Question

In case of dissolution assets and liabilities are transferred to ________ A/c. (Fill in the blank by choosing correct option)
a) Bank A/c
b) Partner's capital A/c
c) Realisation A/c
d) partner's current A/c

Answer 1

Answer : Realisation Account

Explanation:

• In case of dissolution assets and liabilities are transferred to "Realisation Account"

• The Realisation account is opened when the firm goes into liquidation, so as to close the books of accounts.

• Realisation account is opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities.

• All the assets of the firm except cash/bank are transferred to the Debit side of realisation account.

Answer 2

Answer:

The answer is given in the option (c) Realization A/c

Explanation:

When the firm is dissolved, its books of account are to be closed and the profit or

loss arising on the realization of its assets and discharge of liabilities is to be

computed. For this purpose, a Realization Account is prepared to ascertain the

net effect (profit or loss) of realization of assets and payment of liabilities which

maybe it is transferred to the partner’s capital accounts in their profit sharing ratio.

Hence, all assets (other than cash in hand bank balance and fictitious assets, if

any), and all external liabilities are transferred to this account. It also records

the sale of assets, and payment of liabilities and realization expenses. The balance

in this account specified as profit or loss on realization which is moved at the profit-sharing ratio of the partner's capital accounts.