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Subjects
Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessEasy
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If furniture is sold for ₹5,000 at the time of dissolution of the firm, in which account and on which side will the sale proceeds be recorded?

Answer and explanation

Correct answer: Credit side of Realisation Account

At dissolution, the sale proceeds of an asset such as furniture are credited to the Realisation Account. Thus, ₹5,000 is credited to Realisation Account, while the Cash or Bank Account is debited. The debit side records the transfer of assets, not their sale proceeds. Exam tip: Sale of an asset means credit the Realisation Account.

Related tags

Partnership DissolutionRealisation AccountAsset SaleAccounting EntriesClosing The BusinessDissolution Of A Partnership FirmAccountancyClass 12 Mcq
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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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