Question

On dissolution, furniture book value ₹5,000 taken for ₹4,300. Which account is debited?

• A. Cash Account ₹5,000
• B. Realisation Account ₹700
• C. Partner Capital Account ₹5,000
• D. Realisation Account ₹4,300

Hint:

In dissolution: Always ignore book value → use realisation value only.

Answer 1

The Correct Option is D

Concept: On dissolution of a partnership firm, all assets are transferred to Realisation Account at their agreed values (not necessarily book values). Realisation Account is used to determine profit or loss on realization of assets and settlement of liabilities.

Step 1: Identify nature of transaction.
Furniture is taken over by partner during dissolution.

Step 2: Use agreed value principle.
Asset is taken at ₹4,300 (not book value ₹5,000).

Step 3: Accounting treatment.
Realisation Account is debited with agreed value: \[ ₹4,300 \] Final Answer: Realisation Account ₹4,300