which reserves come in realisation account and which are transferred to partners capital account

asked Aug 17, 2014 in Partnership-Dissolution of a Partnership Firm by deepz (143 points) 5,657 views

1 Answer

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Any Reserve against which there is no Asset, is directly credited to all the partners in their profit sharing ratio. For example General Reserve is transferred to all the partners in their profit sharing ratio. Let us take another example, if there is Workmen Compensation Reserve and there is no liability against that reserve, then whole of Workmen Compensation Reserve is credited to partners' capital account in their profit sharing ratio.

If in adjustments a liability is given against any reserve, then best way is to transfer the reserve to the credit side of Realisation A/c and the liability is paid through the Realisation A/c by Debiting Realisation A/c.

answered Aug 17, 2014 by jbsclasses (3,971 points)