{"id":4180,"date":"2026-07-06T13:49:06","date_gmt":"2026-07-06T08:19:06","guid":{"rendered":"https:\/\/mymockmate.com\/notes\/?p=4180"},"modified":"2026-07-06T14:15:18","modified_gmt":"2026-07-06T08:45:18","slug":"ncert-class-12-accountancy-dissolution-of-partnership-firm-solutions","status":"publish","type":"post","link":"https:\/\/mymockmate.com\/notes\/ncert-class-12-accountancy-dissolution-of-partnership-firm-solutions\/","title":{"rendered":"NCERT Class 12 Accountancy Dissolution of Partnership Firm Solutions"},"content":{"rendered":"
\"\"<\/a><\/div><\/div>
\"image_print\"Print<\/span><\/a> 6<\/span><\/div>\n

Short Introduction<\/strong><\/p>\n\n\n\n

Dissolution of Partnership Firm refers to the complete closure of a partnership business. During dissolution, all assets are realized, liabilities are paid, and the remaining balance is distributed among partners according to their agreed profit-sharing ratio. This chapter explains the legal provisions, accounting treatment, and preparation of Realisation Account at the time of dissolution.<\/p>\n\n\n\n

Quick Information Box<\/p>\n\n\n\n

Chapter: Dissolution of Partnership Firm<\/p>\n\n\n\n

Class: 12<\/p>\n\n\n\n

Subject: Accountancy<\/p>\n\n\n\n

Related Topic to Read more<\/span>Relations and Functions Exercise 1.1 Solutions Class 12<\/span><\/a><\/div>

Book: NCERT Accountancy Part-I<\/p>\n\n\n\n

Topic Covered:
• Dissolution of Partnership
• Dissolution of Firm
• Realisation Account
• Settlement of Accounts
• Distribution of Assets and Liabilities<\/p>\n\n\n\n

Concepts Used (Topics Covered)<\/p>\n\n\n\n

• Meaning of Dissolution
• Difference between Dissolution of Partnership and Dissolution of Firm
• Modes of Dissolution
• Settlement of Claims
• Realisation Account
• Treatment of Assets and Liabilities
• Distribution of Profit and Loss on Realisation<\/p>\n\n\n\n

Important Formulas<\/p>\n\n\n\n

    \n
  1. Profit on Realisation<\/li>\n<\/ol>\n\n\n\n

    Profit on Realisation = Credit Side of Realisation Account − Debit Side of Realisation Account<\/p>\n\n\n\n

      \n
    1. Loss on Realisation<\/li>\n<\/ol>\n\n\n\n
      Related Topic to Read more<\/span>Relations and Functions Exercise 1.2 Solutions Class 12<\/span><\/a><\/div>

      Loss on Realisation = Debit Side of Realisation Account − Credit Side of Realisation Account<\/p>\n\n\n\n

        \n
      1. Distribution of Realisation Profit\/Loss<\/li>\n<\/ol>\n\n\n\n

        Partners’ Share = Profit or Loss × Profit Sharing Ratio<\/p>\n\n\n\n

        Question 1<\/p>

        \"\"<\/a><\/div><\/div>\n\n\n\n

        Statement:
        Dissolution of a partnership is different from dissolution of a firm.<\/p>\n\n\n\n

        Answer: True<\/p>\n\n\n\n

        Explanation:<\/p>\n\n\n\n

        Related Topic to Read more<\/span>Miscellaneous Exercise Solutions Class 12 Relations Functions<\/span><\/a><\/div>

        Dissolution of partnership means change in relationship among partners due to admission, retirement or death. The business may continue.<\/p>\n\n\n\n

        Dissolution of a firm means complete closure of business and termination of partnership.<\/p>\n\n\n\n

        \n\n\n\n

        Question 2<\/p>\n\n\n\n

        Statement:
        A partnership is dissolved when there is a death of a partner.<\/p>\n\n\n\n

        Answer: True<\/p>\n\n\n\n

        Explanation:<\/p>\n\n\n\n

        Death of a partner ends the existing partnership agreement and therefore dissolves the partnership relationship.<\/p>\n\n\n\n

        \n\n\n\n

        Question 3<\/p>\n\n\n\n

        Statement:
        A firm is dissolved when all partners give consent to it.<\/p>\n\n\n\n

        Answer: True<\/p>\n\n\n\n

        Explanation:<\/p>\n\n\n\n

        A firm may be dissolved by agreement when all partners mutually agree to dissolve the firm.<\/p>\n\n\n\n

        \n\n\n\n

        Question 4<\/p>\n\n\n\n

        Statement:
        A firm is compulsorily dissolved when a partner decides to retire.<\/p>\n\n\n\n

        Answer: False<\/p>\n\n\n\n

        Explanation:<\/p>\n\n\n\n

        Retirement causes dissolution of partnership but not necessarily dissolution of the firm.<\/p>\n\n\n\n

        \n\n\n\n

        Question 5<\/p>\n\n\n\n

        Statement:
        Dissolution of a firm necessarily involves dissolution of partnership.<\/p>\n\n\n\n

        Answer: True<\/p>\n\n\n\n

        Explanation:<\/p>\n\n\n\n

        When a firm is dissolved, partnership automatically comes to an end.<\/p>\n\n\n\n

        \n\n\n\n

        Question 6<\/p>\n\n\n\n

        Statement:
        A firm is compulsorily dissolved when all partners or all except one partner become insolvent.<\/p>\n\n\n\n

        Answer: True<\/p>\n\n\n\n

        Explanation:<\/p>\n\n\n\n

        Under the Partnership Act, the firm cannot continue if all partners or all except one become insolvent.<\/p>\n\n\n\n

        \n\n\n\n

        Question 7<\/p>\n\n\n\n

        Statement:
        Court can order a firm to be dissolved when a partner becomes insane.<\/p>\n\n\n\n

        Answer: True<\/p>\n\n\n\n

        Explanation:<\/p>\n\n\n\n

        Permanent insanity of a partner is a valid ground for dissolution by court order.<\/p>\n\n\n\n

        \n\n\n\n

        Question 8<\/p>\n\n\n\n

        Statement:
        Dissolution of partnership cannot take place without intervention of the court.<\/p>\n\n\n\n

        Answer: False<\/p>\n\n\n\n

        Explanation:<\/p>\n\n\n\n

        Partnership can be dissolved through mutual agreement without court intervention.<\/p>\n\n\n\n

          \n
        1. Confusing dissolution of partnership with dissolution of firm.<\/li>\n\n\n\n
        2. Treating retirement as compulsory dissolution.<\/li>\n\n\n\n
        3. Ignoring legal provisions of Partnership Act, 1932.<\/li>\n\n\n\n
        4. Assuming court intervention is always required.<\/li>\n<\/ol>\n\n\n\n

          • Learn all modes of dissolution.
          • Remember the distinction table between partnership dissolution and firm dissolution.
          • Revise provisions of Section 39 and Section 48.
          • Frequently asked theory question in CBSE Board Exams.<\/p>\n\n\n\n

            \n
          1. Which of the following leads to dissolution of partnership?<\/li>\n<\/ol>\n\n\n\n

            A. Admission of Partner
            B. Retirement of Partner
            C. Death of Partner
            D. All of These<\/p>\n\n\n\n

            Answer: D<\/p>\n\n\n\n

              \n
            1. Dissolution of firm means:<\/li>\n<\/ol>\n\n\n\n

              A. Change in ratio
              B. Admission
              C. Closure of business
              D. Retirement<\/p>\n\n\n\n

              Answer: C<\/p>\n\n\n\n

                \n
              1. Which Act governs partnership firms in India?<\/li>\n<\/ol>\n\n\n\n

                A. Companies Act
                B. Partnership Act 1932
                C. GST Act
                D. Income Tax Act<\/p>\n\n\n\n

                Answer: B<\/p>\n\n\n\n

                  \n
                1. Which of the following is a ground for dissolution by court?<\/li>\n<\/ol>\n\n\n\n

                  A. Insanity of Partner
                  B. Misconduct
                  C. Continuous Losses
                  D. All of These<\/p>\n\n\n\n

                  Answer: D<\/p>\n\n\n\n

                    \n
                  1. Dissolution of firm always results in:<\/li>\n<\/ol>\n\n\n\n

                    A. Admission
                    B. Retirement
                    C. Dissolution of Partnership
                    D. None<\/p>\n\n\n\n

                    Answer: C<\/p>\n\n\n\n

                    Q1. What is dissolution of partnership?<\/p>\n\n\n\n

                    Answer:
                    It refers to the termination of existing relationship among partners while business may continue.<\/p>\n\n\n\n

                    Q2. What is dissolution of a firm?<\/p>\n\n\n\n

                    Answer:
                    It refers to complete closure of business and termination of partnership relations.<\/p>\n\n\n\n

                    Q3. Which section defines dissolution of firm?<\/p>\n\n\n\n

                    Answer:
                    Section 39 of the Indian Partnership Act, 1932.<\/p>\n\n\n\n

                    Q4. Is death of a partner dissolution of firm?<\/p>\n\n\n\n

                    Answer:
                    Not necessarily. It dissolves partnership but the firm may continue.<\/p>\n\n\n\n

                    Q5. Is court order compulsory for dissolution?<\/p>\n\n\n\n

                    Answer:
                    No. Mutual agreement can also dissolve a firm.<\/p>\n\n\n\n

                    Prepare Accountancy smarter with detailed NCERT solutions, chapter notes, MCQs, important formulas and board exam resources only on www.mymockmate.com<\/a>.<\/p>\n

                    \"image_print\"Print<\/span><\/a> 6<\/span><\/div>
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