Match List-I with List-IIList-I (Amount/Activity at the time of disso…

The correct answer is Option (1) → (A) - (III), (B) - (IV), (C) - (II), (D) - (I)

On dissolution, a Realisation Account is opened to find the profit or loss on selling the assets and paying the outside liabilities. Only assets and external liabilities go into it; amounts owed to partners are settled separately.

(A) Partner's Loan — this matches (III) Is not recorded in the realisation account. A partner's loan is an internal liability, owed to a partner, so it is not transferred to the Realisation Account; it is paid off directly after the outside creditors.

(B) Balance of Realisation Account — this matches (IV) Is transferred to partner's capital account. The balance is the profit or loss on realisation, and it is shared by the partners in their profit sharing ratio through their capital accounts.

(C) Realisation expenses paid — this matches (II) Is debited to realisation account. The expenses of selling assets and settling liabilities reduce the gain on realisation, so they are a debit to that account.

(D) Deficiency of capital account of partner — this matches (I) Is capital loss for the firm. A partner whose capital account shows a debit balance he cannot make good leaves the firm short of capital; the amount that cannot be recovered from him is a capital loss of the firm.