Question

In the event of dissolution of a partnership firm, the provision for doubtful debts is transferred to ______.

Options

• Realisation Account

• Partner’s Capital Accounts

• Sundry Debtors Account

• None of these

Answer 1

In the event of dissolution of a partnership firm, the provision for doubtful debts is transferred to realisation account.

Explanation:

In the event of the dissolution of a partnership firm, the provision for doubtful debts is transferred to the realisation account. This is because the realisation account is used to record the sale of assets and the settlement of liabilities, including the adjustment of provisions for doubtful debts. The purpose is to reflect the actual realisable value of the firm’s assets during dissolution.