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On Dissolution of the firm, Partner’s Capital accounts are closed through:
- a)Realisation Account
- b)Drawings Account
- c)Bank Account
- d)Loan Account
Correct answer is option 'C'. Can you explain this answer?
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On Dissolution of the firm, Partner’s Capital accounts are close...
Bank Account
On Dissolution of the firm, Partner’s Capital accounts are closed through the Bank Account. This process involves several steps:
Realisation Account:
- The first step is to prepare the Realisation Account. This account is used to record the sale of assets, payment of liabilities, and any other realisation expenses.
- The Realisation Account helps in determining the profit or loss on realisation of assets.
Transfer to Partner's Capital Accounts:
- After preparing the Realisation Account, the profit or loss is transferred to the Partner's Capital Accounts.
- The amount credited or debited to each partner's capital account is based on their profit-sharing ratio.
Settlement through Bank Account:
- Once the profit or loss has been transferred to the Partner's Capital Accounts, the final settlement is done through the Bank Account.
- Any remaining cash or bank balance after settling all liabilities and distributing the assets is transferred to the partner's personal bank accounts.
Closure of Partner's Capital Accounts:
- Finally, the Partner's Capital Accounts are closed after all transactions have been completed.
- The closing balances in the Partner's Capital Accounts are zero, indicating that the firm has been dissolved and the partners have received their respective shares.
In this way, the Bank Account plays a crucial role in the dissolution of the firm by facilitating the final settlement of the partners' capital accounts.
On Dissolution of the firm, Partner’s Capital accounts are closed through the Bank Account. This process involves several steps:
Realisation Account:
- The first step is to prepare the Realisation Account. This account is used to record the sale of assets, payment of liabilities, and any other realisation expenses.
- The Realisation Account helps in determining the profit or loss on realisation of assets.
Transfer to Partner's Capital Accounts:
- After preparing the Realisation Account, the profit or loss is transferred to the Partner's Capital Accounts.
- The amount credited or debited to each partner's capital account is based on their profit-sharing ratio.
Settlement through Bank Account:
- Once the profit or loss has been transferred to the Partner's Capital Accounts, the final settlement is done through the Bank Account.
- Any remaining cash or bank balance after settling all liabilities and distributing the assets is transferred to the partner's personal bank accounts.
Closure of Partner's Capital Accounts:
- Finally, the Partner's Capital Accounts are closed after all transactions have been completed.
- The closing balances in the Partner's Capital Accounts are zero, indicating that the firm has been dissolved and the partners have received their respective shares.
In this way, the Bank Account plays a crucial role in the dissolution of the firm by facilitating the final settlement of the partners' capital accounts.
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On Dissolution of the firm, Partner’s Capital accounts are close...
On dissoulation final payments are to be made by Bank account.
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On Dissolution of the firm, Partner’s Capital accounts are closed through:a)Realisation Accountb)Drawings Accountc)Bank Accountd)Loan AccountCorrect answer is option 'C'. Can you explain this answer?
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