Question : On the firm's dissolution, on the realization of goodwill (which was shown in the Balance Sheet) will be debited to:
Option 1: Cash A/c
Option 2: Goodwill account
Option 3: Realization account
Option 4: None of the above
Correct Answer: Cash A/c
Solution :
Answer =
Cash A/c
When goodwill is realised, then Bank a/c will increase (Debited) and credited realisation a/c
Bank a/c.....Dr
To Realisation a/c.
Hence, the correct option is 1.