CUET Accountancy 2025 PYQs13 May Shift 1. Free, no login required.

Partnership

Dissolution

Easy

On the dissolution of a firm, creditor's are transferred to:

Cash Account

Bank Account

Realisation Account

Partners Capital Account

✅ Correct Option: 3

Dissolution of a Firm - Transfer of Creditors

On the dissolution of a firm, all liabilities including creditors are transferred to the Realisation Account.

Understanding Realisation Account

The Realisation Account is prepared during dissolution to:

Record all assets (except cash/bank) on the debit side
Record all liabilities (including creditors) on the credit side
Determine profit or loss on realisation of assets and settlement of liabilities

Journal Entry for Transfer of Creditors

Account	Debit ( $₹$ )	Credit ( $₹$ )
Creditors A/c	XXX
$\quad$ To Realisation A/c		XXX

(Being creditors transferred to Realisation Account)

Why Creditors go to Realisation Account?

Creditors represent an external liability that must be settled during dissolution. By transferring them to the Realisation Account, the firm can:

Track the actual payment made to creditors
Calculate any gain (if settled at less than book value) or loss (if settled at more than book value)
Properly close all accounts systematically

When creditors are actually paid:

Account	Debit ( $₹$ )	Credit ( $₹$ )
Realisation A/c	XXX
$\quad$ To Cash/Bank A/c		XXX

The final balance of Realisation Account (profit or loss) is then transferred to Partners' Capital Accounts in their profit-sharing ratio.

2022: 30 Aug Shift 2

The amount recovered from the debtors is:

2025: 30 May Shift 1

In case of the dissolution of a firm, the firm ceases to conduct business and has to settle its accounts. Arrange the following in the correct sequence :

(A) In paying to each partner proportionately what is due to him on account of capital

(B) In paying the debts of the firm to the third parties

(C) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner's loan)

(D) The residue, if any, shall be divided among the partners in their profit sharing ratio

Choose the correct answer from the options given below:

2023: 11 June Shift 3

Select the way by which provisions appearing in the Balance Sheet of a partnership firm are closed at the time of firm's dissolution.

2025: 2 June Shift 2

Anubha looked after the dissolution work for remuneration of Rs. 8,500 and agreed to bear dissolution expenses upto Rs. 6,000. Actual expenses paid by her were Rs. 7,600. What will be the journal entry for remuneration payable to Anubha?

(A) Realisation A/c is debited by 8,500

(B) Anubha's Capital A/c is credited by 8,500.

(C) Realisation A/c is debited by13,600.

(D) Anubha's Capital is credited by13,600.

Choose the correct answer from the options given below:

2025: 4 June Shift 2

In case of dissolution of firm, the bank overdraft is transferred to:

2023: 20 June Shift 2

Identify which of the following will lead to dissolution of partnership but NOT dissolution of the firm

CUET Accountancy Past Year Questions (Topic-Wise)