Question

At the time of dissolution of partnership firm, fictitious assets are transferred to ______.

Options

• Capital Accounts of Partners

• Realisation Account

• Cash Account

• Partner’s Loan Account

Answer 1

At the time of dissolution of partnership firm, fictitious assets are transferred to capital accounts of partners.

Explanation:

At the time of dissolution of a partnership firm, fictitious assets (such as deferred revenue expenses, preliminary expenses, or advertisement expenses) are transferred to the realisation account. This is because these assets do not have a realisable value and need to be written off during the dissolution process. The loss on these assets is then distributed among the partners based on their profit-sharing ratio.