Q1: 1. What does dissolution of a partnership firm refer to?

• A) Formation of a partnership
• B) Termination of a partnership
• C) Expansion of a partnership
• D) Restructuring of a partnership

Q2: 2. In the dissolution of a partnership firm, which statement is true?

• A) Assets are sold at a loss
• B) Liabilities are paid off first
• C) Partners continue business together
• D) Profit sharing ratio remains unchanged

Q3: 3. When a partnership firm dissolves, what happens to the firm's assets?

• A) Distributed among partners
• B) Returned to creditors
• C) Destroyed
• D) Donated to charity

Q4: 4. What is the first step in the dissolution process of a partnership firm?

• A) Settling liabilities
• B) Selling assets
• C) Notifying partners
• D) Realizing assets

Q5: 5. In the dissolution of a partnership firm, which statement is correct?

• A) Partners can continue business under a new name
• B) Partners must dissolve their personal relationships
• C) Assets are distributed equally among partners
• D) Liabilities are settled after distribution of assets

Q6: 6. What role does the dissolution of a partnership firm play in business operations?

• A) Promotes competition
• B) Facilitates expansion
• C) Allows for closure
• D) Enhances profitability

Q7: 7. When a partnership firm dissolves due to disagreement among partners, what is the common outcome?

• A) Liquidation
• B) Merger
• C) Acquisition
• D) Restructuring

Q8: 8. In the dissolution of a partnership firm, what is the main objective?

• A) Maximizing profits
• B) Settling disputes
• C) Retaining assets
• D) Expanding operations

Q9: 9. Which statement best describes the process of dissolution of a partnership firm?

• A) Complicated and time-consuming
• B) Simple and quick
• C) Expensive and risky
• D) Voluntary and cooperative

Q10: 10. What happens to the remaining assets after settling all liabilities in the dissolution of a partnership firm?

• A) Returned to the partners
• B) Donated to charity
• C) Confiscated by the government
• D) Destroyed

Q11: 11. When a partnership firm is dissolved, what role do third-party creditors play in the process?

• A) They receive priority in asset distribution
• B) They have no claim on the firm's assets
• C) They can block the dissolution process
• D) They become partners in the new firm

Q12: 12. In the dissolution of a partnership firm, what is the purpose of preparing a realization account?

• A) To determine profit share ratios
• B) To calculate goodwill value
• C) To record asset realization and liabilities settlement
• D) To assess future business opportunities

Q13: 13. What is the impact of dissolution of a partnership firm on the partners' personal assets?

• A) Protected from business liabilities
• B) Automatically transferred to the new firm
• C) Used to settle business debts
• D) Frozen until a new partnership is formed

Q14: 14. When a partnership firm dissolves, what is the usual method of asset distribution among partners?

• A) Equal sharing
• B) Based on capital contributions
• C) Based on seniority
• D) Random allocation

Q15: 15. How does the dissolution of a partnership firm affect the partners' relationship with each other?

• A) Strengthens personal bonds
• B) Ends all business ties
• C) Leads to legal disputes
• D) Allows for future collaboration

Q16: 16. In the dissolution process of a partnership firm, what is the significance of settling liabilities before distributing assets?

• A) Ensures fair treatment of creditors
• B) Speeds up the dissolution process
• C) Avoids tax implications
• D) Protects partners from losses

Q17: 17. When a partnership firm dissolves, what role does the goodwill of the firm play in asset distribution?

• A) Ignored in the distribution process
• B) Shared equally among partners
• C) Used to settle liabilities
• D) Valued and included in asset distribution

Q18: 18. What is the primary reason for the dissolution of a partnership firm?

• A) Government intervention
• B) Financial losses
• C) Increase in market demand
• D) Expansion opportunities

Q19: 19. During the dissolution of a partnership firm, how are the partners' capital balances adjusted?

• A) Equalized
• B) Increased
• C) Decreased
• D) Ignored

Q20: 20. In the dissolution of a partnership firm, how are the partners' personal assets separated from the business assets?

• A) Partners retain ownership of business assets
• B) Personal assets are liquidated to settle business debts
• C) Business assets are divided among partners
• D) Personal and business assets are merged

Q21: 21. When a partnership firm dissolves, what is the role of a liquidator?

• A) To maximize profits for partners
• B) To resolve disputes among partners
• C) To oversee the dissolution process
• D) To acquire new business opportunities

Q22: 22. In the dissolution of a partnership firm, what is the impact on the firm's creditors?

• A) They lose all claims on the firm's assets
• B) They receive priority in asset distribution
• C) They become partners in the new firm
• D) They are excluded from the dissolution process

Q23: 23. How does the dissolution of a partnership firm affect the partners' legal obligations?

• A) Partners remain liable for business debts
• B) Partners are absolved of all liabilities
• C) Partners' liabilities are transferred to the liquidator
• D) Partners' liabilities are transferred to the government

Q24: 24. When a partnership firm dissolves, what is the role of a dissolution account?

• A) To distribute profits among partners
• B) To record the dissolution expenses
• C) To calculate partners' capital shares
• D) To value the firm's goodwill

Q25: 25. In the dissolution of a partnership firm, what happens to the firm's ongoing contracts and agreements?

• A) Automatically terminated
• B) Transferred to the partners individually
• C) Assigned to a new business entity
• D) Ignored during the dissolution process