When a firm is dissolved, the Balance of Investment Account and Balance of Investment Fluctuation Fund Account, shown by Firm's Balance Sheet are transferred in ................ and into ................... respectively:-

Debit Side of Realisation Account, Credit side of Realisation Account

The correct answer is Option (1) → Debit Side of Realisation Account, Credit side of Realisation Account

When a firm is dissolved, all assets and liabilities are transferred to the Realisation Account to determine profit or loss on realisation.

1. Investment Account (Asset):

   • Assets are transferred to the debit side of the Realisation Account.

   • But since the question asks where the balance of Investment Account is transferred in, the correct part of the pair is the debit side of Realisation Account.

2. Investment Fluctuation Fund (Reserve):

   • It is a liability or reserve created to meet fall in value of investments.

   • Hence, it is credited when created, and on dissolution, this fund is transferred to the credit side of Realisation Account to close it, since it is not payable to any creditor.