The correct answer is Option (3) → (B), (A), (D), (C)
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(B) Transfer assets and liabilities to realization account: This is the essential first step to close the books. All assets (excluding cash/bank and fictitious assets) are transferred to the debit side, and all outside liabilities are transferred to the credit side of the Realisation Account at their book values.
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(A) Realization of the assets: After transfer, the assets are sold, and the cash received from their sale is credited to the Realisation Account.
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(D) Payment of liabilities: The next step is to settle and pay off the outside liabilities, which is recorded on the debit side of the Realisation Account.
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(C) Ascertainment of profit or loss on realization: Finally, the Realisation Account is balanced. The difference between the credit side (liabilities transferred + assets realized) and the debit side (assets transferred + liabilities paid + dissolution expenses) determines the final profit or loss on realization, which is then transferred to the partners' capital accounts.
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