Match List-I with List-II.
| LIST I (Different accounts) |
LIST II (Related transaction) |
| (A) Profit and loss account | (I) Dissolution of partnership |
| (B) Profit and loss appropriation account | (II) Dissolution of firm |
| (C) Revaluation account | (III) Interest on loan to partner |
| (D) Realization account | (IV) Transfer to reserve |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is option 4- (A)-(III), (B)-(IV), (C)-(I), (D)-(II).
| LIST I (Different accounts) |
LIST II (Related transaction) |
| (A) Profit and loss account | (III) Interest on loan to partner |
| (B) Profit and loss appropriation account | (IV) Transfer to reserve |
| (C) Revaluation account | (I) Dissolution of partnership |
| (D) Realization account | (II) Dissolution of firm |
(A) Profit and loss account- (III) Interest on loan to partner.
Interest on loan to a partner is an expense and is recorded in the Profit and Loss Account.
(B) Profit and loss appropriation account-(IV) Transfer to reserve.
Transfers to general reserve or other reserves are made through the Profit and Loss Appropriation Account.
(C) Revaluation account- (I) Dissolution of partnership.
Revaluation of assets and liabilities happens at the time of reconstitution of the firm, which is called dissolution of partnership.
(D) Realization account-(II) Dissolution of firm.
Realization Account is prepared to record sale of assets and payment of liabilities during complete dissolution of the firm.