Choose the correct statement/ statements related to the dissolution of the firm from the following.
(A) Accumulated profits and reserves are transferred to realisation account.
(B) On dissolution of the firm, the partner's capital accounts are closed through realisation account.
(C) After transferring liabilities like creditors and bills payables to the realisation account, in the absence of any information regarding their payment, such liabilities are treated as never paid
(D) Partner's loan account is not transferred to realisation account.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (D) only
On dissolution only the firm’s assets and its outside liabilities pass through the Realisation Account. What belongs to the partners themselves is settled through their capital accounts.
(A) Accumulated profits and reserves are transferred to realisation account. Incorrect. They belong to the partners and are transferred to the partners’ capital accounts in their profit sharing ratio.
(B) On dissolution of the firm, the partner’s capital accounts are closed through realisation account. Incorrect. The realisation profit or loss is carried to the capital accounts, which are then closed by payment through the Bank Account.
(C) After transferring liabilities like creditors and bills payables to the realisation account, in the absence of any information regarding their payment, such liabilities are treated as never paid Incorrect. With no information, they are treated as fully paid.
(D) Partner’s loan account is not transferred to realisation account. Correct. A partner’s loan is not an outside liability; it is paid separately, after outsiders and before capital.
NCERT (2026-27 edition):
|
