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What is generally done with the assets of a partnership firm at the time of its dissolution?

Answer and explanation

Correct answer: They are sold to realise cash

At dissolution, the firm’s business is closed and its assets are generally sold to realise cash. The sale and related settlement are recorded through the Realisation Account. Purchasing assets or automatically doubling their value is not part of dissolution. Exam tip: Remember that dissolution involves realising assets and paying liabilities.

Related tags

Partnership DissolutionRealisation AccountClosing The BusinessAsset RealisationAccountancy Class 12Dissolution Of A Partnership FirmAccountancyClass 12 Mcq

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