by Vibha.
Ajit’s loan of ₹ 45,000 was settled at ₹ 42,000.
A machine which was not recorded in the books was taken over by Vibha at ₹ 23,000, whereas its expected value was ₹ 28,000.
The firm had a debit balance of ₹ 20,000 in the Profit and Loss Account on the date of dissolution.- CBSE CLASS XII - 2025
- Accountancy
- Dissolution of Partnership Firms
- Madhavan, Chatterjee and Pillai were partners in a firm sharing profits and losses in the ratio of 2 : 1 : 2. On 31stMarch, 2024, their Balance Sheet was as follows :
Balance Sheet of Madhavan, Chatterjee and Pillai as at 31st March, 2024
On the above date, the firm was dissolved and the following transactions took place :Liabilities Amount (₹) Assets Amount (₹) Creditors 1,10,000 Cash at Bank 4,05,000 Outstanding Expenses 17,000 Stock 2,20,000 Mrs. Madhavan’s Loan 2,00,000 Debtors 95,000 Chatterjee’s Loan 1,70,000 Less: Provision for Doubtful Debts (5,000) Capitals: Madhavan – 2,00,000 Land and Building 1,82,000 Chatterjee – 1,00,000 Plant and Machinery 1,00,000 Pillai – 2,00,000 Total 9,97,000 Total 9,97,000
Debtors were taken over by the creditors in full settlement of their claim.
Madhavan agreed to pay Mrs. Madhavan’s loan.
50% of the stock was taken over by Chatterjee at 10% less than the book value. The remaining stock was sold at a profit of 20%.
Land and Building was taken over by Pillai for \(₹1,00,000\) and Plant and Machinery was sold as scrap for \(₹20,000\).
Realisation expenses \(₹17,000\) were paid by cheque.
Prepare Realisation Account.- CBSE CLASS XII - 2025
- Accountancy
- Dissolution of Partnership Firms
- On the dissolution of the partnership firm of Raman, Hari and Suresh, realisation expenses \(₹17,000\) were paid by a debtor of \(₹75,000\) on behalf of the firm. The remaining amount was received from him along with interest of \(₹2,000\) for delayed payment. Realisation Account will be ___________ by ___________.
- CBSE CLASS XII - 2025
- Accountancy
- Dissolution of Partnership Firms
- Sharmila, Urmila, and Leela are partners in the firm 'Jeevan Stores' sharing profit and losses in the ratio 2 : 2 : 1 respectively. On 31st March 2020, they decided to dissolve the firm when their Balance Sheet was as follows: \begin{table}[h!] \centering \begin{tabular}{|l|r|l|r|} \hline Liabilities & Amount (₹) & Assets & Amount (₹)
\hline Capital Account: & & Goodwill & 45,600
Sharmila & 2,27,160 & Machinery & 73,000
Urmila & 1,44,000 & Motor car & 1,67,600
Leela & 1,08,000 & Building & 1,02,000
Creditors & 28,800 & Investment & 62,400
Bills Payable & 21,600 & Debtors & 30,600
& & Stock & 45,000
& & Bank & 3,360
\hline Total: & 5,29,560 & Total: & 5,29,560
\hline \end{tabular} \end{table} The firm was dissolved on the above date and the assets were realised as under: \[\begin{array}{rl} \bullet & \text{Sharmila agreed to take over the building at ₹ 1,23,600.} \\ \bullet & \text{Urmila took over goodwill, stock, and debtors at book value and agreed to pay creditors and bills payable.} \\ \bullet & \text{Motor car and Machinery were realised at ₹ 1,51,080 and ₹ 31,680 respectively.} \\ \bullet & \text{Investments were taken by Leela at an agreed value of ₹ 55,440.} \\ \bullet & \text{Realisation expenses amounted to ₹ 6,800.} \\ \end{array}\] Prepare: \[\begin{array}{rl} \bullet & \text{(a) Realisation Account} \\ \bullet & \text{(b) Partners' Capital Account} \\ \bullet & \text{(c) Bank Account} \\ \end{array}\]- Maharashtra Class XII - 2025
- Book-Keeping & Accountancy
- Dissolution of Partnership Firms
A, B, C, and D share profit and loss in the ratio of 4 : 3 : 2 : 1. The partnership was dissolved on 31st March, 2024. The firm’s balance sheet on this date was as follows:
Liabilities Amount (Rs.) Assets Amount (Rs.) Creditors 1,20,000 Cash at Bank 8,000 Bills Payable 20,000 Bills Receivable 40,000 Capital A 80,000 Debtors 1,40,000 Capital C 1,20,000 Stock 92,000 Capital B 40,000 Capital D 20,000 Total 3,40,000 Total 3,40,000
90% of Book value was realised from Debtors and Bills Receivable. Stock could be sold for ₹ 78,000. Outstanding salary of ₹ 2,000, which was not shown in the Balance Sheet, was also paid. The realisation expenses amounted to ₹ 6,000.
B is insolvent and only ₹ 32,000 could be recovered from him. The rule of Garner v/s Murray shall apply.
Prepare Realisation Account and Partners' Capital Account.- UP Board XII - 2025
- Accountancy
- Dissolution of Partnership Firms
View More Questions
Questions Asked in UP Board XII exam
- Solve: \((\tan^{-1}y - x)dy = (1+y^2)dx\).
- UP Board XII - 2025
- Differential Equations
What is the first law of Kirchhoff of the electrical circuit? Find out the potential difference between the ends of 2 \(\Omega\) resistor with the help of Kirchhoff's law. See the figure:
- UP Board XII - 2025
- Electrical Circuits
- State Kirchhoff's law related to electrical circuits. In the given metre bridge, balance point is obtained at D. On connecting a resistance of 12 ohm parallel to S, balance point shifts to D'. Find the values of resistances R and S.
\includegraphics[width=0.5\linewidth]{image8.png}- UP Board XII - 2025
- Wheatstone Bridge
- What are the electromagnetic waves? Write down its characteristics.
- UP Board XII - 2025
- Electromagnetic Wave
- How the demand of a commodity is affected by changes in the price of the commodity? Explain with the help of a diagram.
- UP Board XII - 2025
- Consumer theory
View More Questions