Dissolution Of Partnership Firm Class 12 Solutions: [CBSE]

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BookTS Grewal Accountancy
Class12
Chapter7 – Dissolution Of Partnership Firm
Volume1

Dissolution Of Partnership Firm Class 12 TS Grewal Solutions

TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7
TS Grewal Class 12 Solutions Chapter 7

Class 12 Dissolution Of Partnership Firm TS Grewal

If you’re looking to master the concept of dissolution in partnership firms, you’re at the right place. TS Grewal Class 12 Chapter 7 unfolds the complex process of winding up business activities, ensuring you’re equipped with the knowledge and understanding necessary for your exams and beyond.

Understanding Dissolution

Dissolution of a Partnership Firm is the complete winding up of the firm’s operations. It signifies an end to the firm’s existence. This does not always mean that the business is non-profitable; there could be a plethora of reasons behind this decision.

Reasons for Dissolution:

  • Mutual Agreement: Partners mutually decide to end the firm.
  • Expiry of the Term: The firm was set for a specific duration, and that period has ended.
  • Completion of Venture: If the firm was set up for a specific project or venture, it would be dissolved after the project’s completion.
  • Death of a Partner: An unexpected event like the death of a partner might necessitate dissolution.
  • Compulsory Dissolution: By law, in cases like bankruptcy or if all partners (except one) become insolvent.
  • Court’s Order: In cases of disputes, a court might order the dissolution of the firm.

When dissolving, it’s imperative to ensure all financial obligations are met. The following sequence is usually maintained:

  • Paying off External Liabilities: Before addressing internal matters, all external obligations, like loans, creditors, and bills payable, are settled.
  • Clearing Partners’ Loans and Capitals: Partners who lent money to the firm get preference over those who have their capital invested.
  • Distribution of Surplus or Residual Value: Any remaining assets after all debts are settled get distributed among partners.

Accounting Treatment During Dissolution

The main objective during dissolution is to ascertain profits or losses arising out of the dissolution and to ensure all partners receive their due share.

Realization Account: The backbone of dissolution accounting. This account is opened to find out the profit or loss made during the dissolution process.

  • Debit Side Entries Include:
    1. All assets at book values (except cash/bank balances).
    2. Any dissolution-related expenses.
    3. Loss incurred during dissolution.
  • Credit Side Entries Include
    1. Money realized from the sale of assets.
    2. Liabilities settled at less than their book value.
    3. Profit from the dissolution process.

Partners’ Capital Accounts: These accounts depict the distribution of profit or loss among the partners. All partners’ claims, including their capital balances and shares in profit or loss, are recorded here.

Important Points to Remember

  • Assets Taken Over by Partners: If a partner takes over any asset, it’s credited to the Realization Account at its book value.
  • Unrecorded Assets and Liabilities: Assets not recorded previously are directly credited to the Realization Account. Similarly, unrecorded liabilities are directly debited.
  • Dissolution Expenses: These are borne by partners equally unless stated otherwise.

Dissolution Of Partnership Firm Class 12 TS Grewal Solutions PDF Download

TS Grewal’s Accountancy book is a popular textbook used by students in Class 12th studying Commerce stream. It is known for its clear and concise explanations of accounting principles and practices. As previously mentioned, using TS Grewal Class 12 Solutions can make your studies more effective and productive. In order to make your studies more convenient and productive for you, we have presented you with Dissolution Of Partnership Firm Class 12 TS Grewal Solutions PDF for free.

If you want to download the pdf solution, then you can click on the download button given below. The download button will take you to a new page, where you can easily download your TS Grewal Class 12 Solutions for absolutely free of cost.

Conclusion

In conclusion, this was your TS Grewal Class 12 Solutions Chapter 7: Dissolution of Partnership Firm. The dissolution of a partnership firm can be intricate, but a systematic approach and understanding of its nuances can make it manageable. With the insights from this chapter, you’re not only well-equipped for your exams but also for any real-life business situations you might encounter in the future. If you have found our solutions helpful, then make sure share with your friends.

FAQs

Can a firm be dissolved without settling its obligations?

No, a firm must settle all its external and internal liabilities before it’s fully dissolved.

Why is cash not transferred to the Realization Account?

Because cash isn’t realized or lost during dissolution. It remains constant unless used for expenses or to settle liabilities.

How do we account for a partner taking over a liability?

If a partner assumes responsibility for a liability, the liability amount is deducted from the partner’s capital account. On the other hand, the Realization Account is credited with the book value of that liability, indicating that the firm no longer bears the responsibility of that debt.

Why is it essential to prepare a Realization Account during dissolution?

The Realization Account helps ascertain the profit or loss during the dissolution process and ensures that all assets and liabilities are accurately accounted for.

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