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Subjects
Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessEasy
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To which account is the final balance of the Realisation Account transferred?

Answer and explanation

Correct answer: Partners’ capital accounts

The profit or loss arising from the Realisation Account is transferred to the partners’ capital accounts in their profit-sharing ratio. The capital accounts are credited for a profit and debited for a loss. Therefore, option A is correct. Exam tip: cash received from the sale of assets is recorded in the Bank or Cash Account, but the final realisation profit or loss is transferred to the partners’ capital accounts.

Related tags

Partnership DissolutionRealisation AccountPartners Capital AccountsClosing BusinessAccounting BasicsClosing The BusinessDissolution Of A Partnership FirmAccountancy
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10 more MCQs
  1. 1What is the process of permanently closing a partnership firm and ending its existence called?
  2. 2Which account is prepared at the time of dissolution of a firm to determine the profit or loss arising from the settlement of its assets and external liabilities?
  3. 3What is generally done with the assets of a partnership firm at the time of its dissolution?
  4. 4On dissolution of a partnership firm, from what are the external liabilities generally paid?
  5. 5To which account is the realisation profit transferred?
  6. 6To which account is the realisation loss transferred?
  7. 7What happens to the existence of the firm after dissolution?
  8. 8Dissolution expenses are generally debited to which account?
  9. 9At the time of dissolution, if an asset is sold for ₹10,000, what amount will be credited to the Realisation Account?
  10. 10On dissolution of a firm, to whom is the final cash balance paid after settling outside liabilities and other amounts due?
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