On dissolution of a firm, realisation account is debited with:

All assets to be realised

The correct answer is option 1- All assets to be realised.

On dissolution of a firm, realisation account is debited with all assets to be realised.

All asset accounts excluding cash, bank and the fictitious assets, if any are closed by transfer to the debit of Realisation Account at their book values. It may be noted that sundry debtors are transferred at gross value and the provision for doubtful debts is transferred to the credit side of Realisation Account along with liabilities. The same thing will apply to fixed assets, if provision for depreciation account is maintained. All external liability accounts including provisions, if any, are closed by transferring them to the credit of Realisation account. Cash received on sale of assets and assets taken over by the partner's are transferred to the credit side of the realisation A/c.