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

(A) Realization Account

(B) Revaluation Account

(C) Partners Capital Account

(D) Bank Account

Choose the correct answer from the options given below:

(A), (C) and (D) only

The correct answer is option 4- (A), (C) and (D) only.

(A) Realization Account- 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.

(B) Revaluation Account- At the time of dissolution of firm, realisation account is prepared not revaluation account. At the time of admission of a new partner, retirement of partner and change in profit sharing ratio,  it is always desirable to ascertain whether the assets of the firm are shown in books at their current values. In case the assets are overstated or understated, these are revalued. Similarly, a reassessment of the liabilities is also done so that these are brought in the books at their correct values. At times there may also be some unrecorded assets and liabilities of the firm. These also have to be brought into the books of the firm. For this purpose the firm has to prepare the Revaluation Account. The gain or loss on revaluation of each asset and liability is transferred to this account and finally its balance is transferred to the capital accounts of the old partners in their old profit sharing ratio.

(C) Partners Capital Account- These accounts show the initial capital contributions, drawings, and final capital balances of each partner after considering their share of the dissolution process. Partner's Capital A/c are settled at last.

(D) Bank Account- This account remains relevant during dissolution. At the end bank account shows zero balance.