theory of accounts

1. Difference between dissolution of partnership and dissolution of partnership firm.

Basis Dissolution of Dissolution of

Economic relationship
Settlement of assets and
liabilities
partnership partnership firm
Continues to exists but Ceases to exist
in a changed form
Assets and liabilities are Assets are sold and
revalued realized and liabilities
are written off

2. What is meant by gaining ratio on retirement of partner?

The ratio in which the share of the retiring partner is acquired by
remaining partners is called gaining ratio. It is calculated by subtracting
the Old PSR from New PSR.
Gaining ratio= New PSR- Old PSR

3. What is meant by issued capital?

Issued capital is the capital which is issued time to time by the company
for subscription. It is the part of the authorised capital which is offered by
the company to the public for its subscription.

4. State any 2 contingencies that may result into the dissolution of the
partnership firm.
- Expiry of period: if the firm is incorporated for a specific period of
time then it will dissolve after completing that specific period.
- Specific purpose: if the firm is incorporated for a specific purpose then
it will dissolve after completion or achieving that specific purpose
5. State any 2 situations when a partnership firm can be compulsorily
dissolved.
- When all partners become insolvent or all partners except one become
insolvent
- The happenings or the changes in the government policies that make
the business firm activities unlawful

6. A new partner 2 main rights in the partnership firm. Explain one of those
rights.
- Share in the profits and right in assets are 2 main rights a new partner
receives while joining the firm.

7. how does nature of business affect the value of goodwill?

- A secured business, stable earnings and good sales increases the
goodwill of the business.

8.