Question

Which of the following will be transferred to Realisation Account at the time of dissolution of firm?

1. Provision for Doubtful Debts
2. Partner’s Loan
3. General Reserve
4. Goodwill

Options

• (i) and (iv)

• (i), (ii) and (iv)

• (i), (iii) and (iv)

• (i), (ii) and (iii)

Answer 1

(i) and (iv)

Explanation:

At the time of dissolution, Provision for Doubtful Debts is transferred to the Realisation Account to adjust it against the actual realizable value of debtors. Similarly, General Reserve is transferred to the Realisation Account as it represents accumulated profits that need to be distributed among the partners. However, Partner’s Loan and Goodwill are settled directly in the partnership’s accounts, not in the Realisation Account.