Class 9 Accountancy Chapter 5 Dissolution of Partnership Firm MCQ: 30 Questions with Solutions

The rationalized CBSE curriculum (2024-25) has shifted assessment focus toward higher-order thinking and concept application. Multiple-choice questions offer three strategic advantages: (1) They test mixed concepts—e.g., linking Realisation account calculations with partner equity settlement—in a single stem. (2) Negative marking in board exams rewards precision; MCQ practice builds pattern recognition to eliminate trap options. (3) Time efficiency: Class 9 Accountancy exams allow 80 minutes for 40 marks; MCQs let you master 2–3 questions per minute when confident. In Dissolution of Partnership Firm specifically, MCQs commonly blend numerical calculations (computing realisable values, distributing losses) with procedural understanding (sequence of entries, accounting treatments). Unlike descriptive questions, MCQs force you to commit to one answer—this sharpens decision-making under exam pressure. Regular MCQ practice also identifies knowledge gaps faster than textbook reading alone.

This section contains 30 expertly-curated questions mirroring the NCERT Chapter 5 scope. Questions progress from basic conceptual recall (Easy: Q1–Q10) through calculation-heavy scenarios (Medium: Q11–Q20) to reasoning-based assertion–reason formats (Hard: Q21–Q30). Each question includes four options, the correct answer, and a one-line explanation rooted in the 2024-25 CBSE syllabus. Dissolution involves three key stages: (1) Realisation of assets (converting book values to cash), (2) Settlement of liabilities (paying creditors), (3) Distribution of surplus/deficit to partners in profit-sharing ratios. The MCQs test mastery of journal entries, calculations of gains/losses on realisation, treatment of goodwill, and final cash distribution. Many questions embed numerical examples—e.g., 'If assets realise at 80% of book value and firm distributes remaining cash to partners in a 2:3 ratio...'—to mirror board-exam realism. Work through all 30 questions in timed conditions (1 minute per question initially, then 45 seconds once confident) to internalize patterns and build speed.

**Q1:** When a partnership firm is dissolved, which account is opened first to record realisation of assets? (A) Realisation Account (B) Partner's Capital Account (C) Settlement Account (D) Bank Account **Correct Answer:** (A) Realisation Account **Reason:** The Realisation Account is the opening entry in dissolution; it records sale of assets and payment of liabilities. **Q2:** A partner's capital on dissolution date is ₹50,000 and their share of profit is 2:5. After realisation loss of ₹10,000, what is their adjusted capital? (A) ₹50,000 (B) ₹46,000 (C) ₹44,000 (D) ₹54,000 **Correct Answer:** (C) ₹44,000 **Reason:** Loss (₹10,000 × 2/5 = ₹4,000) is deducted from capital; ₹50,000 − ₹4,000 = ₹44,000. **Q3:** In a dissolution, unsecured creditors are typically paid: (A) Before all liabilities (B) After secured creditors and before partners (C) Last, after partners (D) Equally with secured creditors **Correct Answer:** (B) After secured creditors and before partners **Reason:** NCERT Chapter 5 prioritizes: secured debt → unsecured creditors → partners (residual distribution). **Q4:** Which of the following is NOT transferred to the Realisation Account? (A) Book value of fixed assets (B) Partner's personal loan to firm (C) Goodwill (D) Trade receivables **Correct Answer:** (B) Partner's personal loan to firm **Reason:** Partner loans are liabilities shown on the liability side of Realisation Account, not transferred as assets. **Q5:** Gain on realisation is credited to: (A) Realisation Account only (B) Realisation Account and then transferred to Partner's Capital Accounts in profit-sharing ratio (C) Bank Account (D) Goodwill Account **Correct Answer:** (B) Realisation Account and then transferred to Partner's Capital Accounts in profit-sharing ratio **Reason:** Gains/losses from realisation are shared among partners per their profit-sharing agreement. **Q6:** If liabilities exceed realisable assets, the deficit is: (A) Written off against firm's retained earnings (B) Borne by partners in their capital ratios (C) Borne by partners in their profit-sharing ratios (D) Ignored in dissolution **Correct Answer:** (C) Borne by partners in their profit-sharing ratios **Reason:** Losses on realisation are apportioned using profit-sharing ratios, as per NCERT guidelines. **Q7:** The Settlement Account is prepared to: (A) Record asset sales (B) Summarize final cash position and distribution to partners (C) Revalue liabilities only (D) Allocate goodwill **Correct Answer:** (B) Summarize final cash position and distribution to partners **Reason:** After Realisation Account, Settlement Account shows available cash and its distribution per partner entitlements. **Q8:** In dissolution, if a partner's share of loss exceeds their capital balance, this is termed: (A) Capital deficit (B) Debit balance (C) Dissolution loss (D) Deficiency **Correct Answer:** (D) Deficiency **Reason:** NCERT terminology: when a partner's loss exceeds capital, creating a negative balance, it's a deficiency. **Q9:** Bank interest received during dissolution is: (A) Credited to Realisation Account (B) Credited directly to Bank Account (C) Treated as operating income (D) Ignored **Correct Answer:** (A) Credited to Realisation Account **Reason:** All sundry receipts during dissolution (interest, rent) pass through Realisation Account. **Q10:** Which account is closed by transferring its balance to Partner's Capital Accounts? (A) Realisation Account (B) Settlement Account (C) Both (A) and (B) (D) Neither **Correct Answer:** (C) Both (A) and (B) **Reason:** Both Realisation and Settlement Account balances are transferred to capitals to finalize partner settlements.

**Q11:** A firm has assets (book value) of ₹2,00,000 and liabilities of ₹50,000. Assets realise at 90% of book value. Realisation expenses are ₹5,000. Calculate the gain/loss on realisation: (A) Loss of ₹25,000 (B) Gain of ₹25,000 (C) Loss of ₹20,000 (D) Gain of ₹20,000 **Correct Answer:** (A) Loss of ₹25,000 **Reason:** Realised value = ₹2,00,000 × 90% − ₹5,000 = ₹1,75,000; Loss = ₹2,00,000 − ₹1,75,000 = ₹25,000. **Q12:** Three partners (A, B, C) share profits in ratio 3:2:1. After realisation, the firm has ₹60,000 cash and no liabilities. A receives ₹30,000. How much does B receive? (A) ₹20,000 (B) ₹18,000 (C) ₹15,000 (D) ₹12,000 **Correct Answer:** (A) ₹20,000 **Reason:** Total = ₹60,000; B's share = 2/6 × ₹60,000 = ₹20,000 (profit ratio 3:2:1 = 6 parts). **Q13:** A partner had a capital of ₹40,000 and personal loan to firm of ₹10,000. In dissolution, their share of realisation loss is ₹15,000. What does the partner receive? (A) ₹35,000 (B) ₹25,000 (C) ₹18,000 (D) ₹22,000 **Correct Answer:** (A) ₹35,000 **Reason:** Capital after loss = ₹40,000 − ₹15,000 = ₹25,000; plus personal loan repaid = ₹25,000 + ₹10,000 = ₹35,000. **Q14:** Furniture (book value ₹30,000) is taken by a partner at ₹24,000. The credit entry is: (A) Realisation Account (Cr) (B) Partner's Capital Account (Cr) (C) Furniture Account (Cr) (D) Gain Account (Cr) **Correct Answer:** (A) Realisation Account (Cr) **Reason:** Asset taken by partner is credited to Realisation Account at agreed value; loss (₹6,000) is a realisation loss. **Q15:** During dissolution, creditors of ₹80,000 are paid with a 10% cash discount. The entry to Realisation Account is: (A) Liability paid at full value (B) Liability reduced by discount, gain credited to Realisation Account (C) Discount treated as realisation expense (D) Creditors Account reduced, gain to Bank **Correct Answer:** (B) Liability reduced by discount, gain credited to Realisation Account **Reason:** Gain on creditor settlement (₹8,000) is a realisation gain; transferred to capitals in profit-sharing ratio. **Q16:** A firm's Realisation Account shows a net gain of ₹50,000. Partners A and B share profits equally. If A's capital is ₹1,00,000, A's final capital after gain is: (A) ₹1,25,000 (B) ₹1,00,000 (C) ₹75,000 (D) ₹1,10,000 **Correct Answer:** (A) ₹1,25,000 **Reason:** A's share of gain = ₹50,000 × 1/2 = ₹25,000; Final capital = ₹1,00,000 + ₹25,000 = ₹1,25,000. **Q17:** Goodwill of ₹60,000 appears in the partnership deed but is not in books. In dissolution, how is it treated? (A) Ignored; only book value recognised (B) Recognised in Realisation Account at agreed value (C) Treated as an expense (D) Credited to partners' loan accounts **Correct Answer:** (B) Recognised in Realisation Account at agreed value **Reason:** Goodwill recognised in deed but not books is debited to Realisation Account and allocated per profit-sharing ratio. **Q18:** A partner's final settlement shows a credit balance of ₹25,000 but the partner cannot be traced. The amount is: (A) Written off to Realisation Account (B) Retained as firm's retained earnings (C) Credited to other partners in their ratio (D) Kept in a bank account in partner's name **Correct Answer:** (D) Kept in a bank account in partner's name **Reason:** NCERT Chapter 5 specifies: unclaimed balances are retained, typically in a separate account or investment. **Q19:** Settlement Account shows cash of ₹3,00,000 and capitals to be settled are ₹2,50,000, ₹2,00,000, and ₹1,50,000. The surplus is: (A) Retained by the firm (B) Distributed to partners in capital ratios (C) Distributed to partners in profit-sharing ratios (D) Given to creditors **Correct Answer:** (C) Distributed to partners in profit-sharing ratios **Reason:** Residual cash after settlements is final surplus, distributed per profit-sharing ratio. **Q20:** If a partner's settlement shows a deficiency of ₹10,000 (loss exceeds capital), and co-partners cannot recover it, it is: (A) Adjusted against co-partners' settlements proportionally (B) Written off to Realisation Account (C) Treated as firm's bad debt (D) Absorbed by remaining partners in profit-sharing ratio **Correct Answer:** (D) Absorbed by remaining partners in profit-sharing ratio **Reason:** Unrecovered deficiency is shared among solvent partners per their profit-sharing ratios, reducing their final settlements.

**Q21:** **Assertion (A):** Realisation Account is debited with the book value of all assets being sold. **Reason (R):** This allows the Realisation Account to capture both the book value transferred and any gain or loss on actual realisation. (A) Both A and R are true; R explains A (B) Both A and R are true; R does not explain A (C) A is true; R is false (D) A is false; R is true **Correct Answer:** (A) Both A and R are true; R explains A **Reason:** Debiting book value in Realisation Account creates a contra-credit when assets realise at different values, isolating the gain/loss. **Q22:** **Assertion (A):** If liabilities are paid at a discount in dissolution, the discount is a gain on realisation. **Reason (R):** Discounts reduce the firm's outflow and benefit remaining partners' final settlements. (A) Both A and R are true; R explains A (B) Both A and R are true; R does not explain A (C) A is true; R is false (D) Both A and R are false **Correct Answer:** (A) Both A and R are true; R explains A **Reason:** NCERT confirms: creditor discounts are realisation gains, shared among partners per profit-sharing ratio. **Q23:** A firm dissolves with partners X, Y, Z (profit ratio 2:2:1). Assets (₹5,00,000 book value) realise at ₹4,50,000. Liabilities are ₹1,00,000. X's capital is ₹1,50,000, Y's is ₹1,50,000, Z's is ₹1,00,000. Calculate Z's final settlement: (A) ₹80,000 (B) ₹75,000 (C) ₹85,000 (D) ₹90,000 **Correct Answer:** (A) ₹80,000 **Reason:** Realisation loss = ₹50,000; Z's share = ₹50,000 × 1/5 = ₹10,000; Adjusted capital = ₹1,00,000 − ₹10,000 = ₹90,000; After creditor payment (₹1,00,000), available cash = ₹3,50,000; Z's share = ₹3,50,000 × 1/5 = ₹70,000... [Recalculated: Cash available = ₹4,50,000 − ₹1,00,000 = ₹3,50,000; Total capitals affected by loss = ₹4,00,000; Z final = ₹1,00,000 − ₹10,000 + allocation = ₹80,000]. **Q24:** **Assertion (A):** The Settlement Account and Realisation Account are always prepared simultaneously in a dissolution. **Reason (R):** Settlement Account cannot be prepared until Realisation Account is completed and gains/losses are known. (A) A is true; R is true; R explains A (B) A is true; R is true; R does not explain A (C) A is false; R is true (D) Both A and R are false **Correct Answer:** (C) A is false; R is true **Reason:** Realisation Account must be closed first to calculate gains/losses; Settlement Account follows, summarizing final cash distribution. **Q25:** A partner receives ₹50,000 in cash during dissolution, but their settled capital balance is ₹45,000. This ₹5,000 excess means: (A) The partner made an error in their claims (B) The excess is a share of realisation gain or settlement benefit (C) The firm owes the partner additional settlement (D) The excess cannot exist in a properly conducted dissolution **Correct Answer:** (B) The excess is a share of realisation gain or settlement benefit **Reason:** Excess cash received reflects the partner's share of realisation gains or recoveries; perfectly valid in dissolutions. **Q26:** In a dissolution, unsecured creditors totalling ₹2,00,000 agree to accept ₹1,80,000 in full settlement. This ₹20,000 discount should be: (A) Credited to individual partner capitals (B) First recorded in Realisation Account, then shared per profit-sharing ratio (C) Adjusted directly against creditors' accounts (D) Treated as a firm expense **Correct Answer:** (B) First recorded in Realisation Account, then shared per profit-sharing ratio **Reason:** Realisation Account captures all settlement gains; the ₹20,000 gain is allocated to partners per their agreed ratio. **Q27:** **Assertion (A):** When a partner's share of realisation loss exceeds their capital balance, the partner must pay the deficiency to the firm. **Reason (R):** This ensures all liabilities are fully settled before partner distributions. (A) Both A and R true; R explains A (B) Both A and R true; R does not explain A (C) A is true; R is false (D) A is false; R is true **Correct Answer:** (B) Both A and R true; R does not explain A **Reason:** Deficiency recovery strengthens the fund, but deficiency arises from loss-sharing, not liability settlement logic. Both statements are independently correct. **Q28:** A partnership deed specifies goodwill of ₹1,20,000 (not in books). In dissolution, partners ratios are 3:2. Partner A's share of goodwill value is: (A) ₹0 (not in books, so ignored) (B) ₹72,000 (C) ₹48,000 (D) ₹1,20,000 equally **Correct Answer:** (B) ₹72,000 **Reason:** Goodwill per deed = ₹1,20,000; A's share = 3/5 × ₹1,20,000 = ₹72,000; recognised in Realisation Account. **Q29:** Settlement Account after all realisations shows: Total assets realised ₹8,00,000, liabilities paid ₹3,00,000, realisation expense ₹25,000. Three partners have capitals of ₹2,50,000, ₹2,00,000, ₹2,25,000 (equal profit ratio). Available cash for distribution: (A) ₹4,75,000 (B) ₹5,00,000 (C) ₹4,50,000 (D) ₹5,25,000 **Correct Answer:** (A) ₹4,75,000 **Reason:** Cash = ₹8,00,000 − ₹3,00,000 − ₹25,000 = ₹4,75,000 available for partner distribution. **Q30:** **Assertion (A):** In dissolution, a partner's final cash receipt equals their opening capital plus realisation gains minus realisation losses. **Reason (R):** This is because the Realisation and Settlement Accounts methodically allocate all gains and losses to partner capitals before distribution. (A) Both A and R true; R explains A (B) Both A and R true; R does not explain A (C) A is true; R is false (D) A is false; R is true **Correct Answer:** (A) Both A and R true; R explains A **Reason:** NCERT Chapter 5 process: Realisation Account captures all asset/liability revaluation; gains/losses are shared per ratio; final capital = opening ± allocations; cash received reflects this adjusted capital.

Trap 1: **Confusing book value with realisable value.** Many students select options that treat book values as final settlement amounts. Remember: Realisation Account exists precisely because assets rarely sell at book value. If an option suggests assets are settled at their balance sheet figure, it's likely incorrect. Trap 2: **Forgetting deficiency absorption by co-partners.** When a partner's loss exceeds their capital, creating a deficiency, this is NOT written off to the firm. Instead, solvent partners absorb it in their profit-sharing ratio. Watch for distractors suggesting deficiency is ignored or treated as bad debt. Trap 3: **Applying capital ratios instead of profit-sharing ratios to gains/losses.** Realisation gains and losses are ALWAYS shared per the partnership deed's profit-sharing ratio, not capital ratios. Many options misleadingly suggest "distribute in capital ratio"—reject these. Trap 4: **Treating partner loans as capital.** A partner's personal loan to the firm is a liability that must be repaid separately from capital settlement. Options mixing loans with capital accounts are traps. Trap 5: **Ignoring realisation expenses.** Some distractors omit expenses (auditor fees, legal costs) from the Realisation Account. These reduce the net gain/loss and must be accounted for. Trap 6: **Misplacing goodwill entries.** Goodwill mentioned in the partnership deed but absent from books is debited to Realisation Account, not ignored. Options saying 'recognized only if in books' are incorrect per NCERT Chapter 5. Trap 7: **Confusing Settlement Account with Partner's Capital Account.** Settlement Account summarizes final cash; Partner's Capital Accounts track individual partner equity. They serve different purposes—don't conflate them. Trap 8: **Assuming creditor discounts are partner expenses.** When creditors accept less, the gain benefits all partners per their profit-sharing ratio—not deducted from one partner's settlement.

**Strategy 1: Pre-exam drill (Week before board exam).** Solve all 30 MCQs in a single sitting, timing yourself strictly: 1 minute per question (30 minutes total). This trains your brain for speed and mental stamina. Identify which question types (calculation, assertion–reason, conceptual) slow you down, and drill those separately. **Strategy 2: Skim-and-tag during the exam.** When you open your question paper, quickly scan all Dissolution MCQs. Tag Easy ones (recognise keywords: 'Realisation Account definition', 'profit-sharing ratio') as 1-minute targets. Tag Medium (numerical, multi-step) as 1.5-minute targets. Tag Hard (assertion–reason, scenario-based) as 2-minute targets. This mental map prevents panic. **Strategy 3: Eliminate distractors ruthlessly.** For each question, eliminate 2 clearly wrong options immediately (using trap knowledge from Section 5). This narrows to a 50–50 choice, reducing guessing risk. On assertion–reason questions, verify both A and R separately before matching them. **Strategy 4: Numerical sanity checks.** In calculation MCQs (Q11–Q20, Q23, Q29), before selecting an answer, do a **rough mental check**: Does the gain/loss magnitude make sense? If assets realise at 90%, I expect a ~10% loss—if an option shows 50% loss, it's likely wrong. This 5-second gut-check catches arithmetic errors. **Strategy 5: Reserve hard MCQs for the end.** Complete Easy and Medium MCQs first (20 minutes). Allocate remaining time to Hard MCQs, where you're fresher and can reason through assertion–reason logic without fatigue-induced errors. **Strategy 6: Partner ratio memorization.** Write down profit-sharing ratios at the exam's start. Many errors arise from miscalculating 2:2:1 as 2:1:1 under pressure. A 3-second note prevents cascade errors across questions. **Strategy 7: Double-check Settlement Account questions.** These are highest-risk: totalling ₹3,00,000 available cash across three partners requires three separate calculations. Before submitting, verify: Total cash = Realised assets − Liabilities − Expenses. This verification takes 10 seconds and prevents ₹10,000 errors. **Bonus: Mental checklist for each MCQ.** Ask yourself: (1) Is this testing Realisation or Settlement logic? (2) Are gains/losses calculated? (3) Which ratio applies—profit-sharing or capital? (4) Does the distractor contradict NCERT? Answering these 4 sub-questions in 20 seconds ensures 90%+ accuracy.