Unrecorded Debtors, are realised at the time of dissolution of a Partnership Firm, will be shown in: Option 1: Partners' Capital Account Option 2: Credit of Realisation Account Option 3: Debit of Bank Account Option 4: Debit of Realisation Account

Answer: Credit of Realisation Account; Debit of Bank Account. Solution: When unrecorded debtors are realized (pay their dues) at the time of dissolution, they represent an unexpected receipt since they were not recorded in the books earlier. The journal entry for this transaction is: Bank A/c Dr. To Realisation A/c (Being unrecorded debtors realized) Analysis of the treatment: Since unrecorded debtors were not appearing in the Balance Sheet, no asset was transferred to the Realisation Account initially. When these debtors pay: - Bank Account is debited because cash is received (an asset increases) - Realisation Account is credited because this is an unexpected gain - an asset that wasn't even recorded in the books has now brought in cash, which increases the profit on realisation This is similar to how any unrecorded asset realized during dissolution is treated as a gain to the firm and credited to the Realisation Account. The Partners' Capital Accounts are not directly involved in this transaction. The gain from unrecorded debtors will ultimately benefit the partners when the Realisation Account is closed and transferred to their capital accounts, but the immediate entry only affects Bank and Realisation Accounts.

Partnership

Dissolution

Medium

common

Unrecorded Debtors, are realised at the time of dissolution of a Partnership Firm, will be shown in:

Partners' Capital Account

Credit of Realisation Account

Debit of Bank Account

Debit of Realisation Account

✅ Correct Option: 2,3

When unrecorded debtors are realized (pay their dues) at the time of dissolution, they represent an unexpected receipt since they were not recorded in the books earlier.

The journal entry for this transaction is:

Bank A/c Dr.

To Realisation A/c

(Being unrecorded debtors realized)

Analysis of the treatment:

Since unrecorded debtors were not appearing in the Balance Sheet, no asset was transferred to the Realisation Account initially. When these debtors pay:

Bank Account is debited because cash is received (an asset increases)
Realisation Account is credited because this is an unexpected gain - an asset that wasn't even recorded in the books has now brought in cash, which increases the profit on realisation

This is similar to how any unrecorded asset realized during dissolution is treated as a gain to the firm and credited to the Realisation Account.

The Partners' Capital Accounts are not directly involved in this transaction. The gain from unrecorded debtors will ultimately benefit the partners when the Realisation Account is closed and transferred to their capital accounts, but the immediate entry only affects Bank and Realisation Accounts.

2026: 19 May Shift 1

Choose the correct statement/ statements related to the dissolution of the firm from the following.

(A) Accumulated profits and reserves are transferred to realisation account.

(B) On dissolution of the firm, the partner's capital accounts are closed through realisation account.

(C) After transferring liabilities like creditors and bills payables to the realisation account, in the absence of any information regarding their payment, such liabilities are treated as never paid

(D) Partner's loan account is not transferred to realisation account.

Choose the correct answer from the options given below:

2026: 29 May Shift 2

State the order of payment to be followed on the dissolution of a firm:

A. To each partner proportionately what is due to him/her from the firm for advances provided i.e. Partner's Loan A/c

B. To each partner proportionately what is due to him/her on account of capital

C. For the debts of the firm to outside parties

Choose the correct answer from the options given below:

2025: 27 May Shift 2

Romesh took over Investments at Rs.8,100 which is 10% less then its book value. The book value of the investment was ____

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:

2026: 31 May Shift 1

Arrange the steps in order while preparing Realisation A/c in case of dissolution of a partnership firm.

A. Transfer of Assets & Liabilities

B. Sale of Assets

C. Payment of Liabilities

D. Transfer of Profit & Loss to Partners' Capital A/c

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:

Unrecorded Debtors, are realised at the time of dissolution of a Partnership Firm, will be shown in:

Solution

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