What traumatic event does Zitkala-Sa describe at the school?

The forcible cutting of her long hair

Why was the cutting of her hair so humiliating to Zitkala-Sa?

Among her people, shingled hair was worn by cowards and mourners

Distinguish dissolution of partnership from dissolution of a firm.

Dissolution of partnership changes the partners' relationship while the firm continues; dissolution of the firm ends the firm's business and existence altogether.

Which section defines dissolution of the firm?

Section 39 of the Indian Partnership Act 1932 defines the dissolution of partnership among all the partners as the dissolution of the firm.

Name the modes of dissolution of a firm.

By agreement, compulsory dissolution, dissolution on the happening of certain contingencies, dissolution by notice and dissolution by the court.

What is the purpose of a Realisation Account?

To record the sale of assets and the settlement of liabilities so as to find the profit or loss on realisation.

Which items are not transferred to the Realisation Account?

Cash and bank balances, and fictitious assets or accumulated losses, are not transferred to the Realisation Account.

How is profit or loss on realisation distributed?

It is transferred to the partners' capital accounts in their profit-sharing ratio.

In what order are accounts settled on dissolution?

First outside liabilities, then partners' loans, and finally the partners' capital balances.

How are realisation expenses recorded?

They are debited to the Realisation Account; if borne by a partner, the partner's capital account is credited.

When can a court order dissolution of a firm?

On grounds such as a partner becoming of unsound mind, permanent incapacity, misconduct, persistent breach of agreement or the business running at a loss.

What happens to a partner's loan to the firm on dissolution?

It is repaid after outside liabilities but before the partners' capital accounts are settled.

Dissolution of Partnership Firm

Class 12 Accountancy · Accountancy Part I · Chapter 4

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Summary

Dissolution must distinguish between the dissolution of partnership and the dissolution of a partnership firm. Dissolution of partnership changes the existing relationship among partners—through a change in the ratio, admission, retirement, death or insolvency—while the firm may continue its business. Dissolution of the firm, under Section 39 of the Partnership Act 1932, is the dissolution of partnership among all the partners; it ends the firm's existence and the business is wound up. A firm may be dissolved by mutual agreement, compulsorily (for example on insolvency of all but one partner or on the business becoming unlawful), on the happening of certain contingencies, by notice in a partnership at will, or by an order of the court. On dissolution of the firm, the books are closed by transferring all assets (except cash and bank) and all external liabilities to a Realisation Account. Assets are sold and liabilities are paid off, realisation expenses are recorded, and the resulting profit or loss on realisation is shared by the partners in their profit-sharing ratio. Partners' loans are repaid, the partners' capital accounts are settled, and finally the cash or bank account is balanced, closing the books of the firm.

Dissolution of partnership vs firmModes of dissolution under the ActPreparation of the Realisation AccountSettlement of accounts and order of paymentClosing the books of the firm

Key terms

Dissolution of Partnership

A change in the relationship among partners while the firm continues its business as before.

Dissolution of Firm

The dissolution of partnership among all partners, bringing the firm's existence and business to an end (Section 39).

Realisation Account

The account prepared on dissolution to record the sale of assets, payment of liabilities and the resulting profit or loss.

Realisation Expenses

The expenses incurred in the process of winding up the firm, such as costs of selling assets and settling liabilities.

Firm's Debts

Liabilities owed by the firm to outsiders, which are paid out of the firm's assets before partners' claims are settled.

Settlement of Accounts

The order in which the firm's assets are applied—paying outside debts, partners' loans, and finally partners' capitals.

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Dissolution of partnership differs from dissolution of a firm because in dissolution of partnership:

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Dissolution of Partnership Firm

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Summary

Key terms

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Practice quiz · Dissolution of Partnership Firm

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