At the time of dissolution of a firm, to which account is the profit or loss arising from the Realisation Account ultimately transferred?

Correct answer: Partners’ Capital Accounts

The profit or loss on the Realisation Account is transferred to the partners’ capital accounts in their profit-sharing ratio. The Bank Account records cash collected and payments made, while a Revaluation Account is not prepared for dissolution. Exam tip: Remember that the final transfer of realisation profit or loss is made to the partners’ capital accounts.