Partnership

Dissolution

Easy

common

All assets except cash/bank and fictitious assets are transferred to the Debit side of the ______Account.

Realisation Account

Capital Account

Revaluation Account

Current Account

✅ Correct Option: 1

When a partnership firm is dissolved, a Realisation Account is prepared to determine the profit or loss on realisation of assets and settlement of liabilities.

All assets except cash/bank and fictitious assets are transferred to the Debit side of Realisation Account at their book values.

Why cash/bank is excluded:

Cash and Bank are not transferred because they remain in the firm to make payments for liabilities, expenses, and finally for distribution among partners. These are recorded separately in the Cash/Bank Account.

Why fictitious assets are excluded:

Fictitious assets (like Preliminary Expenses, Discount on Issue of Debentures, Profit & Loss A/c debit balance) have no realisable value. They represent losses or expenses already incurred and are written off against partners' capital accounts in their profit-sharing ratio before preparing the Realisation Account.

The journal entry for transferring assets to Realisation Account is:

Account	Debit	Credit
Realisation A/c	Dr.	XXX
To Sundry Assets A/c		XXX

(Being assets transferred to Realisation Account)

The correct answer is Option 1: Realisation Account

2026: 29 May Shift 2

Varun (partner) had given a loan to firm of Rs. 5,00,000. On dissolution, he accepted furniture of Rs. 4,50,000 against the loan. The balance Rs. 50,000 will be:

2025: 3 June Shift 2

At the time of the Dissolution of a Partnership Firm, which statement is not false :-

2025: 24 May Shift 1

Which of the following statements truly makes the distinction between Dissolution of Partnership and Dissolution of Firm:

(A) In dissolution of partnership, business is not terminated, while in dissolution of firm business is terminated.

(B) The Court intervenes in dissolution of Partnership because a partnership is not dissolved by mutual agreement. A firm can not be dissolved by court order.

(C) Economic relationships between partners continue in a changed form in dissolution of partnership. Economic relationships between the partners come to an end at the dissolution of the Firm.

(D) Dissolution of Partnership doesn't require permanent closure of books, while in Dissolution of firm books are closed.

Choose the correct answer from the options given below:

2026: 6 June Shift 1

In case of dissolution of firm, if a partner agrees to take over the debtors of Rs. 80,000 at 10% discount, the entry for the same shall be:

2026: 13 May Shift 2

If a partnership firm is being dissolved, a liability taken over by a partner is credited to :

2026: 12 May Shift 1

Out of the following, which items are to be credited to Realisation A/c?

(A) Liabilities transferred

(B) Sales proceeds of assets

(D) Realisation expenses

Choose the correct answer from the options given below:

All assets except cash/bank and fictitious assets are transferred to the Debit side of the ______Account.

Solution

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