Question

At the time of dissolution of the partnership firm, Deferred Revenue Expenditure (Advertisement Expenditure) is transferred to ______.

Options

• Capital Accounts of Partners.

• Realisation Account.

• Cash Account.

• Loan by Partner Account.

Answer 1

At the time of dissolution of the partnership firm, Deferred Revenue Expenditure (Advertisement Expenditure) is transferred to Capital Accounts of Partners.

Explanation:

Deferred Revenue Expenditure (like Advertisement Suspense) is a fictitious asset that represents an accumulated past loss. Since it has no real physical or market value, it cannot be sold for cash and is never transferred to the Realisation Account. Instead, it must be written off completely among the owners. The firm closes this account by transferring the balance to the debit side of the partners’ capital accounts in their profit-sharing ratio, which directly reduces their final capital payouts.