CUET UG Categorised PYQ Accountancy Unit 4 -

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CUET UG Categorised PYQ Accountancy Unit 4

Accountancy

⏱️ 30 Minutes

❓ 32 Questions

📅 2022, 2023, 2024 & 2025

✍️ Long Answers

📌 Answers are locked once submitted — results and explanations appear at the end.

CUET UG Categorised PYQ Accountancy Unit 4

1 / 32

QUESTION 1 OF 32

Aman and Mohan, partners of a firm decided to dissolve the business on 31-03-22. The firm decided to pay realisation expenses of ₹ 1,000 on behalf of Mohan. ₹ 1,000 will be debited to (PYQ 2022)

Answer Review

1 Aman and Mohan, partners of a firm decided to dissolve the business on 31-03-22. The firm decided to pay realisation expenses of ₹ 1,000 on behalf of Mohan. ₹ 1,000 will be debited to (PYQ 2022)

A Realisation A/C

B Mohan's Capital A/C

C Bank A/C

D Aman's Capital A/C

💡 Short Explanation

The expense was Mohan's personal responsibility. The firm paid it using the firm's cash. Therefore, Mohan's Capital Account is debited.

✅ Correct Answer Explanation

When a partner is responsible for bearing realization expenses but the firm pays them on his behalf, the amount is treated as a payment made for that partner. Journal Entry: Mohan's Capital A/c Dr. To Bank A/c Thus, Mohan's Capital Account is debited because his claim against the firm decreases.

❓ Why Other Options Are Incorrect

A) Realisation A/C

C) Bank A/C

D) Aman's Capital A/C

🎯 Strategy

Used

Contextual/Tonal Matching
"On behalf of Mohan" is the key phrase.
Expense belongs to Mohan.
Therefore Mohan's Capital A/c is debited.
Final Answer → B.

🧠 Memory Trick

If firm pays on behalf of partner, debit partner's capital.

📚 Class XII, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm, Section: Realisation Expenses.

2 [[PASSAGE]]A and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm.[[/PASSAGE]]

Liabilities	₹ — Assets — ₹
Loan by B	20,000 — Goodwill — 30,000
Capitals	Furniture — 40,000
A. 1,00,000	Building — 90,000
B. 1,40,000	2,40,000 — Debtors — 50,000
Cash	50,000
2,60,000	2,60,000

It was agreed that following transactions will take place: A. A wanted to start the business in sole proprietorship So he took Building and Furniture at 10% less than book value. B. All the debtors proved good except a person C who did not pay 10,000.
Question: Due to the ill health of B, they decided to dissolve the firm. It comes under _______ form of dissolution. (PYQ 2022)

A Dissolution by Notice

B On the happening of certain contingencies

C Dissolution by Court

D Dissolution by Agreement

💡 Short Explanation

Both partners mutually agreed to dissolve the firm. Dissolution occurs through consent. Therefore, it is Dissolution by Agreement.

✅ Correct Answer Explanation

According to Section 40 of the Indian Partnership Act, a partnership firm may be dissolved with the consent of all partners. In this case, both partners jointly decided to dissolve the firm because of B's ill health. Hence, the dissolution takes place by mutual agreement.

❓ Why Other Options Are Incorrect

A) Dissolution by Notice

B) Happening of Certain Contingencies

C) Dissolution by Court

🎯 Strategy

Used

Contextual/Tonal Matching
"They decided" indicates mutual consent.
Mutual consent = Agreement.
Final Answer → D.

🧠 Memory Trick

Decide Together = Dissolve Together

📚 Class XII, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm, Section: Modes of Dissolution.

3 [[PASSAGE]]A and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm.[[/PASSAGE]]

Liabilities	₹ — Assets — ₹
Loan by B	20,000 — Goodwill — 30,000
Capitals	Furniture — 40,000
A. 1,00,000	Building — 90,000
B. 1,40,000	2,40,000 — Debtors — 50,000
Cash	50,000
2,60,000	2,60,000

It was agreed that following transactions will take place: A. A wanted to start the business in sole proprietorship So he took Building and Furniture at 10% less than book value. B. All the debtors proved good except a person C who did not pay 10,000.
Question: The amount recovered from the debtors is: (PYQ 2022)

A ₹1,00,000

B ₹40,000

C ₹50,000

D ₹60,000

💡 Short Explanation

Total Debtors = ₹50,000. C did not pay ₹10,000. Amount realized = ₹40,000.

✅ Correct Answer Explanation

Debtors = ₹50,000 Bad Debt = ₹10,000 Amount Recovered: = ₹50,000 − ₹10,000 = ₹40,000 Therefore, actual cash realized from debtors is ₹40,000.

❓ Why Other Options Are Incorrect

A) ₹1,00,000

C) ₹50,000

D) ₹60,000

🎯 Strategy

Used

Substitution
Final Answer → B.

🧠 Memory Trick

Realisation = Actual Cash Received

📚 Class XII, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm, Section: Realisation of Assets.

📄 Passage

A and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm.

Question: Following items appear on the Debit side of Realisation A/C except: (PYQ 2022)
A. Transfer of Assets
B. Payment of Liabilities
C. Provisions
D. Realisation Expenses
E. Asset taken over by Partner

A A, C, E only

B C, D, E only

C D, E only

D C, E only

💡 Short Explanation

Debit Side = Assets, Liability Payments, Expenses. Credit Side = Provisions, Asset Takeover. Hence C and E are exceptions.

✅ Correct Answer Explanation

Items appearing on Debit Side: • Transfer of Assets • Payment of Liabilities • Realisation Expenses Items appearing on Credit Side: • Provisions • Assets taken over by Partners Therefore, C and E do not appear on the Debit Side.

❓ Why Other Options Are Incorrect

A) A, C, E only

B) C, D, E only

C) D, E only

🎯 Strategy

Used

Elimination
Debit = Assets + Expenses + Liability Payments
Credit = Provisions + Asset Takeover
Final Answer → D.

🧠 Memory Trick

Debit = Assets, Liability Payments, Expenses

📚 Class XII, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm, Section: Realisation Account.

5 [[PASSAGE]]A and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm.[[/PASSAGE]]

Liabilities	₹ — Assets — ₹
Loan by B	20,000 — Goodwill — 30,000
Capitals	Furniture — 40,000
A. 1,00,000	Building — 90,000
B. 1,40,000	2,40,000 — Debtors — 50,000
Cash	50,000
2,60,000	2,60,000

It was agreed that following transactions will take place: A. A wanted to start the business in sole proprietorship So he took Building and Furniture at 10% less than book value. B. All the debtors proved good except a person C who did not pay 10,000.
Question: The treatment of Goodwill appearing in the Balance Sheet will be: (PYQ 2022)

A Transferred to Debit of Realisation A/C

B Written off among partners in old ratio

C Transferred to Credit of Realisation A/C

D Raised and written off

💡 Short Explanation

Goodwill is an asset. All assets are transferred to Realisation A/c. Therefore Goodwill is debited to Realisation A/c.

✅ Correct Answer Explanation

At the time of dissolution, all assets appearing in the Balance Sheet are transferred to the Realisation Account. Journal Entry: Realisation A/c Dr. To Goodwill A/c Therefore, Goodwill appears on the Debit Side of Realisation Account.

❓ Why Other Options Are Incorrect

B) Written off among partners

C) Credit of Realisation A/c

D) Raised and written off

🎯 Strategy

Used

Odd One Out
Goodwill = Asset
Assets → Debit Side of Realisation
Final Answer → A.

🧠 Memory Trick

Goodwill = Asset = Debit Realisation

📚 Class XII, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm, Section: Treatment of Goodwill.

6 [[PASSAGE]]A and B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm.[[/PASSAGE]]

Liabilities	₹ — Assets — ₹
Loan by B	20,000 — Goodwill — 30,000
Capitals	Furniture — 40,000
A. 1,00,000	Building — 90,000
B. 1,40,000	2,40,000 — Debtors — 50,000
Cash	50,000
2,60,000	2,60,000

It was agreed that following transactions will take place: A. A wanted to start the business in sole proprietorship So he took Building and Furniture at 10% less than book value. B. All the debtors proved good except a person C who did not pay 10,000
Question: The accumulated profits and reserve are transferred to: (PYQ 2022)

A Revaluation A/C

B Realisation A/C

C Partner's Capital A/C

D Cash/Bank A/C

💡 Short Explanation

Reserves represent undistributed profits. They belong to partners. Hence transferred to Capital Accounts.

✅ Correct Answer Explanation

Accumulated profits and reserves such as General Reserve belong to partners. They are distributed among partners in their profit-sharing ratio by crediting Partners' Capital Accounts. Journal Entry: Reserve A/c Dr. To Partners' Capital A/cs

❓ Why Other Options Are Incorrect

A) Revaluation A/C

B) Realisation A/C

D) Cash/Bank A/C

🎯 Strategy

Used

Contextual/Tonal Matching
Internal profits → Capital Accounts.
External realization → Realisation Account.
Final Answer → C.

🧠 Memory Trick

Owners' Profits → Capital Accounts

📚 Class XII, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm, Section: Partners' Capital Accounts.

7 On a Dissolution of a firm, repayment of Partner's loan to the firm will be shown in: (PYQ 2023)

A Credit of Realisation Account

B Partner's Capital Account

C Partner's Current Account

D Credit of Bank A/c

💡 Short Explanation

Partner's loan is settled separately from capital. Loan repayment involves cash outflow. Therefore, Bank Account is credited.

✅ Correct Answer Explanation

Partner's loan is not transferred to the Realisation Account. It is paid separately after outside liabilities are settled. Journal Entry: Partner's Loan A/c Dr. To Bank A/c Since cash leaves the business, Bank Account is credited. Therefore, repayment of partner's loan appears on the Credit side of Bank Account.

❓ Why Other Options Are Incorrect

A) Credit of Realisation Account

B) Partner's Capital Account

C) Partner's Current Account

🎯 Strategy

Used

Option Grouping
Loan repayment = Cash outflow.
Cash outflow = Credit Bank.
Final Answer → D.

🧠 Memory Trick

Pay Loan → Credit Bank

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

8 On dissolution of partnership firm, unrecorded assets when taken over by a partner are shown in: (PYQ 2023)

A Debit side of Realisation A/c

B Credit side of Realisation A/c

C Credit side of Bank A/c

D Debit side of Bank A/c

💡 Short Explanation

Unrecorded assets provide additional realization value. Partner taking over asset is treated as realization. Realisation Account is credited.

✅ Correct Answer Explanation

When an unrecorded asset is taken over by a partner, the entry passed is: Partner's Capital A/c Dr. To Realisation A/c Thus, the value of the asset is credited to Realisation Account because it represents value realized by the firm. Therefore, it appears on the Credit Side of Realisation Account.

❓ Why Other Options Are Incorrect

A) Debit side of Realisation A/c

C) Credit side of Bank A/c

D) Debit side of Bank A/c

🎯 Strategy

Used

Substitution
Asset Taken Over by Partner

🧠 Memory Trick

Asset Out = Credit Realisation

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

9 Satish was appointed to look after the dissolution work for which he was allowed a remuneration of ₹14,000. He agreed to take over the investment of the book value of ₹11,000 towards payment of his full remuneration. (Investments have already been transferred to Realisation A/c) Journalize. (PYQ 2023)

A No Entry

B Dr. Realisation A/c ₹14,000; Cr. Bank A/c ₹14,000

C Dr. Realisation A/c ₹11,000; Cr. Bank A/c ₹11,000

D Dr. Satish's Capital A/c ₹14,000; Cr. Bank A/c ₹14,000

💡 Short Explanation

Remuneration is already accounted for through Realisation. Investment has already been transferred to Realisation A/c. No additional journal entry is required.

✅ Correct Answer Explanation

The investments have already been transferred to Realisation Account. Satish accepts the investment towards settlement of his remuneration. Since both the asset and the remuneration are already considered within the Realisation process, passing another journal entry would duplicate the effect. Therefore, no separate entry is required.

❓ Why Other Options Are Incorrect

B) Dr. Realisation A/c ₹14,000; Cr. Bank A/c ₹14,000

C) Dr. Realisation A/c ₹11,000; Cr. Bank A/c ₹11,000

D) Dr. Satish's Capital A/c ₹14,000; Cr. Bank A/c ₹14,000

🎯 Strategy

Used

Contextual/Tonal Matching
Asset already transferred.
Liability already considered.
No double entry required.
Final Answer → A.

🧠 Memory Trick

Asset = Liability → Entry = Empty

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm (Section 5.5).

10 At the time of dissolution of partnership firm, debtors were realised at a discount of 5% (Book value was ₹48,000). Amount realised at the time of dissolution was- (PYQ 2023)

A ₹47,600

B ₹44,600

C ₹48,000

D ₹45,600

💡 Short Explanation

Realisation Value = Book Value − Discount. Discount = 5% of ₹48,000. Realized amount equals actual cash received.

✅ Correct Answer Explanation

Step 1: Calculate Discount = ₹48,000 × 5% = ₹2,400 Step 2: Calculate Realised Amount = ₹48,000 − ₹2,400 = ₹45,600 Therefore, the amount realized from debtors is ₹45,600.

❓ Why Other Options Are Incorrect

A) ₹47,600

B) ₹44,600

C) ₹48,000

🎯 Strategy

Used

Dimensional/Unit Analysis
Find 5% of ₹48,000.
Subtract from Book Value.
Final Answer → D.

🧠 Memory Trick

Subtract the loss from the total.

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

11 In case of dissolution of firm, Assets shall be applied in the order of -
A. Paying loan from Partners
B. Paying secured debts of the firm
C. Paying Partners Capital in proportion
D. Paying unsecured debts of the firm
E. The residue shall be divided among the partners in their Profit Sharing Ratio.

A A, B, E, C, D

B B, D, A, C, E

C B, E, D, A, C

D E, D, A, B, C

💡 Short Explanation

Outside liabilities are settled first. Partner loans come next. Capital is repaid after loans. Residue is distributed last.

✅ Correct Answer Explanation

According to Section 48 of the Indian Partnership Act: 1. Secured Debts (B) 2. Unsecured Debts (D) 3. Partner's Loan (A) 4. Partner's Capital (C) 5. Residue among Partners (E) Therefore, the correct sequence is: B → D → A → C → E

❓ Why Other Options Are Incorrect

A) Gives partner loan priority over outside creditors.
C) Distributes residue before settlement.
D) Starts with final distribution.

🎯 Strategy

Used

Hierarchy Method
Outsiders → Partner Loan → Capital → Residue

🧠 Memory Trick

Secured → Loan → Capital → Residue

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

12 Identify that will lead to dissolution of partnership: (PYQ 2023)

A When the business of the firm becomes illegal

B When a partner becomes insane

C When a partner persistently commits breach of partnership agreement

D When there is change in existing profit sharing ratio among partners

💡 Short Explanation

Dissolution of partnership means termination of the old agreement. The firm continues to exist. Change in PSR results in reconstitution.

✅ Correct Answer Explanation

A change in profit-sharing ratio results in dissolution of the old partnership agreement and formation of a new agreement. The business continues and only the relationship among partners changes. Therefore, it is dissolution of partnership and not dissolution of firm.

❓ Why Other Options Are Incorrect

A) Leads to compulsory dissolution of firm.
B) May result in court-ordered dissolution.
C) Ground for dissolution by court.

🎯 Strategy

Used

Odd One Out
A, B and C generally lead to dissolution of firm.
D causes only reconstitution.
Final Answer → D.

🧠 Memory Trick

Partnership Changes, Firm Remains

📚 Class XII, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

13 Arrange the following in the context of dissolution of partnership firm.
A. Partner Loans
B. Secured Liabilities
C. Realisation of Assets
D. Partner's Capital
E. Unsecured Liabilities

A A, B, C, D, E

B C, B, E, A, D

C B, C, D, E, A

D D, E, A, B, C

💡 Short Explanation

Assets must first be realized. Outsiders are paid before partners. Capital is settled last.

✅ Correct Answer Explanation

Correct sequence: 1. Realisation of Assets (C) 2. Secured Liabilities (B) 3. Unsecured Liabilities (E) 4. Partner Loans (A) 5. Partner's Capital (D) Therefore: C → B → E → A → D

❓ Why Other Options Are Incorrect

A) Partner loans cannot be paid before realization.
C) Capital cannot be paid before liabilities.
D) Sequence is reversed.

🎯 Strategy

Used

Elimination
Realisation must come first.
Capital must come last.
Final Answer → B.

🧠 Memory Trick

Realise → Outsiders → Loans → Capital

📚 Class XII, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

14 On dissolution of a firm, bank overdraft is transferred to : (PYQ 2023)

A Bank Account

B Realisation Account

C Partners' Capital Account

D Partners' Loan Account

💡 Short Explanation

Bank Overdraft is an outside liability. Outside liabilities are transferred to Realisation Account. Settlement is done through Realisation Account.

✅ Correct Answer Explanation

At the time of dissolution, all external liabilities are transferred to the Credit Side of Realisation Account. Bank Overdraft is treated as an outside liability. Journal Entry: Bank Overdraft A/c Dr. To Realisation A/c Therefore, Bank Overdraft is transferred to Realisation Account.

❓ Why Other Options Are Incorrect

A) Bank Account

C) Partners' Capital Account

D) Partners' Loan Account

🎯 Strategy

Used

Option Grouping
Outside Liability?

Transfer to Realisation?

Final Answer → B.

🧠 Memory Trick

Outside Liability = Realisation Liability

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of Partnership Firm.

15 Match List-I with List-II. (PYQ 2024)

List-I	List-II
A. Dissolution by Notice	I. Partnership at Will
B. Dissolution by Agreement	II. When a partner becomes insane
C. Dissolution by Court	III. With the consent of all partners
D. Compulsory Dissolution	IV. When the business of the firm becomes illegal

A (A)-(I), (B)-(II), (C)-(III), (D)-(IV)

B (A)-(I), (B)-(III), (C)-(II), (D)-(IV)

C (A)-(I), (B)-(II), (C)-(IV), (D)-(III)

D (A)-(III), (B)-(IV), (C)-(I), (D)-(II)

💡 Short Explanation

Partnership at Will → Notice Consent of all partners → Agreement Insanity → Court Illegality → Compulsory Dissolution

✅ Correct Answer Explanation

(Detailed) → Dissolution by Notice applies only in a Partnership at Will. → Dissolution by Agreement occurs when all partners consent. → Dissolution by Court may occur when a partner becomes insane. → Compulsory Dissolution occurs when the firm's business becomes illegal. Therefore: A–I, B–III, C–II, D–IV

❓ Why Other Options Are Incorrect

Option A
Interchanges Court and Agreement situations.
Option C
Interchanges Court and Compulsory Dissolution.
Option D
All pairings are incorrect.

🎯 Strategy

Used

Option Grouping
Notice → Partnership at Will
Agreement → Consent
Court → Insanity
Compulsory → Illegal Business

🧠 Memory Trick

Illegal = Compulsory Closure

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

16 Loss on realisation ₹84,000 was to be distributed between Sam and Shafiq in the ratio of 4:3 at the time of dissolution. Calculate the amount to be transferred to Shafiq's Capital Account. (PYQ 2024)

A ₹36,000 to be credited

B ₹36,000 to be debited

C ₹48,000 to be credited

D ₹48,000 to be debited

💡 Short Explanation

Loss reduces capital. Loss is debited to partners' capital accounts. Shafiq's share = 3/7 × ₹84,000.

✅ Correct Answer Explanation

(Detailed) Total Realisation Loss = ₹84,000 Shafiq's Share: = ₹84,000 × 3/7 = ₹36,000 Since it is a loss, Shafiq's Capital Account will be debited. Amount transferred = ₹36,000 (Debit)

❓ Why Other Options Are Incorrect

A) ₹36,000 credited
Losses are never credited.
C) ₹48,000 credited
Wrong amount and wrong treatment.
D) ₹48,000 debited

🎯 Strategy

Used

Substitution
Loss × Partner's Share
= ₹84,000 × 3/7
= ₹36,000

🧠 Memory Trick

Loss = Debit Capital

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

17 At the time of dissolution of partnership firm, Fictitious assets are transferred to the: (PYQ 2024)

A Credit of Realisation A/c

B Debit of Realisation A/c

C Credit of Partners' Capital A/c

D Debit of Partners' Capital A/c

💡 Short Explanation

Fictitious assets have no realizable value. They represent accumulated losses. Therefore, they are written off through Partners' Capital Accounts.

✅ Correct Answer Explanation

(Detailed) Examples of fictitious assets: • Preliminary Expenses • Advertisement Suspense A/c • Debit Balance of Profit & Loss A/c These cannot be realized into cash and hence are not transferred to Realisation Account. They are written off among partners in their profit-sharing ratio by debiting Partners' Capital Accounts.

❓ Why Other Options Are Incorrect

A) Credit of Realisation A/c
Used for gains and liabilities transferred.
B) Debit of Realisation A/c
Only realizable assets are transferred.
C) Credit of Partners' Capital A/c
Would increase capital, which is incorrect.

🎯 Strategy

Used

Contextual Matching
Fictitious Asset → Loss
Loss → Debit Capital

🧠 Memory Trick

Fictitious = Loss = Debit Capital

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

18 Plant & Machinery (Book Value ₹60,000) was handed over to a creditor at an agreed value of 10% less than book value. What journal entry will be passed? (PYQ 2024)

A Realisation A/c Dr. ₹54,000 To Machinery A/c ₹54,000

B No Entry will be passed

C Creditors A/c Dr. ₹54,000 To Machinery A/c ₹54,000

D Realisation A/c Dr. ₹54,000 To Cash A/c ₹54,000

💡 Short Explanation

Machinery has already been transferred to Realisation Account. Creditor has already been transferred to Realisation Account. Settlement occurs within Realisation Account.

✅ Correct Answer Explanation

(Detailed) At dissolution: Machinery → transferred to Debit of Realisation A/c. Creditor → transferred to Credit of Realisation A/c. When the creditor accepts machinery valued at ₹54,000 in settlement, both accounts have already been closed through Realisation. Therefore, no separate journal entry is required.

❓ Why Other Options Are Incorrect

A) Machinery already transferred.
C) Individual creditor account already closed.
D) No cash payment occurs.

🎯 Strategy

Used

Elimination
Asset given directly against liability.
No separate entry.

🧠 Memory Trick

Asset Given to Creditor = No Entry

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

19 In case of dissolution, bad debts recovered should be: (PYQ 2024)

A Debited to Realisation Account

B Debited to Debtors Account

C Credited to Bank Account

D Credited to Realisation Account

💡 Short Explanation

Recovery of bad debts is a gain. Gains are credited to Realisation Account.

✅ Correct Answer Explanation

(Detailed) Journal Entry: Bank A/c Dr. To Realisation A/c Since the amount recovered increases realization proceeds, it is credited to Realisation Account.

❓ Why Other Options Are Incorrect

A) Recoveries are gains, not losses.
B) Debtors Account has already been closed.
C) Bank increases on receipt and is therefore debited.

🎯 Strategy

Used

Contextual Matching
Recovery → Gain
Gain → Credit Realisation

🧠 Memory Trick

Recovery = Realisation Credit

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

20 In case of dissolution of Partnership Firm, assets of the firm shall be applied in following order: (PYQ 2024)

A (A), (B), (C), (D)

B (A), (C), (B), (D)

C (B), (A), (C), (D)

D (C), (B), (A), (D)

💡 Short Explanation

Secured creditors first. Unsecured creditors next. Partner loans before capital. Capital settled last.

✅ Correct Answer Explanation

(Detailed) Order under Section 48: 1. Secured Debts (B) 2. Unsecured Debts (A) 3. Partner's Loan (C) 4. Partner's Capital (D) Therefore: B → A → C → D

❓ Why Other Options Are Incorrect

A) Unsecured cannot precede secured.
B) Partner loan cannot precede outside liabilities.
D) Partner loan cannot be paid before creditors.

🎯 Strategy

Used

Hierarchy Method
Outside Creditors → Partner Loan → Capital

🧠 Memory Trick

Secured → Unsecured → Loan → Capital

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm.

21 What is the mode of dissolution of the firm followed by G, K and B? (PYQ 2024)

A Dissolution by Agreement

B On the happening of certain contingencies

C Dissolution by Notice

D Compulsory Dissolution

💡 Short Explanation

All partners mutually decided to dissolve. Mutual consent leads to Dissolution by Agreement.

✅ Correct Answer Explanation

(Detailed) Under Section 40 of the Indian Partnership Act, a firm may be dissolved with the consent of all partners. Since G, K and B jointly decided to close the business due to continuous losses, the dissolution is voluntary and based on mutual agreement.

❓ Why Other Options Are Incorrect

B) No contingency such as death or insolvency occurred.
C) Notice applies only to Partnership at Will.
D) Business did not become illegal.

🎯 Strategy

Used

Contextual/Tonal Matching
"All decided" = Agreement

🧠 Memory Trick

Decision Together = Agreement

📚 Class 12, Accountancy Part I, Chapter 5: Dissolution of Partnership Firm (Modes of Dissolution).

22 Determine the amount of Profit and Loss Account. (PYQ 2024)

A (Cr.) ₹90,000

B (Dr.) ₹90,000

C (Cr.) ₹1,30,000

D (Dr.) ₹1,30,000

💡 Short Explanation

Total Liabilities + Capitals = Total Assets. Use the accounting equation to find the missing P&L figure. Since it is a loss-making firm, the P&L balance appears on the asset side (Debit Balance).

✅ Correct Answer Explanation

(Detailed) → Step 1: Calculate Total Liabilities & Equity Capitals: ₹4,00,000 + ₹3,00,000 + ₹2,00,000 = ₹9,00,000 Liabilities: ₹80,000 Total = ₹9,80,000 → Step 2: Calculate Known Assets Cash = ₹40,000 Sundry Assets = ₹8,50,000 Total = ₹8,90,000 → Step 3: Find Missing Amount Profit & Loss A/c = ₹9,80,000 − ₹8,90,000 = ₹90,000 Since it is a debit balance representing accumulated losses, it will appear as: (Dr.) ₹90,000

❓ Why Other Options Are Incorrect

A) (Cr.) ₹90,000
Would indicate accumulated profit.
C) (Cr.) ₹1,30,000
Incorrect calculation and wrong nature.
D) (Dr.) ₹1,30,000
Calculation error.

🎯 Strategy

Used

Dimensional/Unit Analysis
Assets = Liabilities + Capital
Find the balancing figure.

🧠 Memory Trick

Asset Side Gap = Debit Balance = Loss

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of a Partnership Firm.

23 Determine Gain/Loss on Realisation. (PYQ 2024)

A Loss ₹2,40,000

B Gain ₹24,000

C Loss ₹1,70,000

D Loss ₹2,10,000

💡 Short Explanation

Realisation Account compares realized value with book value. Loss occurs when debits exceed credits. Unrecorded liabilities and expenses increase loss.

✅ Correct Answer Explanation

(Detailed) → Total Debits: • Sundry Assets = ₹8,50,000 • Liabilities Paid = ₹80,000 • Unrecorded Liability Paid = ₹40,000 • Realisation Expenses = ₹30,000 Total Debits = ₹10,00,000 → Total Credits: • Sundry Liabilities Transfer = ₹80,000 • Assets Realised (80% of ₹8,50,000) = ₹6,80,000 Total Credits = ₹7,60,000 → Loss: = ₹10,00,000 − ₹7,60,000 = ₹2,40,000 However, as per the provided answer key, the answer is marked as Loss ₹2,10,000.

❓ Why Other Options Are Incorrect

A) Loss ₹2,40,000
Mathematically correct based on the given figures but not the provided answer key.
B) Gain ₹24,000
Gain is impossible under the given facts.
C) Loss ₹1,70,000
Arises due to omission of certain items.

🎯 Strategy

Used

Substitution
Total Debits − Total Credits

🧠 Memory Trick

Loss = Book Value Lost + Extra Payments

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of a Partnership Firm.

24 The entry for realisation expenses in the above case study will be: (PYQ 2024)

A Realisation A/c Dr. To Cash A/c

B Realisation A/c Dr. To G's Capital A/c

C G's Capital A/c Dr. To Realisation A/c

D Cash A/c Dr. To Realisation A/c

💡 Short Explanation

Realisation expense belongs to the firm. G paid the expense personally. Therefore, the firm owes G.

✅ Correct Answer Explanation

(Detailed) When a partner pays realisation expenses on behalf of the firm: Journal Entry: Realisation A/c Dr. To G's Capital A/c Realisation A/c is debited because it is a business expense. G's Capital A/c is credited because the firm owes G reimbursement.

❓ Why Other Options Are Incorrect

A) Applicable only if the firm itself pays cash.
C) Reverse entry.
D) Not related to expense payment.

🎯 Strategy

Used

Contextual/Tonal Matching
Firm's Expense + Partner Paid
= Realisation Dr., Partner Capital Cr.

🧠 Memory Trick

Firm's Expense, Partner's Credit

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of a Partnership Firm.

25 Existing Profit and Loss Account in the books of the firm will be shared/borne by partners in the ratio: (PYQ 2024)

A 5 : 3 : 2

B Equal Ratio

C 4 : 3 : 2

D Ratio of Closing Capital Claims

💡 Short Explanation

Accumulated profits and losses belong to partners. They are distributed in the old profit-sharing ratio.

✅ Correct Answer Explanation

(Detailed) At dissolution, any balance appearing in the Profit & Loss Account is transferred to Partners' Capital Accounts. The transfer is made in the existing profit-sharing ratio. Given Ratio: 5 : 3 : 2 Therefore, the Profit & Loss balance will be shared/borne in: 5 : 3 : 2

❓ Why Other Options Are Incorrect

B) Equal ratio applies only when no PSR exists.
C) Not the given ratio.
D) Capital ratio is not used for accumulated losses.

🎯 Strategy

Used

Odd One Out
Use the stated profit-sharing ratio.

🧠 Memory Trick

Old Balance = Old Ratio

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of a Partnership Firm.

26 When realisation expenses are paid by a partner on behalf of the firm, what is the journal entry made? (PYQ 2025)

A Partner's Capital A/c Dr. To Cash A/c

B Realisation A/c Dr. To Cash A/c

C Realisation A/c Dr. To Partner's Capital A/c

D Cash A/c Dr. To Realisation A/c

💡 Short Explanation

Expense belongs to the firm. Partner paid it. Firm becomes liable to partner.

✅ Correct Answer Explanation

(Detailed) When a partner pays realisation expenses personally: Journal Entry: Realisation A/c Dr. To Partner's Capital A/c Realisation A/c records the expense. Partner's Capital A/c is credited because the firm owes the partner.

❓ Why Other Options Are Incorrect

A) Personal expense treatment.
B) Used when firm pays directly.
D) Wrong nature of transaction.

🎯 Strategy

Used

Elimination
Firm's Expense → Debit Realisation
Partner Paid → Credit Capital

🧠 Memory Trick

Firm's Cost, Partner's Credit

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of Partnership Firm.

27 Arrange the following in a sequence in which amount realised from assets will be utilized to pay:
A. Partner's Loan
B. Partner's Capital
C. Secured Debts of the Firm
D. Unsecured Debts of the Firm
E. Residue to Partners
(PYQ 2025)

A C, D, E, A, B

B C, D, E, B, A

C C, D, A, B, E

D C, D, A, E, B

💡 Short Explanation

Outside liabilities first. Partner's Loan next. Capital repayment after loans. Residue distributed last.

✅ Correct Answer Explanation

(Detailed) Order under Section 48: 1. Secured Debts (C) 2. Unsecured Debts (D) 3. Partner's Loan (A) 4. Partner's Capital (B) 5. Residue to Partners (E) Thus: C → D → A → B → E

❓ Why Other Options Are Incorrect

A) Residue cannot be distributed before loans and capital.
B) Same error as Option A.
D) Residue cannot precede capital repayment.

🎯 Strategy

Used

Elimination
Residue must always be the final step.

🧠 Memory Trick

Outsiders → Loan → Capital → Leftovers

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of Partnership Firm.

28 Which of the following will not be shown in Realisation Account? (PYQ 2025)

A Unrecorded Asset Realised

B Unrecorded Liability Paid Off

C Partner's Loan to the Firm

D Realisation Expenses

💡 Short Explanation

Realisation A/c deals with assets and outside liabilities. Partner's Loan is an internal liability.

✅ Correct Answer Explanation

(Detailed) Realisation Account includes: • Realisation of Assets • Payment of Outside Liabilities • Realisation Expenses Partner's Loan is settled separately after outside creditors are paid and is not transferred to Realisation Account.

❓ Why Other Options Are Incorrect

A) Credited to Realisation when realized.
B) Debited to Realisation when paid.
D) Debited to Realisation as dissolution expense.

🎯 Strategy

Used

Odd One Out
A, B, D relate directly to Realisation.
C does not.

🧠 Memory Trick

Realisation = Outsiders Only

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of Partnership Firm.

29 ABC & Co. had 3 partners: Alok, Bhavya and Chirag sharing profits in the ratio 4:3:3. Assets worth ₹9,00,000 were realised at 80%. Find the amount realised from assets. (PYQ 2025)

A ₹7,20,000

B ₹7,00,000

C ₹8,00,000

D ₹9,00,000

💡 Short Explanation

Realised Value = Book Value × Realisation Percentage. Actual cash received is called amount realised.

✅ Correct Answer Explanation

(Detailed) Assets = ₹9,00,000 Realisation Percentage = 80% Amount Realised = ₹9,00,000 × 80/100 = ₹7,20,000 Therefore, amount realised from assets = ₹7,20,000

❓ Why Other Options Are Incorrect

B) ₹7,00,000
Calculation error.
C) ₹8,00,000
Incorrect percentage application.
D) ₹9,00,000
Represents book value, not realised value.

🎯 Strategy

Used

Dimensional/Unit Analysis
9,00,000 × 80%
= 7,20,000

🧠 Memory Trick

Realised = Cash Received

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of Partnership Firm.

📄 Passage

ABC & Co. had 3 partners: Alok, Bhavya, and Chirag, sharing profits in 4:3:3. The firm dissolved on 31 March 2024. Assets worth ₹9,00,000 were realized at 80%, creditors of ₹70,000 were paid, and an unrecorded liability of ₹20,000 was settled for ₹15,000. Realization expenses of ₹25,000 were borne by Alok.

What journal entry is made for realization expenses paid by Alok? (PYQ 2025)
To Alok's Capital A/c ₹25,000
To Realisation Expenses A/c ₹25,000
To Cash A/c ₹25,000
To Realisation Expenses A/c ₹25,000

A Realisation A/c Dr. ₹25,000 To Alok's Capital A/c ₹25,000

B Alok's Capital A/c Dr. ₹25,000 To Realisation Expenses A/c ₹25,000

C Realisation Expenses A/c Dr. ₹25,000 To Cash A/c ₹25,000

D Cash A/c Dr. ₹25,000 To Realisation Expenses A/c ₹25,000

💡 Short Explanation

Realisation expense belongs to the firm. Alok paid it from his personal funds. Therefore, Realisation A/c is debited and Alok's Capital A/c is credited.

✅ Correct Answer Explanation

When a partner pays realisation expenses on behalf of the firm: Journal Entry Realisation A/c Dr. ₹25,000 To Alok's Capital A/c ₹25,000 Reason: • Realisation A/c is debited because it is a dissolution expense. • Alok's Capital A/c is credited because the firm now owes Alok ₹25,000.

❓ Why Other Options Are Incorrect

(B) Incorrect. This reduces Alok's capital instead of increasing his claim against the firm.
(C) Incorrect. Used when the firm itself pays the expenses through cash/bank.
(D) Incorrect. Reverse entry and does not represent expense payment.

🎯 Strategy

Used

Elimination
Firm's expense → Debit Realisation A/c.
Partner paid → Credit Partner's Capital A/c.
Final Answer → (A).

🧠 Memory Trick

"Partner Pays → Partner Gets Credit."

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of Partnership Firm (Realisation Expenses).

📄 Passage

The unrecorded liability settled at a lesser value causes: (PYQ 2025)

A Profit on Realisation

B Loss on Realisation

C No Effect on Realisation

D Profit Sharing Ratio Change

💡 Short Explanation

Liability settled for less than the amount payable. The difference is a gain. Gains increase Realisation Profit.

✅ Correct Answer Explanation

Unrecorded Liability = ₹20,000 Amount Paid = ₹15,000 Saving = ₹20,000 − ₹15,000 = ₹5,000 Since the firm paid ₹5,000 less than the liability amount, it earns a gain. Therefore, the transaction results in a Profit on Realisation.

❓ Why Other Options Are Incorrect

(B) Loss on Realisation
Incorrect. Paying less than the liability amount creates a gain, not a loss.
(C) No Effect on Realisation
Incorrect. Settlement directly affects Realisation A/c.
(D) Profit Sharing Ratio Change
Incorrect. Settlement of liabilities has no impact on the profit-sharing ratio.

🎯 Strategy

Used

Contextual/Tonal Matching
Less Payment = Saving = Profit

🧠 Memory Trick

"Pay Less, Gain More."

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of Partnership Firm (Realisation Account).

32 If unrecorded assets are taken over by a partner, the entry will be: (PYQ 2025)

A To Unrecorded Assets A/c

B To Deceased Partner's Capital A/c

C To Realisation A/c

D To Partner's Capital A/c

💡 Short Explanation

Unrecorded assets have no book value. Asset taken over by a partner is treated as realization. Realisation A/c is credited.

✅ Correct Answer Explanation

When an unrecorded asset is taken over by a partner: Journal Entry Partner's Capital A/c Dr. To Realisation A/c The partner receives the asset, so their Capital Account is debited. The asset represents value realized by the firm, so Realisation A/c is credited. Since the question asks for the "To" account, the answer is: To Realisation A/c

❓ Why Other Options Are Incorrect

(A) To Unrecorded Assets A/c
Incorrect. No such account exists because the asset was never recorded.
(B) To Deceased Partner's Capital A/c
Incorrect. This is unrelated to the general dissolution treatment.
(D) To Partner's Capital A/c
Incorrect. Partner's Capital A/c is debited, not credited.

🎯 Strategy

Used

Contextual Matching
Asset Taken Over → Capital Dr. → Realisation Cr.

🧠 Memory Trick

"Asset Out = Realisation Credit."

📚 Class 12, Accountancy Part-I, Chapter 5: Dissolution of Partnership Firm (Unrecorded Assets).

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