Accountancy Part ADissolution of Partnership Firm

In the case of the Dissolution of partnership firm, which accounts ar…

In the case of the Dissolution of partnership firm, which accounts are opened:

(A) Realization Account

(B) Revaluation Account

(D) Bank Account

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (A), (C) and (D) only

On dissolution the business ends. Its assets are sold, its liabilities are paid and the partners are settled, so the accounts opened are those that do this work.

(A) Realization Account — True. It records the sale of assets and payment of liabilities and shows the profit or loss on realisation.
(B) Revaluation Account — False. Revaluation is done when a firm is reconstituted (admission, retirement, death) and continues. On dissolution the assets are actually sold, so the realisation account takes its place.
(C) Partners Capital Account — True. The profit or loss on realisation is transferred to the partners’ capital accounts, which are then closed.
(D) Bank Account — True. Every receipt from assets and every payment to creditors and partners passes through the cash or bank account.

NCERT (2026-27 edition):
Accounting Treatment – “When the firm is dissolved, its books of account are to be closed and the profit or loss arising on realisation of its assets and discharge of liabilities is to be computed. For this purpose, a Realisation Account is prepared to ascertain the net effect (profit or loss) of realisation of assets and payment of liabilities which may be is transferred to partner’s capital accounts in their profit sharing ratio.”

NCERT (2026-27 edition):
Accounting Treatment

Extract from the NCERT textbook