Question

In dissolution of partnership, _________ account is created, whereas _________ account is prepared in dissolution of firm.

• A. Revaluation, Realization
• B. Realization, Revaluation
• C. Revaluation, Memorandum
• D. Memorandum, Realization

Answer 1

The correct option is A Revaluation, Realization

If a partner is retiring or any new partner is admitted, its called dissolution of partnership. In such situation all the assets and liabilities are revalued for which a revaluation account is opened. The differences of the original value and revalued amount are transferred to Revaluation Account. Surplus or deficit on revaluation is transferred to the partners capital account.

If the firm is dissolving, all the assets and liabilities accounts are transferred to Realization Account. Amount received or paid against the assets and liabilities are debited/credited to the realization account.