Choose the correct statements from the following, regarding the disso…

The correct answer is Option (4) → C and D only

On dissolution, the Realisation Account collects the assets, the outside liabilities and all the gains, losses and expenses of winding up; the result goes to the partners in their profit sharing ratio.

A. In the event of dissolution of a partnership firm, the provision for doubtful debts is transferred to Partners' Capital Account. Incorrect. Debtors go to the Realisation Account at their gross value, and the provision for doubtful debts is transferred to the credit of the Realisation Account along with the liabilities, not to the capital accounts.

B. On dissolution of a partnership firm, goodwill appears in balance sheet and nothing is mentioned about it then it is assumed that it will realise its book value. Incorrect. Goodwill can be sold only if someone pays for it. When nothing is said about what it fetched, it is taken to realise nothing, so its book value becomes a loss on realisation.

C. On dissolution of a partnership firm, if a partner paid Rs. 2,000 for realisation expenses on behalf of the firm, then the realisation account will be debited. Correct. Realisation expenses are a cost of winding up, so they are debited to the Realisation Account; the partner who paid them is credited: Realisation A/c Dr. To Partner's Capital A/c.

D. On expiry of the period of partnership, a partnership firm is deemed to be dissolved. Correct. A firm formed for a fixed term is dissolved by the expiry of that term, unless the partners agree otherwise.