In a partnership firm, if a partner retires, the continuing partners: MCQ with Answer and Explanation

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In a partnership firm, if a partner retires, the continuing partners:

A. Revalue assets and liabilities and adjust capital

B. Distribute all assets

C. Dissolve the firm

D. Close the business

Answer: Option A

Solution (By JKSSB Mock Tests)

On retirement, the firm continues, assets and liabilities are revalued, and retiring partner's dues are settled.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

Debentures are shown in Balance Sheet under:

A. Share capital

B. Reserves and surplus

C. Current liabilities

D. Long-term borrowings

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Correct Answer: Option D

Explanation:
Debentures are long-term borrowings unless they are due within 12 months, then current liabilities.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

The term 'Prepaid Expense' is treated as:

A. A liability

B. A loss

C. An asset

D. An expense

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Correct Answer: Option C

Explanation:
Prepaid expenses are treated as current assets because they represent future economic benefits for which payment has already been made.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #3

The main difference between a partnership and a company is:

A. Partnership has limited liability

B. Company cannot own assets

C. Partnership pays corporate tax

D. Company has separate legal entity, partnership does not

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Correct Answer: Option D

Explanation:
A company is a separate legal entity, while a partnership (except LLP) is not.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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