In 'Piecemeal Distribution' during dissolution, the first priority for payment of outside liabilities is: MCQ with Answer and Explanation

Question
In 'Piecemeal Distribution' during dissolution, the first priority for payment of outside liabilities is:
A. Secured creditors up to the value of security
B. Partners' capital balances
C. Unsecured trade creditors
D. Partners' loans
Answer: Option A
Solution (By JKSSB Mock Tests)
Secured creditors have the first right over the assets they hold as security. Any remaining dues become unsecured.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
In BRS, if the cash book shows a bank balance of ₹10,000 (Dr.) and there is an unpresented cheque of ₹2,000, the passbook balance will be:
A. ₹8,000
B. ₹12,000
C. ₹2,000
D. ₹10,000
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Correct Answer: Option B

Explanation:
Unpresented cheque has been deducted in cash book but not in passbook. So passbook balance = Cash book balance + Unpresented cheque = 10,000 + 2,000 = ₹12,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
S1: Under the Companies Act 2013, a company can buy back its shares up to 25% of its total paid-up equity capital in a financial year. S2: The debt-equity ratio should not exceed 2:1 after a buyback of shares. Which statement(s) is/are correct?
A. S1 only
B. S2 only
C. Both S1 and S2
D. Neither S1 nor S2
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Correct Answer: Option C

Explanation:
Section 68 of the Companies Act 2013 limits buyback to 25% of total paid-up equity capital in a year and mandates that the post-buyback debt-to-equity ratio must not exceed 2:1. Both are correct.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
In a common-size statement, all items are expressed as percentage of:
A. Capital
B. Net profit
C. Total assets or total revenue
D. Gross profit
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Correct Answer: Option C

Explanation:
Common-size balance sheet expresses each item as % of total assets; income statement as % of net sales.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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In 'Piecemeal Distribution' during dissolution, the first priority for payment of outside liabilities is: