The correct answer is Option (4) → (A)-(III), (B)-(I), (C)-(II), (D)-(IV)
(A) Excess of actual profits over the normal profits - (III) Super Profit.
Super profit is earned by a firm when there actual profit is more than the normal profit i.e. profit earned by a similar business.
(B) Unrecorded assets of the firm brought into books - (I) Revaluation Account.
Revaluation account serves as a record of changes in the value of assets and liabilities. When there is an increase in the value of each asset or a decrease in liabilities, it is considered a gain and is credited to the revaluation account. Conversely, when there is a decrease in the value of assets or an increase in liabilities, it is considered a loss and is debited to the revaluation account. Additionally, any unrecorded assets are credited to the revaluation account, and unrecorded liabilities are debited to the revaluation account to ensure proper accounting. After all the adjustments are made, the revaluation account's final balance can either be a credit or a debit. If it shows a credit balance, it indicates a net gain resulting from the revaluation process. On the other hand, if it shows a debit balance, it indicates a net loss from the revaluation. Ultimately, the net gain or net loss reflected in the revaluation account will be transferred to the capital accounts of the old partners based on the previously agreed-upon ratio among the partners. This ensures that the partners' capital accounts are adjusted to account for the changes in the partnership's assets and liabilities due to the revaluation.
(C) Business of the firm becomes illegal - (II) Compulsory dissolution of a partnership firm.
Compulsory Dissolution: A firm is dissolved compulsorily in the following cases:
(a) when all the partners or all but one partner, become insolvent, rendering them incompetent to sign a contract;
(b) when the business of the firm becomes illegal; or
(c) when some event has taken place which makes it unlawful for the partners to carry on the business of the firm in partnership, e.g., when a partner who is a citizen of a country becomes an alien enemy because of the declaration of war with his country and India.
(D) Death of a partner - (IV) Dissolution of partnership.
Dissolution of partnership leads to reconstitution of the partnership. Reconstitution is occured in case of retirement, death, admission of partner etc. |
