Question

On dissolution, furniture book value ₹5,000 taken for ₹4,300. Which account is debited?

• A. Cash Account ₹5,000
• B. Realisation Account ₹700
• C. Partner Capital Account ₹5,000
• D. Realisation Account ₹4,300

Hint:

In dissolution: Always ignore book value → use realisation value only.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
When a partner takes over an asset upon dissolution, the asset is transferred to their Capital Account at the agreed value (the price they agreed to pay), not the book value.
Step 2: Detailed Explanation:

- The Realisation Account is already debited when assets are transferred at book value (5,000).
- When a partner takes over the asset for 4,300, the entry is:
Partner's Capital A/c ... Dr 4,300
To Realisation A/c ... 4,300
- However, since the question asks which account is debited in the context of the transaction, and the asset value was 5,000, the partner's capital account is debited by the agreed value.
Step 3: Final Answer:
The Partner's Capital Account is debited (with the agreed value of 4,300).