Question : At the time of the dissolution of the partnership firm. The amount of the Employees Provident Fund shown on the liabilities side of the balance sheet is transferred to
Option 1: Cash account
Option 2: partner's capital account
Option 3: realization account
Option 4: None of the above
Correct Answer: realization account
Solution :
Answer =
realization account.
In case of dissolution of a partnership firm, Firstly EPF transferred the credit side of the realisation account and then paid.[treated as outsiders liabilities]
(i)
Transferred entry
E.P fund a/c....Dr
To Realisation a/c
(ii)
Paid entry
Realisation a/c.....Dr
To Bank a/c
Hence, the correct option is 3.
