Arrange the following steps in the correct accounting sequence in the case of dissolution of a partnership:(A) Preparing a Bank account(B) Realizing assets and payments of liabilities.(C) Transferring of assets and liabilities in realization account.(D) Preparation of capital account of partners.Choose the correct answer from the options given below:
- A(A), (C), (B), (D)
- B(B), (C), (D), (A)
- C(B), (A), (D), (C)
- D(C), (B), (D), (A)
Solution & Step-by-step Explanation
The process for closing books during dissolution follows this sequence:(C) Transferring assets and liabilities to the realization account: Balance sheet accounts are closed out first.(B) Realizing assets and payments of liabilities: Cash is collected from disposals and third-party obligations are settled.(D) Preparation of capital account of partners: Profit/loss from realization is distributed to find final balances.(A) Preparing a Bank account: Final settlements are made, closing the cash/bank balance to zero.Thus, the correct structural order is (C), (B), (D), (A).