Question

A report on a procedure of winding up partnership firm

Answer 1

Dissolution (closure) of a firm requires the following accounts to be opened so as to close book :

 1)   Realization Account

2) Partner's loan account

3) Partner's Capital account

4) Cash or book account

Accounts are settled according to Indian Partnership Act 1932.

The following rules are to be followed by the partners after dissolution:

 

1)   Losses shall be paid first from profit, then from capital, and then from partners individually in the proportions from their share profit.

 

2)   The assets of the firm are divided among the partners with respect to their proportion in share profit. They are also responsible for any debts to third party