Dissolution of Partnership Firm · Class 12 · CBSE · Commerce Accountancy
Explain the treatment of General Reserve and the debit balance of the Profit and Loss Account at the time of dissolution of a partnership firm.
Practice question from Dissolution of Partnership Firm (Class 12 · CBSE · Commerce Accountancy), with the correct answer and a step-by-step solution.
medium · Subjective · Q-FA8D8A
Explain the treatment of General Reserve and the debit balance of the Profit and Loss Account at the time of dissolution of a partnership firm.
Solution
General Reserve is distributed among the partners as accumulated profit, while the debit balance of the Profit and Loss Account is treated as an accumulated loss. Both are transferred through the partners’ Capital Accounts in the profit-sharing ratio.
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