Partnership

Dissolution

Easy

common

On dissolution of a firm, bank overdraft is transferred to:

Cash Account

Bank Account

Realisation Account

Partner's Capital Account

✅ Correct Option: 3

When a firm is dissolved, all assets (except cash and bank balance) and all external liabilities must be transferred to the Realisation Account. This is a temporary account created specifically to record the disposal of assets and settlement of liabilities during dissolution.

Bank overdraft is a liability of the firm (the firm owes money to the bank). Therefore, it must be transferred to the Realisation Account along with other liabilities like creditors, bills payable, etc.

Journal Entry for transfer:

Bank Overdraft A/c Dr.

To Realisation A/c

This entry transfers the liability to the Realisation Account. Later, when the bank overdraft is actually paid off during dissolution, the following entry is recorded:

Realisation A/c Dr.

To Bank A/c

The Realisation Account essentially consolidates all assets to be realized and liabilities to be settled, helping calculate the profit or loss on dissolution, which is then distributed among partners in their profit-sharing ratio.

Note that only cash/bank balances are NOT transferred to Realisation Account as they are the medium through which other assets are converted and liabilities are paid off.

2025: 30 May Shift 2

When realisation expenses are paid by the firm on behalf of a partner, which account will be debited:

2026: 13 May Shift 2

Select the correct statements from the following:

(A) Realisation Account is prepared at the time of death of a partner.

(B) Revaluation Account is prepared at the time of dissolution of a firm.

(D) At the time of dissolution, the Realised value of Assets are transferred to the Credit Side of the Realisation Account.

Choose a pair of correct statements from the given options below:

2025: 14 May Shift 2

According to section ......... of the Partnership Act, 1932, the dissolution of partnership between all the partners of a firm is called the dissolution of the firm.

2025: 2 June Shift 2

Match List-I with List-II

List-I	List-II
(Accounting standards Section of Act.)	(Issues)
(A) AS-3	(I) Settlement Of Accounts.
(B) AS-26	(II) Firm's debt and private debt
(C) Section 48 of the Indian partnership Act	(III) Cash flow statement.
(D) Section 49 of the Indian partnership Act	(IV) Treatment of goodwill.

Choose the correct answer from the options given below:

2025: 27 May Shift 1

Arrange the following in correct sequence in the case of dissolution of a partnership.

(A) Preparing a Bank account

(B) Realizing assets and payments of liabilities.

(D) Preparation of capital account of partners.

Choose the correct answer from the options given below:

(A), (C), (B), (D)
(B), (C), (D), (A)
(B), (A), (D), (C)
(C), (B), (D), (A)

2025: 27 May Shift 1

In the case of a dissolution of a firm, accumulated losses are transferred to:

On dissolution of a firm, bank overdraft is transferred to:

Solution

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