Concept:On dissolution of a partnership, the realization account is opened to compute the gain or loss from disposing of the firm's assets and settling its liabilities.
Explanation:At the start of dissolution, every non-cash asset is transferred into the realization account at its book value.
This transfer removes the asset from the partnership books.
The journal entry for this transfer is:
Debit: Realization Account
Credit: Asset Account
Therefore, when an asset's value is debited to the realization account, the corresponding credit is made to the asset account.
Later, when the asset is actually sold, cash or bank is debited and the realization account is credited with the sales proceeds.
Do not confuse the later sale entry with the initial transfer entry described in the question.
The credit in the initial transfer entry goes to the asset account, not to bank, cash, or dissolution.
Answer:B. asset