Question : In the event of dissolution of a partnership firm, the provision for doubtful debts is transferred to
Option 1: Realization account
Option 2: Partners capital account
Option 3: Sundry debtors account
Option 4: None of the above
Correct Answer: Realization account
Solution :
Answer =
Realization account.
In the event of the dissolution of a partnership firm, the provision for doubtful debts is typically transferred to the
Realization Account.
This account records the disposal of assets and settlement of liabilities during the dissolution process. Provision for bad and doubtful debt on debtors is transferred to the
credit side
of the realization account under the head of current liabilities, but no payment was made for it.
Hence, the correct option is 1.
