Question
Download Solution PDFOn dissolution of a firm, the balance of provision for Bad Debts Account is transferred to:
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is Realisation Account.
Key PointsRealisation Account:
- It is a nominal account opened on the dissolution of a firm to ascertain the profit or loss on realisation of assets and payment of outsider's liabilities.
- This account is closed by transferring the balance (i.e., profit or loss on realisation) to partner’s capital accounts.
Important PointsProvision against assets such as Provision for Depreciation or Provision for Bad & Doubtful debts etc. are transferred to Realisation Account by passing a Separate entry which are as follows:
| Date | Particulars | L.F. | Dr. | Cr. |
| Provision's for Bad Debts A/c Dr. | ||||
|
Provision’s for Depreciation A/c Dr. |
||||
| Investment Fluctuation Fund A/c Dr. | ||||
| To Realisation A/c | ||||
| (Being Provision & Reserves Against Assets transferred to Realisation Account) |
Additional InformationFormat of Realisation Account:
Last updated on May 6, 2025
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