Which of the following will be shown in Capital Account at the time of firm's dissolution?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) - P & L (Dr.) Balance of ₹30,000.
P & L (Dr) Balance of ₹30,000 will be shown in Capital Account at the time of firm's dissolution.
* P & L (Dr.) Balance of ₹30,000- The Profit and Loss (Dr.) balance of ₹30,000 is an accumulated loss which is debited to the partner's Capital Account.
OTHER OPTIONS
* Goodwill appearing in old Balance Sheet- Goodwill is an intangible asset, and during dissolution, it is transferred to realisation A/c like any other assets.
* Investment Fluctuation Reserve and Investment of equal amount in old Balance Sheet- The Investment Fluctuation Reserve and Investment is adjusted during dissolution. There is no extra reserve.
* Workmen Compensation Reserve of ₹20,000 against which workmen claim is ₹25,000- As the reserve is of 20,000 and claim is more than reserve. Excess of claim is a liability of the firm.