When a partnership firm is dissolved, any accumulated losses (such as a debit balance in the Profit and Loss Account) are transferred directly to the:

Accumulated reserves, profits, or losses shown on a firm's balance sheet belong entirely to the existing partners.During dissolution, accumulated losses (e.g., a debit balance in the P&L Account or deferred revenue expenditures) are written off by transferring them directly to the debit side of the Partners' Capital Accounts in their old profit-sharing ratio. These losses are not transferred to the Realisation Account because they do not represent realisable business assets.