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When a partnership dissolves, the balance of a partner's capital account on the assets side of a balance sheet is transferred to:
  • a)
    On the Debit of Realization Account
  • b)
    On the Credit of Realization Account
  • c)
    On the Debit of Partner’s Capital Account
  • d)
    On the Credit of Cash Account
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
When a partnership dissolves, the balance of a partners capital accoun...
At the time of dissolution, if a partner's capital account balance appears on the assets side of the balance sheet, it indicates that the partner owes the firm. This balance is transferred to the debit side of the Partner's Capital Account to adjust for the outstanding amount.
The Realization Account is used to close the books of accounts by transferring assets and liabilities, but the balance owed by a partner is adjusted through the Partner’s Capital Account. Hence, the correct treatment is to transfer it to the debit of the Partner's Capital Account.
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When a partnership dissolves, the balance of a partners capital account on the assets side of a balance sheet is transferred to:a)On the Debit of Realization Accountb)On the Credit of Realization Accountc)On the Debit of Partner’s Capital Accountd)On the Credit of Cash AccountCorrect answer is option 'C'. Can you explain this answer?
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