Which of the following account is not prepared at the time of dissolution?a)Revaluation Accountb)Cash Accountc)Realisation Accountd)Partners Capital AccountCorrect answer is option 'A'. Can you explain this answer?

Question

Answer

Revaluation Account is not prepared at the time of dissolution of partnership firm. The main reason is that revaluation account is prepared at the time of change in existing partnership and not at the time of dissolution of partnership firm.

Answer

: An increase in an asset's value in order to reflect the current market value of the asset. The values of all of a firm's assets must be recognized and documented in their accounts. ... When an asset increases in value, a revaluation is necessary.

Answer

Because at the time of dissolution the realisation is prepared which is inculde all exp and income   till the last day of partnership where as the revaluation is prepared to revalue asset as accounting  is done histroical basis so when when new enter in into partnership at that time the modern approve is applied for revaluaing of assetfor a part event like admission and retirement of the partner

Answer

At the time of dissolution of a partnership firm, various accounts are prepared to close the books and settle the affairs of the firm. These accounts include the Realisation Account, Cash Account, and Partners' Capital Account. However, the Revaluation Account is not prepared at the time of dissolution.

Explanation:
- Revaluation Account: The Revaluation Account is prepared to record any changes in the value of assets and liabilities of the firm at the time of retirement or death of a partner. It helps in adjusting the capital accounts of the remaining partners and ensures that the new profit-sharing ratio is correctly established. The Revaluation Account is necessary to account for any unrealized profits or losses that may arise due to changes in the value of assets and liabilities.

- Cash Account: The Cash Account is prepared to record all cash receipts and payments made by the firm during the process of dissolution. It helps in determining the cash position of the firm and ensures that all cash transactions are properly accounted for.

- Realisation Account: The Realisation Account is prepared to record the realization of all assets and the payment of all liabilities of the firm. It helps in determining the profit or loss on the realization of assets and settling the claims of creditors and partners. The Realisation Account is essential to distribute the remaining assets after paying off all liabilities and to determine the final profit or loss on the dissolution of the firm.

- Partners' Capital Account: The Partners' Capital Account is prepared to record the distribution of assets and settlement of capital accounts of the partners. It helps in determining the final capital balance of each partner after taking into account their shares of profit or loss, drawings, and adjustments.

The Revaluation Account is not prepared at the time of dissolution because it is specifically used to adjust the capital accounts of the remaining partners when a partner retires or dies. In the case of dissolution, the partnership firm is completely wound up, and there are no remaining partners to adjust their capital accounts. Therefore, the Revaluation Account is not required in the process of dissolution.

To summarize, the Revaluation Account is not prepared at the time of dissolution because its purpose is to adjust capital accounts in situations involving the retirement or death of a partner.

Similar Commerce Doubts

At the time of dissolution of firm, creditors are 70000;partners capital is 120000;cash balance is 10000.Other assets realised 150000 . Calculate the Profit or loss of the realisation account? (2 Points)?

On dissolution of the firm the value of the asser were rupees 58500. X took some of the asset at rupees 36000 which was 10% less than book value and remaining asset at 80% of book value were realised in cash. Realisation account will be created with?

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