Question

On dissolution of a firm, the final balance of Capital Account is transferred to

• A. Realisation A/c
• B. Profit and Loss A/c
• C. Cash A/c
• D. Loan A/c of partners

Hint:

The final balance of Capital Account is transferred to Realisation A/c during the dissolution of a firm.

Answer 1

The Correct Option is A

Step 1: Concept of dissolution.
When a partnership firm dissolves, the capital accounts of the partners are closed, and the final balances are transferred to the Realisation Account to account for the realization of assets and settlement of liabilities.
Step 2: Accounting treatment.
The Realisation Account is used to record the gains or losses on the sale of assets and the settlement of liabilities. The final balance in the Capital Accounts is transferred to this account.
Step 3: Conclusion.
Thus, the correct answer is (A) Realisation A/c. Final Answer: \[ \boxed{\text{Realisation A/c}} \]