Question

At the time of dissolution of the firm, The assets and liabilities appearing in the Balance sheet transferred to ____________ .

• A. Revaluation Account
• B. Realisation Account
  
• C. Partner's Capital Accounts
• D. None of these

Answer 1

Answer: (B)

Realisation Account

At the time of dissolution of the firm, the assets and liabilities appearing on the Balance Sheet are transferred to the Realisation Account. When a firm decides to discontinue its operations, all assets need to be disposed off and all liabilities need to be discharged. For this purpose, a Realisation account is opened where all the assets, excluding cash at hand and bank, are shown on the debit side at their book values and all the external liabilities are shown on the credit side at their book value. Any sale of assets or discharge of liabilities is also shown in this account.