Dissolution Of Partnership Firm — Important Questions

Debit Partner's Capital Account, Credit Realisation Account

When a partner takes over an asset, their capital account is debited and Realisation Account is credited at agreed value.

All partners become insolvent

If all partners become insolvent, the firm is compulsorily dissolved as no one can manage the business.

To Realisation Account (credited)

Provisions like Provision for Doubtful Debts are closed by crediting the Realisation Account.

Realisation A/c Dr, To Bank A/c

Realisation expenses paid by the firm are debited to Realisation Account and credited to Bank Account.