CUET Accountancy 2024
Accountancy
Dissolution of Partnership Firm
Easy
G, K and B were partners running a partnership for last 10 years, sharing profit and loss in the ratio of 5 : 3 : 2. Post Covid, their firm was affected badly and started incurring losses. On 31st March, 2023 they all decided to dissolve the firm due to continuous losses. Their capital balances were ₹ 4,00,000, ₹ 3,00,000 and ₹ 2,00,000 respectively. Firm had liabilities ₹ 80,000, Cash balance ₹ 40,000, other Sundry Assets ₹ 8,50,000 and P&L A/c constituted the rest. Assets realised at 80% and liabilities were paid in full. There was unrecorded liability of ₹ 50,000 which was settled at ₹ 40,000. Realisation expenses amounted to ₹ 30,000, being paid by G on behalf of the firm.
What is the mode of dissolution of the firm followed by G, K and B?
What is the mode of dissolution of the firm followed by G, K and B?
Correct Option: 1
G, K, and B decided to dissolve their partnership due to continuous losses after 10 years of operation.They agreed to end the business together, which is known as Dissolution by Agreement. This means all partners consented to dissolve the firm voluntarily.In this case, they faced losses, had liabilities, and decided to settle everything, which shows they worked together to close the business properly.Thus, the correct answer is option 1: Dissolution by Agreement.
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CUET Accountancy 2024
CUET Accountancy 2024
CUET Accountancy 2024