When a firm is dissolved, the Balance of Investment Account and Balance of Investment Fluctuation Fund Account, shown by Firm's Balance Sheet are transferred into ..................... and into ...............respectively:-
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Debit Side of Realisation Account, Credit side of Realisation Account
On dissolution, assets are closed by transfer to the debit side of the Realisation Account and liabilities, provisions and funds against assets to its credit side. Investments are an asset, so they go to the debit side. The Investment Fluctuation Fund is kept against a fall in the value of those investments; like a provision against an asset, it is closed by transfer to the credit side of the Realisation Account.
Option (2) Credit Side of Realisation Account, Debit side of Realisation Account — Incorrect. It reverses both entries; an asset is never credited to the Realisation Account on transfer.
Option (3) Credit Side of Realisation Account, Debit side of Capital Account — Incorrect. Investments go to the debit side, and the fund, a credit balance, could only be credited wherever it is transferred.
Option (4) Credit Side of Realisation Account, Credit side of Current Account — Incorrect. The first half is wrong: investments, an asset, go to the debit side.
NCERT (2026-27 edition):
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