Question : What is the treatment of provisions against assets on dissolution of a firm?
Option 1: Provisions against assets are credited to Realisation A/c.
Option 2: Provisions against assets are credited to revaluation A/c.
Option 3: Provisions against assets are debited to Realisation A/c.
Option 4: Provisions against assets are credited to partner's capital account.
Correct Answer: Provisions against assets are credited to Realisation A/c.
Solution :
Answer =
Provisions against assets are credited to Realisation A/c.
Treatment of Provision against Assets on dissolution of firm will Be credited to Realisation alc But no need to pay live other liabilities (outsiders liabilities).
Hence, the correct option is 1.
