In the final check of partners' capital accounts on dissolution, which statement is correct?

Correct answer: All capital accounts should close after settlement

The direct answer is A: after final settlement, all partners’ capital accounts should close. A capital account is a record of what the firm owes a partner or what the partner owes the firm. During dissolution, assets, liabilities, reserves, realisation profit or loss, and final adjustments are transferred to these accounts. The remaining balance is then paid to the partner or recovered from the partner. After that payment or recovery, the balance becomes zero and the account is closed. A is therefore the correct final-check statement. B is wrong because a capital account may show a credit balance or, in some cases, a debit balance; it does not always show debit. C is wrong because realisation profit is distributed among partners in the profit-sharing ratio. D is wrong because partners are normally paid through the firm’s Cash or Bank Account. The exam check is simple: after every final amount is settled, no capital-account balance should remain.