Question

On dissolution, the final balance of the partner’s capital account are transferred to ______.

Options

• Realisation Account

• Cash Account

• Profit and Loss Account

• Loan Accounts of Partners

Answer 1

On dissolution, the final balance of the partner’s capital account are transferred to cash account.

Explanation:

On the dissolution of a partnership firm, the final balance of the capital accounts of the partners is transferred to the cash account. This is done to reflect the actual distribution of cash among the partners. After settling all liabilities and realising assets, the remaining amount (if any) is distributed to the partners in accordance with their final capital balances.