Accountancy Part ADissolution of Partnership Firm

On dissolution of partnership, goodwill account is transferred to:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → The debit side of Realisation Account

On dissolution, all assets except cash, bank and fictitious assets are closed by transfer to the debit side of the Realisation Account at book value. Goodwill is an intangible asset, so it goes there too.

Why the other options are incorrect

Option (2) The credit side of Realisation Account — Incorrect. The credit side receives the liabilities and the amounts realised from assets.
Option (3) The credit side of Partner’s Capital/Current Account — Incorrect. Partners are credited with their share of profit on realisation, not with the asset itself.
Option (4) The debit side of Partner’s Capital/Current Account — Incorrect. Goodwill is written off to capital accounts only in other cases such as admission; on dissolution it is an asset to be realised.

NCERT (2026-27 edition):
For transfer of assets – “All asset accounts excluding cash, bank and the fictitious assets, if any are closed by transfer to the debit of Realisation Account at their book values.”