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WAEC Financial Accounting 2018 Question 42

Question 42

Partnership Admission, Retirement and Dissolution

The accounting entries for cash realized from the sale of assets on dissolution of partnership is debit

  1. A.Cash Account; credit Partners Capital Account.
  2. B.Asset Account; credit Cash Account.
  3. C.Cash Account; credit Realisation Account.
  4. D.Realisation Account; credit Cash Account.
Show the answer and explanation

Answer: C (Cash Account; credit Realisation Account.)

Explanation

Cash comes in (debit cash) and the realisation account is credited with the proceeds.