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WAEC Financial Accounting 1996 Question 38

Question 38

Partnership Admission, Retirement and Dissolution

The cash realised from the sale of assets on dissolution of partnership is

  1. A.debited to Cash Account and credited to Asset Account
  2. B.credited to Cash Account and debited to Asset Account.
  3. C.debited to Cash Account and credited to Realisation Account
  4. D.credited to Cash Account and debited to Realisation Account
  5. E.debited to Realisation Account and credited to Asset Account.
Show the answer and explanation

Answer: C (debited to Cash Account and credited to Realisation Account)

Explanation

On dissolution the assets are first moved to the realisation account; cash received for them is debited to cash and credited to realisation.