Some possible Revision Notes for the chapter "Dissolution of Partnership Firm" in Class 12 Accountancy are:
1. Dissolution of Partnership Firm: It refers to the process of ending the partnership firm's business due to various reasons such as mutual agreement, completion of the venture, loss of profits, change in demand, legal interventions, or death of a partner.
2. Types of Dissolution: The dissolution of the partnership firm can be of the following types:
- Dissolution by Mutual Agreement
- Compulsory Dissolution
- Dissolution on the Happening of an Event
- Dissolution on the Basis of Court Order
3. Settlement of Accounts: After the dissolution of the partnership firm, the capital account of each partner needs to be settled. This settlement involves the following steps:
- Record the Realization Account: A realization account is created to record the liquidation of all assets and payment of liabilities. The profit or loss on realization is credited or debited to the partner's capital account.
- Payment of Liabilities: Liabilities owed to outsiders such as creditors, lenders, and employees are paid from the realization account.
- Payment of Partner's Capital: The capital accounts of each partner are settled by paying out their share of the remaining assets after clearing liabilities.
- Distribution of Residual Assets: The residual assets are distributed among partners in their profit sharing ratio.
4. Treatment of Goodwill: Goodwill is the value of the reputation and recognition earned by the partnership firm over time. The value of goodwill needs to be adjusted after the dissolution. If there is any balance of goodwill available, it is distributed among the partners in their agreed profit sharing ratio.
5. Treatment of Accumulated Losses: If the partnership firm has accumulated losses after the realization of assets, the loss is borne by the partners in their agreed profit sharing ratio.
6. Partner's Loan: If a partner has loaned any amount to the partnership firm, the amount is paid back after the payment of liabilities. The loan amount is treated as a liability and paid out of the realization account.
7. Adjustment of Overdrawn Capital Account: If any partner's capital account is overdrawn, the amount is adjusted from the partner's share of the remaining assets.
8. Dissolution Expenses: All expenses related to the dissolution process are paid out of the realization account.
9. Distribution of Surplus: If any surplus amount remains after the settlement of accounts, it is distributed among the partners in their agreed profit sharing ratio.
10. Legal Formalities: After the settlement of accounts, a dissolution deed is signed by all the partners and submitted to the concerned authorities. The dissolution process is completed after obtaining the necessary approvals and clearances.
More Chapters:-
Revision Notes for Share Capital
Revision Notes for Issue and Redemption of Debentures
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