In the case of a dissolution of a firm, accumulated losses are transferred to:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Capital Accounts in Profit Sharing Ratio
Accumulated losses (a debit balance of Profit and Loss Account, deferred revenue expenditure) are losses the partners have already suffered together. On dissolution they are debited to the partners' capital accounts in their profit sharing ratio, the ratio in which losses are borne. They are not part of realisation, so they never go to the Realisation Account, and losses are shared equally only when there is no agreed ratio.
NCERT (2026-27 edition):
|
