All assets (except cash/bank and fictitious assets) are transferred to the _____ side of _____ Account.
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Debit/Realization
When a partnership firm is dissolved:
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All assets (except cash/bank and fictitious assets) are transferred to the debit side of the Realization Account. This is because the Realization Account is prepared to record the sale/realization of assets and settlement of liabilities.
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Liabilities are transferred to the credit side of the Realization Account.
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Finally, profit or loss on realization is transferred to the partners’ Capital Accounts in their profit-sharing ratio.