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What are the steps and accounts involved in closing the books for the dissolution of a partnership firm?

Accounting

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Here are the ledger accounts to close the books for the dissolution of the firm:

Step 1: Prepare the Realisation Account.
All assets (except cash) are transferred to the debit side at their book values. All external liabilities and provisions are transferred to the credit side at their book values. Assets realized and liabilities paid are recorded. The profit or loss on realisation is then distributed among partners.

  • Assets transferred to Realisation A/c (Debit side):
    • Plant & Machinery: ₹40,000
    • Patents: ₹6,000
    • Sundry Debtors: ₹19,000
    • Stock: ₹25,000
    • Total:
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