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Question
On dissolution, goodwill account is transferred to ______.
Options
In the Capital Accounts of Partners
On the credit of Cash Account
On the Debit of Realisation Account
On the Credit of Realisation Account
MCQ
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Solution
On dissolution, goodwill account is transferred to on the debit of realisation account.
Explanation:
On the dissolution of a partnership firm, the goodwill account is transferred to the debit of the realisation account. This is because goodwill is considered an asset, and during dissolution, assets are written off. The entry is made on the debit side of the realisation account to adjust for the goodwill and eventually distribute it among the partners based on the agreed profit-sharing ratio.
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