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Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessExpert
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At the time of dissolution, an asset with a book value of ₹85,000 was sold for ₹79,000, and ₹2,000 was incurred as selling expense. What is the total loss on realization of the asset?

Answer and explanation

Correct answer: ₹8,000

The loss on sale is the difference between book value and sale proceeds: ₹85,000 − ₹79,000 = ₹6,000. Adding the selling expense of ₹2,000 gives a total realization loss of ₹8,000. Therefore, option C is correct. Exam tip: realization expenses are added to the loss on sale; considering only the sale difference would incorrectly give ₹6,000, option A.

Related tags

Partnership DissolutionRealization AccountRealization LossSelling ExpensesAccountancy 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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