Accounting for Partnership Dissolution: Understanding the Procedure and Preparation of Ledger Accounts

The video tutorial explains the process of dissolving a partnership firm, focusing on the accounting procedures involved. It covers the creation and purpose of various ledger accounts, such as the realization account, capital account, and cash in bank account. The tutorial also discusses how to handle surplus and deficit situations, as well as the implications of partner insolvency. The session concludes with a review of different scenarios that may arise during the dissolution process.

What is the primary reason for the dissolution of a partnership firm as discussed in the video?

• Disputes among partners

• Lack of capital

• Market competition

• Technological advancements

Which of the following accounts is NOT required during the dissolution process?

• Realization account

• Capital account

• Cash in bank account

• Inventory account

Why is the realization account important in the dissolution process?

• To track sales and payments

• To calculate taxes

• To manage employee salaries

• To forecast future profits

What happens to accumulated profits or losses during the dissolution?

• They are transferred to partners' capital account

• They are written off

• They are distributed among partners

• They are transferred to the realization account

In the event of a surplus during dissolution, what is the first priority for payment?

• External liabilities

• Loans from partners

• Partners' capital account

• Realization account

What is the effect of a partner taking over a liability during dissolution?

• The liability is transferred to the realization account

• The partner's capital account is debited

• The liability is written off

• The partner's capital account is credited

How are unrecorded assets treated during the dissolution process?

• They are recorded in the realization account

• They are transferred to partners' capital account

• They are ignored

• They are sold at book value

In the case of a deficit, how is the loss distributed among partners?

• Equally among all partners

• Randomly

• According to profit-sharing ratio

• Based on capital contribution

If assets are sold at a lower price and a partner is insolvent, what happens to the unpaid liabilities?

• They are transferred to the realization account

• They are borne by the remaining partners

• They are written off

• They are transferred to a deficiency account

What happens if all partners are insolvent during the dissolution process?

• Liabilities are closed by transferring to a deficiency account

• Liabilities are written off

• Liabilities are transferred to realization account

• Liabilities are paid by creditors