On dissolution of a partnership firm, Bank overdraft is transferred to:
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Realisation A/c.
Bank Overdraft is a liability and hence it is transferred to Realisation account.
Realisation A/c is used to settle the firm’s liabilities and to account for the assets being realized. Once all assets are realized and liabilities settled, any remaining balance will be distributed to the partners' capital accounts.