Question : Assertion (A): The partner’s Private Property can be applied to pay the firm’s debt.

Reason (R): In a partnership firm, partners have unlimited liability.
Option 1: Assertion (A) and Reason (R) are correct but the reason (R) is not the correct explanation of Assertion (A)
Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
Option 3: Only Assertion (A) is correct.
Option 4: Assertion (A) is not correct but the Reason (R) is correct.

Question

Question : Assertion (A): The partner’s Private Property can be applied to pay the firm’s debt.

Reason (R): In a partnership firm, partners have unlimited liability.

Option 1: Assertion (A) and Reason (R) are correct but the reason (R) is not the correct explanation of Assertion (A)

Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Option 3: Only Assertion (A) is correct.

Option 4: Assertion (A) is not correct but the Reason (R) is correct.

Team Careers360 · Accepted Answer

Correct Answer: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Solution : Partners' are jointly and severally liable for the liabilities of the Partnership Firm and there is no limit on the liability hence their liability is unlimited. Partners' personal assets can be used to settle the debts/liabilies of the Firm.

Hence the correct answer is option 2.

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Question : Assertion (A): Dissolution of the firm means the dissolution of the partnership between all the partners of the firm.

Reason (R): Dissolution of the firm means the closure of business and therefore means dissolution of

Question : Assertion (A): A loan from a relative of a partner is an external liability.

Reason (R): It is not transferred to the Realisation Account.

Question : Assertion (A): Balance at Banks is transferred to Realisation Account.

Reason (R): Balance at Bank is not to be realised but instead distributed in its present form.

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Reason (R): Dissolution of Partnership firm results in the ending of the economic relationship.

Question : Assertion A:- The cash flow statement and income statement are the same.
Reason R:- The cash flow statement does not show the profit and loss account.