Accountancy Part ADissolution of Partnership Firm

Realisation A/c is debited with ___________ on the dissolution of fir…

Realisation A/c is debited with ___________ on the dissolution of firm.

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Transfer of all assets that are to be Realised

On dissolution, all assets except cash, bank and fictitious assets are closed by transferring them at book value to the debit side of the Realisation Account. Outside liabilities go to its credit side.

Why the other options are incorrect

Option (2) Transfer of all external liabilities of the firm — Incorrect. Liabilities are transferred to the credit side.
Option (3) Cash received on sale of assets — Incorrect. Cash realised is credited to the Realisation Account.
Option (4) Any asset that was taken over by any one of partner — Incorrect. An asset taken over by a partner is credited to the Realisation Account and debited to his capital account.

NCERT (2026-27 edition):
For transfer of assets – “… 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.”