WAEC Accounting 2012 Theory — Question 2

Model answer

(a) Events that may lead to dissolution of partnership: (i) Death of a partner. (ii) Sales of the partnership business. (iii) Conversion of the partnership business to public limited company. (iv) Expiration of time for the partnership business. (v) Dissolution of the partnership business by order of the court. (b) How proceeds of dissolution of partnership are applied, in order: (i) Payment of dissolution expenses. (ii) Discharging of all debts and liabilities of the partnership business. (iii) Discharging partners' loans. (iv) Settlement of partners' capital. (v) The profit and/or loss are shared based on partners' profit/loss sharing ratio.