Where will accumulated losses be transferred at the time of dissolution of partnership firm and in what ratio it is transferred?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Capital Accounts in profit sharing ratio.
Accumulated losses will be transferred at the time of dissolution of partnership firm to partner's capital account in their profit sharing ratio.
* For transfer of accumulated profits to partners’ capital accounts in their profit sharing ratio:
Accumulated profit A/c Dr.
To Partners’ Capital A/c (individually)
* For transfer of accumulated losses , if any, to partners’ capital accounts in their profit-sharing ratio:
Partners’ Capital A/c (individually) Dr.
To Accumulated losses A/c