There are two statements Assertion (A) and Reason (R):
Assertion (A): Private assets of a partner can also be used for paying off the firm’s debts.
Reason (R): Liability of a partner for acts of the firm is limited.
Choose the correct alternative from the following:
Assertion (A): Private assets of a partner can also be used for paying off the firm’s debts.
Reason (R): Liability of a partner for acts of the firm is limited.
Choose the correct alternative from the following:
Show Hint
- Assertion (A) is incorrect, but Reason (R) is correct.
- Assertion (A) is correct, but Reason (R) is incorrect.
- Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
- Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
The Correct Option is B
Solution and Explanation
Step 2: The Reason (R) says "Liability of a partner for acts of the firm is limited," which is incorrect because in a general partnership, each partner has unlimited and joint liability.
Step 3: Therefore, Assertion (A) is correct, but Reason (R) is incorrect.
Top Questions on Partnership
- Bharat and Ishu were partners in a firm sharing profits and losses in the ratio of 4 : 1. Rishab was admitted into partnership for \(\frac{1}{4}\) share in the profits of the firm. Goodwill of the firm was valued at 4,00,000. Rishab brought 2,00,000 as his capital and 60,000 out of his share of goodwill premium in cash. At the time of Rishab’s admission, goodwill was appearing in the books of the firm at 50,000.
Pass necessary journal entries for the above transactions in the books of the firm on Rishab’s admission. Naval, Nyaya and Nritya were partners sharing profits in the ratio of 3:5:2. On 31st March, 2024, Nyaya retired. Revaluation of assets and goodwill adjustments were made. Prepare Revaluation Account and Partners’ Capital Accounts.
Uma and Umesh were partners in a firm sharing profits and losses in the ratio of 2:3. On 31st March, 2024, their Balance Sheet was given. Daya was admitted with 2:3:5 profit sharing ratio, bringing in capital and goodwill. Various revaluations and adjustments were also made. Journalise the transactions related to Daya’s admission.
Hans, Sohan and Kishore were partners in a firm sharing profits and losses in the ratio of 3 : 2 : 1. The firm closes its books on 31st March every year. On 1st August, 2024, Kishore died. The partnership deed provided that on the death of a partner, his executors will be entitled for:
(i) Balance in his capital account less drawings.
(ii) Interest on capital @ 12% p.a.
(iii) His share of goodwill.
(iv) His share in the profits of the firm till the date of his death calculated on the basis of average profit of the previous four years.
The following information was obtained from the books of the firm on the date of Kishore’s death:
(a) Capital on 1st April, 2024 = 4,00,000, Drawings = 90,000
(b) Goodwill of the firm = 60,000
(c) Profits for last 4 years: 2,00,000, 2,20,000, 1,20,000, 1,80,000Rani, Manav and Pushpa were partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. On 1st April, 2024, Rani decided to retire from the firm. On that day, the balance in her capital account after making necessary adjustments on account of reserves, revaluation of assets and reassessment of liabilities was 3,08,000. Manav and Pushpa agreed to pay her 3,80,000 in full settlement of her claim.
Calculate Rani’s share of goodwill and pass the necessary journal entry for the same.
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