At the time of dissolution, to which partners’ account is the profit or loss from the Realisation Account transferred in the profit-sharing ratio?

Correct answer: Capital Account

On dissolution, the profit or loss arising from the realisation of assets and settlement of liabilities is determined through the Realisation Account. This profit or loss is transferred to the partners’ Capital Accounts in their profit-sharing ratio, making Capital Account the correct answer. Purchase, Sales and Salary Accounts are not used for this adjustment. Exam tip: Remember that realisation profit or loss is distributed among partners in the profit-sharing ratio.