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Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessEasy
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On dissolution of a partnership firm, in which account and on which side is the amount received from the sale of stock recorded?

Answer and explanation

Correct answer: Credit side of Realisation Account

Stock is an asset transferred to the Realisation Account at its book value, while the cash or bank amount received from its sale is credited to the Realisation Account. Therefore, option A is correct. The debit side of the Realisation Account records the transfer of assets and dissolution expenses, not the sale proceeds. Exam tip: For an asset sold during dissolution, record Cash/Bank on the debit side and Realisation Account on the credit side.

Related tags

Partnership DissolutionRealisation AccountAsset SaleAccounting EntriesClosing BusinessClosing 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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