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Which account is prepared to ascertain the profit or loss on dissolution of a partnership firm?

Answer and explanation

Correct answer: Realisation Account

The Realisation Account is prepared to determine the profit or loss arising from the realisation of assets and settlement of liabilities. The Cash and Bank Accounts record receipts and payments, while the Stock Account deals only with stock. Exam tip: The profit or loss on realisation is ultimately transferred to the partners’ capital accounts.

Related tags

Partnership DissolutionRealisation AccountFirm ClosingProfit Or LossPartnership AccountingClosing The BusinessDissolution Of A Partnership FirmAccountancy

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