Reserve transferred to Realisation Account

When a partnership firm is dissolved, the assets are sold, liabilities are paid off, and the remaining amount is distributed among the partners. In this process, the partners' capital accounts are closed, and their profits and losses are transferred to their respective capital accounts. However, there may be some reserves or funds that are not transferred to the partners' capital accounts but are instead transferred to the Realisation Account. These reserves or funds include the following:

1. General Reserve: This is a reserve that is created out of profits and is kept aside for future contingencies.

2. Capital Reserve: This is a reserve that is created out of capital profits and cannot be distributed as dividends.

3. Profit and Loss Account: This is an account that accumulates the profits and losses of the firm over the years.

4. Revaluation Reserve: This is a reserve that is created when the assets and liabilities of the firm are revalued.

5. Investment Fluctuation Reserve: This is a reserve that is created to absorb the fluctuations in the value of investments.

6. Reserve for Doubtful Debts: This is a reserve that is created to provide for bad debts.

7. Employee Provident Fund: This is a fund that is created to provide for the retirement benefits of employees.

Not transferred to Realisation Account

Out of the above-mentioned reserves and funds, only the Contingency Reserve is not transferred to the Realisation Account. The reason for this is that the Contingency Reserve is created to meet future contingencies, and therefore, it is deemed necessary to transfer the reserve to the partners' capital accounts.

Conclusion

In conclusion, when a partnership firm is dissolved, the reserves and funds are transferred to the partners' capital accounts, except for the Contingency Reserve, which is not transferred to the Realisation Account. This is because the Contingency Reserve is created to meet future contingencies, and it is deemed necessary to transfer the reserve to the partners' capital accounts.