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Subjects
Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessEasy
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At the time of dissolution of a firm, in which account is the sale proceeds of machinery recorded?

Answer and explanation

Correct answer: Realisation Account

On dissolution, the sale proceeds of non-cash assets such as machinery are credited to the Realisation Account. The book value of the asset is debited to this account, enabling the firm to determine the profit or loss on realisation and settlement. Exam tip: associate the sale of assets and settlement of liabilities with the Realisation Account.

Related tags

Partnership DissolutionRealisation AccountAsset SaleClosing BusinessAccountancy Class 12Closing 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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