Which account is prepared to close the books of account of a dissolving firm?

Realisation A/c

The correct answer is option 2- Realisation A/c.

Realisation A/c is prepared to close the books of account of a dissolving firm.

When the firm is dissolved, its books of account are to be closed and the profit or loss arising on realisation of its assets and discharge of liabilities is to be computed. For this purpose, a Realisation Account is prepared to ascertain the net effect (profit or loss) of realisation of assets and payment of liabilities which may be is transferred to partner’s capital accounts in their profit sharing ratio.