Question : On firm dissolution, which one of the following accounts should be prepared at the last?
Option 1: Realization account
Option 2: Partner's capital account
Option 3: Partner's loan account
Option 4: Cash account
Correct Answer: Cash account
Solution :
Answer =
cash account
The cash or bank account is prepared at last. The balance of the cash account and the receipts during the process of dissolution has to be equal to the payments to outsiders and partners. With the cash account, all the accounts will stand closed. It reflects the final disposition of cash assets after settling all liabilities, ensuring an accurate depiction of the firm's financial position at the close of its operations.
Hence, the correct option is 4.
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