Question

State whether the following statements are True or False.

On dissolution Cash or Bank Account is closed automatically.

Answer 1

True

Explanation: On dissolution, the Cash or Bank Account is closed automatically because if the capital accounts show any balance, then such balance is transferred to the Cash or Bank Account. This is done so that both the sides of the Cash or the Bank Account show the same balance. This is because of the double-entry system of book-keeping.