Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

Cash balance shown in the Balance Sheet is shown on the dissolution of partnership firm in which of the following accounts?

Options:

Cash A/c

Realisation a/c

Capital account of partners

None of the above

Correct Answer:

Cash A/c

Explanation:

On dissolution, the books of the firm are to be closed. Dissolution process starts by opening the following accounts in the firm’s books: Realisation Account, Partner’s Loan Account, Partners’ Capital Accounts, Bank or Cash Account. In Cash or bank a/c, on the debit side, we show opening balance, the amount received from the sale of assets and amount brought by partners. And on the credit side, we show payment of liabilities, expenses and amount paid to partners. After settling the claims of the partners, there is no balance in the Bank/Cash Account.